Loading...
HomeMy WebLinkAbout09 - Oil Field Wastewater DischargeMay 14, 2002 CITY COUNCIL AGENDA ITEM NO. 9 TO: Mayor and Members of the City Council FROM: Utilities Department SUBJECT: MODIFICATION OF AGREEMENT FOR OIL FIELD WASTEWATER DISCHARGE RECOMMENDATION: 1. Approve the Modification of Agreement with West Newport Oil for the disposal of wastewater from the operation of the oil and gas facility. 2. Authorize the Mayor and City Clerk to execute the Modification of Agreement DISCUSSION: Since May 1994, the City of Newport Beach has been allowed by agreement with West Newport Oil to discharge excess wastewater (brine water) from the production of oil and gas operations into West Newport Oil's injection system. West Newport Oil has been disposing of the wastewater into their well injection system. The original agreement requires that the City pay West Newport Oil $0.10 per barrel of wastewater that is produced and delivered into their disposal system. This cost per barrel has not been increased since the inception of the agreement in 1994. West Newport Oil has requested an increase from $0.10 to $0.20 per barrel to cover increased operation costs to dispose of the wastewater. (See attached letter) The City has annually paid West Newport Oil approximately $40,000 to $45,000 per year for this service at the $0.10 rate. The oil field operations produce about 1200 barrels per day of wastewater. Beginning in January of this year the City ceased discharging the wastewater to West Newport Oil and instead began using the entire quantity of wastewater in the City's recently installed injection system as part of the Oil Field Rehabilitation Program. Under our new operations, the only time the wastewater will be discharged to West Newport Oil is when our injection system is shut down for maintenance or repair. We anticipate that future wastewater discharges to West Newport Oil disposal system will be substantially less than the past because the discharges to West Newport Oil will occur only on an intermittent basis. The annual cost is expected to be less than $10,000 per year even with the increased processing costs from West Newport Oil. The Oil and Gas Field Operations Committee meet on April 16, 2002 to review this amendment to the Agreement. The Committee supported the modification and recommended that it be submitted to the City Council for approval. Res ectfull/y�sub ed, �, r 7b E130-n- I on G. Davidson Utilities Director By: Tim Deutsch Utilities Administrative Manager Attachments: Exhibit "A " — Original Discharge Agreement —May 1994 Exhibit T" - Letter from West Newport Oil Exhibit "C" —Modification of Wastewater Discharge Agreement— Contract Number C -3005 May 2002 M TIDELANDS OIL OPERATION TO WEST NEWPORT OIL COMPANY THIS AGREEMENT is made and entered into this /&�day of 1994, by and between West Newport Oil Company a California Corporation er referred to as' WNOC ", and the "CITY OF NEWPORT BEACH", a municipal corporation, hereinafter referred to as "CII Y". WITH ESSET1i: WHEREAS, "CITY", owns and operates oil producing facilities which generates a wastewater discharge, and, WHEREAS, "QTY", desires to dispose of the wastewater discharge in the most cost effective manner, and; WHEREAS, "CITY", has determined that the most cost effective way to discharge the wastewater is to deliver it to "WNOC" and; WHEREAS, "CITY", will be required to pay for initial piping improvements necessary for the delivery of the wastewater to WNOC, and; WHEREAS, "CITY", will be required to pay a fee for each barrel of wastewater discharge delivered, and; NOW THEREFORE, in consideration of the foregoing, it is mutually agreed and understood that: Exhibit A I. PARTIES AND PURPOSES "WNOC" hereby agrees to accept from "CITY" the wastewater discharge produced from 'Ul Y's" oil producing facilities. The "CITY" will identify a mutually acceptable point of delivery outside the "CITY s" oil producing facilities. "WNOC" will not be required to construct pipeline facilities or improvements within the "CITY s" oil producing facilities. F0 0 K M The term of this agreement shall be one (1) month commencing on the date executed by both parties. The term shall be automatically renewed for consecutive one (1) month periods, unless 20 calendar days prior notice of intent to cancel this Agreement is provided by the party wishing to terminate the Agreement. III. PAYMENT FOR SERVICES The "CITY" shall pay "WNOC" a one time payment of Five Thousand Dollars ($5,000.00) to reimberse "WNOC's" costs to construct such pipelines and facilities for "WNOC" to accept from "CITY" its waste water discharge at the point of delivery pursuant to paragraph I above, which pipelines and facilities shall be owned and maintained by "WNOC ". All pipelines and facilities required to deliver the "Mrs,' waste water discharge to "WNOC's" pipelines and facilities at the point of delivery shall be owned and maintained by the "CITY ". The Five Thousand Dollars ($5,000.00) is due and payable upon execution of this Agreement by "WNOC ". If "WNOC" term mates this Agreement pursuant to Section V, paragraph 1, prior to the tenth (10th) month of the term, then "WNOC" shall pay "CITY" an amount equal to $500.00 multiplied by the number of months of the term subtracted from 10. For example, if "WNOC" terminates this Agreement after 5 months, "WNOC" would pay "CITY" $2,500.00, calculated as follows: $500.00 x (10 -5). The "CITY" shall meter all wastewater discharge deliveries hereunder to WNOC and shall pay "WNOC" Ten Cents ($0.10) per barrel of wastewater discharge delivered. Payment shall be made monthly based on the meter reading by "CTf Y' staff. "WNOC" has the right to inspect the meter upon request. IV. LIABILITY AND INDEMNIFICATION 1. Neither "CITY" nor any officer, agent or employee of "CITY" shall be responsible for any damage or liability occurring by any acts or omissions on the part of "WNOC" nor any officer, agent or employee of "WNOC ". in connection with any work, authority or duties to be carried out by "WNOC" under this Agreement. 