HomeMy WebLinkAbout08 - BA-040 - Oil & Gas Field Deferred MaintenanceApril 10, 2001
CITY COUNCIL AGENDA
ITEM NO. 8
TO: Mayor and Members of the City Council
FROM: Public Works Department
SUBJECT: APPROVE A BUDGET AMENDMENT FOR DEFERRED MAINTENANCE
PROJECTS AT THE OIL & GAS FIELD FACILITY
RECOMMENDATION:
Approve a budget amendment in the amount of $80,000 from the Tidelands Fund
unappropriated balance to the Oil and Gas Operations Maintenance and Repair
Account No. 5400 -8160.
DISCUSSION:
The City of Newport Beach has maintained an oil and gas operation since 1981. In
December 1998, the price of oil hit an all time low of $6.37 per barrel. In the past two
years there has been a dramatic climb in the per barrel price of oil (to an average of
$24.77 per barrel this year), and the annual revenue has increased from $400,000 in
1998 to an estimated annual revenue of over $1 million dollars in FY 2000 -01. The Oil
revenue projection for FY 2000 -01 was $850,000 and based on 8'Y2 months of
production, it is estimated that the projection can be increased by approximately
$160,000. During the last three years, only critical maintenance work necessary to
keep the wells, tank farm, and collection system operational was performed.
Preventative maintenance items were deferred.
Below is a list of deferred maintenance items that need to be performed to keep the oil
production facilities fully operational and reliable:
• Clean the wastewater tank, slop tank, and oil storage tank $18,000
• Replace three tank tops $15,000
• Replace existing electrical conduit $22,000
• Replace existing skim tank $15,000
• Replace wastewater pumps $10,000
Total $80,000
SUBJECT: Budget Amendment —Oil Field Deferred Maintenance
March 27, 2001
Page 2
The 2000 -01 budget for oil field maintenance and repair was $26,000 and this amount
has been expended. It is recommended that a budget amendment be approved to
transfer $80,000 into the Oil and Gas Maintenance and Repair Account (5400 -8160) for
implementing the deferred maintenance projects. Completing the improvements this
fiscal year will help prepare the oil facilities for increased production, anticipated after
the water flooding program is implemented.
Respectfully sud,
v ' bmitte it
PUBLIC WORKS DEPARTMENT
Don Webb, Director
By:
don Davidson
Utilities Services Manager
City of Newport Beach
BUDGET AMENDMENT
2000 -01
EFFECT ON BUDGETARY FUND BALANCE:
Increase Revenue Estimates
X Increase Expenditure Appropriations
Transfer Budget Appropriations
SOURCE:
from existing budget appropriations
from additional estimated revenues
qx from unappropriated fund balance
EXPLANATION:
NO. BA- 040
AMOUNT: Sso,000.00
Increase in Budgetary Fund Balance
AND X Decrease in Budgetary Fund Balance
No effect on Budgetary Fund Balance
This budget amendment is requested to provide for the following:
To increase expenditure appropriations for deferred maintenance projects at the Oil & Gas Field Facility
from unaoorooriated Tidelands funds.
ACCOUNTING ENTRY:
BUDGETARY FUND BALANCE
Fund Account
230 3605
REVENUE ESTIMATES (3601)
Fund /Division Account
EXPENDITURE APPROPRIATIONS (3603)
Division
Number
Account
Number
Division
Number
Account
Number
Division
Number
Account
Number
Division Number
Account Number
Signed:
Signed:
Signed:
Administrative
Description
Fund Balance
Description
Description
5400 Public Works - Oil & Gas
8160 Maintenance and Repair Materials
Amount
Debit Credit
$80,000.00 `
Automatic
$80,000.00
al: Administrative S� 'ces Director Date
)prove City Manager Dat
City Council Approval: City Clerk
Date