REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, City Manager
PREPARED BY: Jennifer Carey, Deputy City Manager
Subject:
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Approve and Authorize Execution of Amendment No. 3 with Excalibur Well Services, Corp.; Approve Additional Funding and Appropriation of Funds for Well #3 of the Civic Center Oil Well Abandonment Project
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Statement of Issue:
The Huntington Beach Fire Department (HBFD) and the Public Works Department have been working on the abandonment of three oil wells at the Civic Center. While work on wells #1 and 2 two is nearly complete, additional funding and work is needed to complete well #3. To ensure timely and cost-effective project completion, the City met with the contractor, Excalibur Well Services, Corp. (Excalibur), to determine an “all-in” project completion cost not to exceed $1,150,000, meaning any cost over the $1,150,000 will be the responsibility of Excalibur. As part of the $1,150,000 all-in cost, Excalibur agreed to waive approximately $400,000 in equipment and standby charges. This cost is inclusive of Excalibur’s subcontractor oversight and ongoing compliance with CalGEM and the City’s Fire Department. In the event the project is completed under $1,150,000, the City and Excalibur will split the savings.
Financial Impact:
Staff is requesting an appropriation of up to $1,150,000 in HB Recovery Funds to Oil Well Abandonment business unit 31465001.82800. Sufficient funds are available in the Infrastructure Fund to cover this cost.
Recommended Action:
recommendation
A) Authorize Mayor & City Clerk to execute, “Amendment 3 to Service Agreement Between the City of Huntington Beach and Excalibur Well Services, Corp. for Civic Center Well Abandonment” in an all-in amount not to exceed $1,150,000 for full project completion as outlined.
B) Approve an appropriation and transfer of $1,150,000 in HB Recovery Funds to Oil Well Abandonment business unit 31465001.828000.
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Alternative Action(s):
Authorize Mayor and City Clerk to execute Amendment No. 3 with Excalibur Well Services, Corp. in an amount of $900,000 to continue project under current terms. This alternative action would not ensure an all-in cost for project completion and could result in staff returning to City Council to request additional funding based upon ongoing project conditions. Additionally, the City would be expected to cover approximately $400,000 in equipment and standby charges which Excalibur offered to waive with the all-in $1,150,000 amount.
The City Council may also elect to authorize Mayor and City Clerk to execute Amendment No. 3 with Excalibur Well Services, Corp. in an amount of $250,000 to place well #3 in idle. This alternative action will lead to additional increased costs of $20,000 per year to keep the well in idle. Additionally, the City will need to eventually abandon the well, leading to costs in the millions.
Analysis:
In February 2024, the City Council approved a contract with Excalibur Well Services, Corp. (Excalibur) for the abandonment of Civic Center Wells #1, #2, and #3. While abandonment work for Civic Center Wells #1 and #2 is nearly complete, additional work is required to complete Civic Center Well #3. To ensure timely and cost-effective project completion, the City met with the contractor, Excalibur Well Services, Corp. (Excalibur), to determine an “all-in” project completion cost not to exceed $1,150,000. To reach the $1,150,000 amount, Excalibur has agreed to waive approximately $400,000 in existing equipment and standby charges. Additionally, Excalibur will cover any project costs that exceed the $1,150,000 amount. In the event the project is completed under $1,150,000, the City and Excalibur will split the savings.
The remaining scope of work required to complete the project includes, but is not limited to, the items referenced below and is included within the all-in $1,150,000 cost:
• Clean out 2-7/8” inner liner from 2,343.77’ to 2,625’
• Run inside cutter to cut 2-7/8” slotted liner @ 2,375’
• Deploy spear and hydraulic jar BHA to engage and free liner
• Clean out 5-1/2” 17# liner to reach top of 2-3/8” tubing (FISH) @ ~3,654’
• Recover downhole junk (fish)
• Continue cleanout to CalGEM’s required depth of 4,094’
• Perform cementing operations in accordance with CalGEM and City Fire Department standards (Fire Department to witness final surface cement plug)
• Conduct perforations per CalGEM requirements
• Perform casing cut-off at required elevation, confirm cement returns to surface, and conduct leak test (CalGEM and Fire Department to witness)
• Install top plate with proper identification (CalGEM and Fire Department to witness)
Excalibur will provide oversight to all onsite subcontractors and confirm compliance with CalGEM and the City’s Fire Department. Should a cement top job be required after casing cut-off, Excalibur will complete the work as part of and is included in the all-in amount.
Environmental Status:
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.
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. Amendment No. 3 to Service Agreement Between the City of Huntington Beach and Excalibur Well Services, Corp. for the Civic Center Well Abandonment