Loading...
HomeMy WebLinkAbout15 - Oil Field Operation - Water Pump PurchaseCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 15 May 13, 2003 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Utilities Department Eldon Davdison, (949) 718 -3400, edavidson @city.newport- beach.ca.us SUBJECT: OIL FIELD OPERATION —WATER PUMP PURCHASE RECOMMENDATION: Authorize the purchase of one water injection pump from National Oil Well of Long Beach in the amount of $100,552.50. DISCUSSION: Background: The City currently operates 16 oil and gas wells in West Newport that produced approximately 41,515 barrels of oil last fiscal year. Production continues to decline so the City continues to pursue methods to increase production. On August 22, 2000, the Utilities Department presented a report to the City Council, regarding the status of the Oil and Gas operation. As part of this report, the Council authorized staff to pursue a rehabilitation program designed to increase the oil production through water flooding and well repairs. Under Phase 1 of the program four wells were rehabilitated with needed repairs. It was determined that the oil layers or sands would need to be pressurized by water flooding in order to increase the production of oil. Staff then worked with Renick Sampson (operator), Mel Wright (consultant) and outside contractors on the design, installation and implementation of a pilot water injection system (Phase 2). This included the installation of a water treatment system, underground pressurized pipe, electrical control system, a used 1981 water injection pump and the rehabilitation of well number three which is being used as the injection well. Over the past year, this injection pump has been running at its maximum and has been determined to be undersized. The water that is injected was previously sent to West Newport Oil, who charged the City an annual fee of approximately $100,000, to dispose through Purchase of Pump — Oil Fields May 13, 2003 Page 2 subsurface injection. By implementing the Phase 2 improvements, the City no longer pays this annual fee. Staff has recently developed Phase 3 of the rehabilitation program. This phase requires that the City replace the existing 1,200 - barrel per day (bpd) water pump with a 5,000 bpd pump and acquire an additional source of water. As indicated above, the existing pump is currently running at its maximum capacity and has to be replaced for the water injection program to increase oil production. A request for proposal was advertised in Oiltizer, an oil operation equipment network publication, which allows operators to request proposals for equipment that are specific for the industry needs. The City received two proposals and reviewed each with contract operator Renick Sampson. The third vendor, Custom Pump & Equipment, was non - responsive with its proposal. National Oilwell of Long Beach was the lowest proposal. JW Oilfield Equipment LLC was the other company that submitted a proposal, which was $104,431.50. Implementing the waterflooding program has the potential of increasing production and extending the operational life for up to 18 years. Without the waterflooding program, the operational life of the oil will be less than five years. Once the rehabilitation program is fully implemented, the City has the potential of producing 500,000 barrels of oil over the next 18 years. At an average price of $16.50 per barrel, the oil operations could generate $8,250,000 over the 18 -year period. On April 23, 2003, Utilities staff met with the Oil & Gas Committee to discuss this issue. The Committee supported the decision to purchase the pump and requested that staff present it to the Council. Environmental Review: This project is categorically exempt from CEQA pursuant to Section 15302 of the Guidelines, replacement of existing facilities that will substantially the same purpose and capacity as the facility replaced. Funding Availability: Funds for the purchase and installation of the pump are available in the Oil Field Improvement Program budget, account 7231- C5400053. Prepared by: Submitted by: Tim Deutsch, Administrative Manager Eldon Davidson, Utilities Director Attachments: National Oilwell Proposal I E F, i �F0 2 January 9, 2003 City of Newport Ed Burt Fax 949 - 646 -2540 National Oilwell 2875 Junipero Ave Signal Hill, CA 90755 562 - 424 -0751 National Oilwell is pleased to offer the following quotation for your review and consideration. (1) National Oilwell 300Q -SM Quintuplex Plunger Pump Package, skid mounted, electric motor, direct drive consisting of the following: a) 300Q -SM Quintuplex Pump factory new b) Aluminum Bronze 9 -1) Fluid End (No b) Spherical Valves Tapered Seat c) 2 -5/8" Tungsten Carbide Plungers d) Spring Loaded Kevlar Packing e) Stainless Steel Stuffing Boxes f) Plunger Lubricator g) 200 HP TEFC electric motor, 3PH. 230/460 volt h) Skid and coupling guard i) Gear Reducer 5.63:1 Ratio j) 2 ea. L129CK1 oil level gage k) Falk Coupling 1100T10 1) Unit primed and painted With 2 -5/8 plungers at 300 RPM this pump will operate at 1800 PSI and 6000 BPD. Based on 100% volumetric efficiency. Price $91,000.00 ea. Plus Tax Delivery 10 -12 Weeks A_R.O. Estimated Freight from Odessa, TX $2500.00 Thank you, Doug Ortega Coll 310- 487 -2454 'r . ;cc.