HomeMy WebLinkAbout24 - Oil Management ProposalsAgenda Item No. 24
September 10, 2013
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Dave Kiff, City Manager
949 - 644 -3001, dkiff @newportbeachca.gov
PREPARED BY: Rob Houston, Assistant to the City Manager
APPROVED:S —� G
TITLE: Receive Sealed Proposals for the Management of the City's Oil,
Gas and Other Hydrocarbon Resources
ABSTRACT:
The City of Newport Beach ( "City ") may pursue an operating agreement with a third
party company to manage the City's oil, gas and other hydrocarbon resources ( "Oil
Operations "). Pursuant to state law, the City adopted a resolution on July 23, 2013
expressing its intent to enter into an operating agreement for the management of the
City's Oil Operations. This resolution was advertised for four successive weeks. The
City Council may now open the sealed proposals received from companies interested in
managing the City's Oil Operations.
RECOMMENDATION:
Open, examine and record all sealed proposals that have been submitted to manage
the City's Oil Operations.
FUNDING REQUIREMENTS:
No funding is required for this action.
DISCUSSION:
The City manages the tidelands within its boundaries on behalf of the State of California
pursuant to the provisions of the Beacon Bay Bill (Chapter 74 of the Statutes of 1978,
as amended). As part of that responsibility, the City manages oil, gas and other
hydrocarbon resources located in West Newport Beach at 5810 West Coast Hwy. The
resources located at this site include 16 oil wells that were drilled between 1953 and
Receiving Initial Proposals for the Management of the
City's Oil, Gas and Other Hydrocarbon Resources
September 10, 2013
Page 2
1958. The wells are slant drilled under property within the City, into the area under the
ocean which is called the Newport Offshore Oil Field. Oil production at the site has
declined since the 1980s (when the City acquired the oil wells) from approximately
60,000 barrels per year to 30,000 barrels per year in 2009. In recent years, the City has
been averaging approximately $1.5 to $1.8 million in Oil Operations revenue a year
with operation and maintenance expenditures of approximately $800,000 to $900,000 a
year. Oil Operations revenue from this site are deposited into the Tidelands Fund. The
Tidelands Fund may be used only for eligible expenditures that support and maintain
the tidelands, such as improvements to tidelands property including dredging Lower
Newport Bay, maintenance of the tidelands, and more.
At its July 23, 2013 meeting, the City Council adopted a resolution expressing its intent
to enter into an operating agreement for the management of the City's Oil Operations.
This resolution was published in the Daily Pilot on July 27th, August 3`d, August 10th, and
August 17th. In addition, the request for proposals was listed on the City's Current
Bids /RFPs webpage to further notify potential firms of this opportunity to manage the
City's Oil Operations. Pursuant to the adopted resolution and state law the City Council
may now open, examine and record all sealed proposals that have been submitted to
manage the City's Oil Operations. Following their opening, City staff will review the
proposals in- depth, negotiate and bring back a recommendation to the City Council.
ENVIRONMENTAL REVIEW:
City 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.
NOTICING:
This agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers this item).
Submitted by:
Dave Kiff
City Manager
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