2. Neither "WNOC" nor any officer, agent or employee of "WNOC ", shall be responsible for any damage or liability occurring by any acts or omissions of the "CITY", in connection with any work, authority or duties to be carried out by "CITY" under this Agreement. It is also understood and agreed that, pursuant to Government Code Section 895.4, "CITY' shall fully indemnify, defend and hold "WNOC" harmless from any liability imposed for injury (as defined by the Government Code) occurring by any acts or omissions on the part of the "CITY" in connection with any work, authority or duties delegated to "CITY" under this Agreement. v. DEFAULT & GROUNDS FOR TERMINATION This Agreement shall terminate: 1. Upon notice pursuant to Section (II); 2. Upon default by either party where such default is not corrected within tan (10) days after receipt of written notice, specifying the nature of the default and the corrective action required or where such default cannot reasonably be corrected within ten (10) days. A Party shall not be in default so long as either party commences actions necessary for correction within ten (10) days of notice and diligently prosecutes the same to completion. VI. NOTICE Any notice, demand, reciuest, consent, approval, or communication either party desires or is required to give to the other party or any other person, shall be in writing and either served personally or sent via United States Mail, prepaid, first - class delivery to the address set forth below. Either party may change its address by notifying the other party of the change in writing. Notice shall be deemed communicated at the time personally delivered or in three (3) days from time of the mailing if mailed as provided in this section. To CITY: City of Newport Beach, Utilities Department 33W Newport Boulevard Newport Beach, California 92658 -8915 Attention Utilities Director To WNOC: West Newport Oil Company, Post Office Box 1487 Newport Beach, California 92663 Attention J. R Stair, Vice President V11. CALIFORNIA LAW This Agreement shall be construed and interpreted with both validity and performance of the parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Orange, State of California, or any other appropriate court in such county, and the parties hereto agree to submit to the personal jurisdiction of such court in the event of any action. VIII. ATTORNEY'S FEES If either party of this Agreement is required to initiate or defend any action or proceeding in any way connected with this Agreement, the prevailing party in such action or proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to all reasonable attorney's fees. Attorney's fees shall include attorney's fees on any appeal. In addition, a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, taking depositions and discovery and all other necessary costs the court allows in such litigation. All such fees shall be deemed to have accrued on a commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. DC. AUTHORITY "WNOC" warrants and represents that it has the authority to enter unto this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day, month and year first above written. APPROVED AS TO FORM Wanda Ragoo /� City Clerk Address and Telephone: CITY OF NEWPORT BEACH a municipal corporation Clarence Turner Mayor WESTNEWPORT OIL COMPANY a C'al;Fnm;a corporation Jay R S ' Vice President City of Newport Beach West Newport Oil Company 3300 Newport Boulevard Post Office Boa 1487 Newport Beach, Cahfomia 92659 -1768 Newport Beach, califomia 92663 (714 )644 -3011 (714)6465204 (FAX) C714)631-1100 C714)650-4005 4 WEST NEWPORT OIL COMPANY POST OFFICE BOX 1487 NEWPORT BEACH, CALIFORNIA 92659 Telephone (949) 631 -1100 Fax (949) 645 -1127 HAND DELIVERED December 5, 2001 Mr. Tim Deutsch Utilities Department City or-Newport Beach 3300 Newport Blvd. Newport Beach, California 92663 Re: Agreement for Delivery of Wastewater Discharge from Tidelands Oil Operations to West Newport Oil Company Dear Mr. Deutsch: As we discussed during our telephone conversation today, West Newport Oil Company's costs for disposing of wastewater discharge from the City's Tidelands oil operations have risen sharply. In order to continue to accept the city's wastewater discharge under the referenced agreement (Agreement), Article III of the Agreement will have to be amended to increase the per barrel discharge fee from $0.10Bbl. to $0.20BbL effective January 1, 2002. If the City does not agree in writing to the proposed fee increase on or before December 10, 2001, please consider this letter notification of cancellation of the Agreement effective January 1, 2002, pursuant to Article 11 of the Agreement We appreciate your consideration of our proposal and should you have.any questions, please contact me. Yours truly, WEST NEWPORT OIL COMPANY Jay RPM Vice 1'resi dot Exhibit B MODIFICATION OF AGREEMENT DELIVERY OF WASTEWATER DISCHARGE FROM TIDELANDS OIL OPERATION TO WEST NEWPORT OIL COMPANY THIS MODIFICATION OF THE AGREEMENT NUMBER C -3005, is made and entered into this day of May, 2002, by and between the City of Newport Beach, a municipal corporation, hereinafter referred to as "City" and West Newport Oil Company, hereinafter referred to as "WNOC ". RECITALS . A. In May 1994, Agreement Number C -3005 was entered into by and between City and WNOC (hereinafter "Agreement"). B. City and WNOC desire to modify the Agreement on the terms and conditions set forth herein. NOW THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Section III of the Agreement is modified to read as follows: "The City shall meter all wastewater discharge deliveries hereunder and agrees to pay WNOC Twenty Cents ($0.20) per barrel of wastewater discharge delivered." 2. All other Terms and Conditions of the Agreement shall remain the same. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date above written: APPROVED AS TO FORM: City of Newport Beach, A municipal corporation Robin Clauson Tod W. Ridgeway, Mayor Assistant City Attorney "City" ATTEST: West Newport Oil Company LaVonne Harkless Jay R. Stair, Vice President City Clerk "WNOC" Exhibit C