HomeMy WebLinkAbout15 - Amendment to PSA for Oil Well Management ServicesQ �EwPpRT
CITY OF
s NEWPORT BEACH
`q44:09 City Council Staff Report
November 14, 2023
Agenda Item No. 15
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Mark Vukojevic, Utilities Director - 949-644-3011,
mvukojevic@newportbeachca.gov
PREPARED BY: Joshua Rosenbaum, Senior Management Analyst,
josenbaum@newportbeachca.gov
PHONE: 949-644-3011
TITLE: Amendment to Professional Services Agreement with Sampson Oil
Company for Oil Well Management Services
ABSTRACT:
The City of Newport Beach's (City) oil wells are managed and operated by a specialty
service contractor. The services provided include daily maintenance, repair and operation
of the City's oil wells and production tank facility; coordination of regulatory agency
inspections and compliance; purchasing of materials; and managing subcontractor
repairs. The Utilities Department is requesting City Council approval to amend the existing
agreement with Sampson Oil Company.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
and
b) Approve Amendment No. Four to the Professional Services Agreement with Sampson
Oil Company for Oil Management Services, which extends the contract to
September 30, 2024, and increases the contract amount by $500,000, and authorize
the Mayor and City Clerk to execute the agreement.
DISCUSSION:
Sampson Oil Company (Sampson) has been managing and operating the City's oil fields
in West Newport since the 1980s. Its operations and services include daily maintenance,
repair, operation and regulatory compliance of the City's 15 oil wells, one injection well, a
production tank facility, and pipelines. Sampson also coordinates regulatory agency
inspections, compliance reporting, material procurement, and manages subcontractors
that perform as -needed repairs. Sampson has decades of experience with the City and
has the expertise and familiarity with the management and operations of the City's oil
field.
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Amendment to Professional Services Agreement with Sampson Oil Company
for Oil Well Management Services
November 14, 2023
Page 2
Over the last 12 months of the agreement, the City and Sampson have made significant
oil well repairs in order to maintain compliance with the State of California's new idle well
program requirements. Sampson also completed several repairs which were funded
through the City's Capital Improvement Program. These repair expenditures have
lowered the available contract capacity within the existing agreement ahead of the original
July 31, 2024, expiration. Staff is requesting additional funds to continue operations
through the rest of the fiscal year along with a two -month extension.
The owner of Sampson Oil will be retiring during this agreement term and City staff is
advertising and notifying the industry that a request for proposals will be issued to seek
out experienced and highly qualified oil well operators to take over the contract
operations. Until a new operator is under contract, Sampson will continue the routine
management and operation of the City wells. This includes all necessary time needed by
Sampson's administrative, maintenance and office staff to maintain and operate the
system annually.
Sampson's staff will continue to perform minor repairs and larger repairs will be done by
subcontractors. The contract also includes allowances for the purchase of materials and
for unforeseen repairs performed by subcontractors. During the previous and current
fiscal years, expenditures were necessary for regulatory compliance with idle wells and
injection wells, replacement tubing and inner liners, casing repairs, pump and motor
replacements, cementing, haul -offs, zone abandonments, rehabilitations, and
investigations into underperforming wells.
Staff recommends City Council approval of Amendment No. Four to the Professional
Services Agreement with Sampson Oil Company for Oil Well Management Services,
which extends the contract to Sept. 30, 2024, and increases the total contract amount by
$500,000.
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Sufficient funding for this agreement is included in the adopted budget for Fiscal Year
2023-24, which will be funded from operating funds in the Tidelands Fund (Fund 100).
Funding has also been set aside in the Capital Improvement Program. Revenues from oil
sales offset expenditures and net proceeds from oil operations are placed in the Tidelands
Fund.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
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Amendment to Professional Services Agreement with Sampson Oil Company
for Oil Well Management Services
November 14, 2023
Page 3
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A — Amendment No. Four to Professional Services Agreement
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ATTACHMENT A
AMENDMENT NO. FOUR TO
PROFESSIONAL SERVICES AGREEMENT
WITH SAMPSON OIL COMPANY, INC. FOR
OIL WELL MANAGEMENT SERVICES
THIS AMENDMENT NO. FOUR TO PROFESSIONAL SERVICES AGREEMENT
("Amendment No. Four") is made and entered into as of this 24th day of October, 2023
("Effective Date"), by and between the CITY OF NEWPORT BEACH, a California
municipal corporation and charter city ("City"), and SAMPSON OIL COMPANY, INC., a
California corporation ("Consultant"), whose address is 301 Ultimo Avenue, Long Beach,
California 90814, and is made with reference to the following:
RECITALS
A. On July 11, 2017, City and Consultant entered into a Professional Services
Agreement ("Agreement") for oil well management services ("Project").
B. On July 12, 2020, City and Consultant entered into Amendment No. One to the
Agreement ("Amendment No. One") to reflect additional services not previously
included in the Agreement, to extend the term of the Agreement to July 31, 2022,
to increase the total compensation, to update the City's Administration of the
Agreement, and to update insurance requirements.
C. On June 14, 2022, City and Consultant entered into Amendment No. Two to the
Agreement ("Amendment No. Two") to extend the term of the Agreement to July
31, 2023, and to increase the total compensation.
D. On March 14, 2023, City and Consultant entered into Amendment No. Three to the
Agreement ("Amendment No. Three") to extend the term of the Agreement to July
31, 2024, and to increase the total compensation.
E. The parties desire to enter into this Amendment No. Four to extend the term of the
Agreement to September 30, 2024, and to increase the total compensation.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows
1. TERM
Section 1 of the Agreement is amended in its entirety and replaced with the
following: "The term of this Agreement shall commence on the Effective Date, and shall
terminate on September 30, 2024, unless terminated earlier as set forth herein."
2. COMPENSATION TO CONSULTANT
Section 4.1 of the Agreement is amended in its entirety and replaced with the
following: "City shall pay Consultant for the Services on a time and expense not -to -
exceed basis in accordance with the provisions of this Section and the Schedule of Billing
Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's
compensation for all Work performed in accordance with this Agreement, including all
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reimbursable items and subconsultant fees, shall not exceed Four Million Seven
Hundred Ninety One Thousand Nine Hundred Sixty Eight Dollars and 001100
($4,791,968.00), without prior written authorization from City. No billing rate changes
shall be made during the term of this Agreement without the prior written approval of City."
The total amended compensation reflects Consultant's additional compensation
for additional Services to be performed in accordance with this Amendment No. Four,
including all reimbursable items and subconsultant fees, in an amount not to exceed Five
Hundred Thousand Dollars and 001100 ($500,000.00).
3. INTEGRATED CONTRACT
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the Agreement shall remain unchanged and shall be in full force and effect.
[SIGNATURES ON NEXT PAGE]
Sampson Oil Company, Inc. Page 2 15-5
IN WITNESS WHEREOF, the parties have caused this Amendment No. Four to
be executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: /? I /% 7
By:
A on C. Harp S
City Attorney
�3
ATTEST:
Date:
IA
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
By:
Noah Blom
Mayor
CONSULTANT: SAMPSON OIL
COMPANY, INC., a California
corporation
Date: /
z
By: -
Renick Sampson
Chief Executive Officer, Chief Financial
Officer, Secretary
[END OF SIGNATURES
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