HomeMy WebLinkAbout83-127 - Oil Operating AgreementRESOLUTION NO. 83 -127
• A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH EXPRESSING ITS INTENTION TO
ENTER INTO AN OIL OPERATING AGREEMENT AND
INVITING BIDS THEREON
WHEREAS, the City of Newport Beach is presently engaged
in producing oil from a field located beneath tidelands; and
WHEREAS, the City Council and the Technical Oil Advisory
Committee (TOAC) believe that,it is in the best interests of the
City of Newport Beach to retain a qualified oil field operator to
maintain and operate the 16 City -owned oil wells, and related oil
production and storage facilities in the west Newport area; and
WHEREAS, litigation with respect to the City -owned wells
and production facilities has been resolved and no longer
constitutes an impediment to the approval of an agreement with an
oil field operator; and
WHEREAS, the City has petitioned the State Lands
Commission for approval of this resolution, and exhibits attached
hereto, and the State Lands Commission has approved same; and
WHEREAS, the provisions of Section 7058 et seq of the
Public Resources Code require the City of Newport Beach to
express, by resolution, its intention to enter into an operating
agreement, requires that the resolution contain certain
information, and requires that the City follow certain procedures
prior to executing such an agreement; and
WHEREAS, this resolution fully complies with the
provisions of the Public Resources Code referenced above, and
expresses the intention of the City not only to enter into an oil
operating agreement, but to strictly follow the State statutes
with regard to the execution and performance of such agreement.
NOW, THEREFORE, BE IT RESOLVED by the City Council of
the City of Newport Beach that:
1. The City Council of the City of Newport Beach hereby
expresses its intention to enter into an agreement to
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operate the sixteen (16) oil wells, and related oil
production and storage facilities owned by the City of
Newport Beach and located in the area commonly known as
"West Newport," northerly of Pacific Coast Highway and
westerly of 52nd Street if extended and more fully
described on Exhibit "A" to the request for proposal
which is attached to this resolution;
2. The term of the agreement will be two years. The
agreement will relate only to oil field operations, and
the agreement will convey no rights to the operator other
than compensation for work performed. Other terms and
conditions of the operating agreement will be as set
forth in the request for proposal which is attached to
this resolution, as Exhibit "B" together with such
additional terms and conditions as may be deemed
necessary or appropriate by the City Council to fully
protect the interests of the City of Newport Beach, the
State of California and the State Lands Commission.
3. The operating agreement shall specify:
A. The monthly service fee to be paid to the operator
for the duties required to be performed pursuant to
the agreement; and
B. The compensation, expressed on the basis of an
hourly rate, for extra engineering work required of
the operator by City; and
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C. The compensation, expressed on the basis of an
hourly rate, for extra administrative and office
work requested of operator by the City.
4. The award of the operating agreement will be made to the
lowest responsible bidder, as determined by the City
Council of the City of Newport Beach, on the basis of
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bids for the fees and services described in Section 3 of
this resolution. Bids are to be submitted on the
• proposal form which is attached to this resolution as
Exhibit "C ". Prospective bidders may obtain one copy of
the proposed form and other relevant documents, at no
cost, at the office of the Utilities Department, 949 W.
16th Street, Newport Beach, CA 92663. The Utilities
Director is authorized to transmit bid documents to
persons known to be qualified oil field operators. The
operating agreement will be awarded during the regularly
scheduled meeting of the City Council to be held on
January 23, 1984. The City Clerk is hereby directed to
publish this resolution, in the official newspaper, at
least once a week, for four successive weeks, prior to
the date and time fixed for the award of the operating
agreement, and the publication of this resolution shall
constitute notice to all prospective bidders. Bids must
be submitted to the City Clerk's office no later than
January 11, 1984, by 10:00 A.M., and will be opened by
the City Clerk at said time, place and date. All bids
will be examined by City staff, which shall thereafter,
submit the bids along with recommendations from the
City's Technical Oil Advisory Committee to the City
Council in public session. The City Council shall then
decide to enter into an agreement with one of the bidders
or reject all bids. If an agreement is entered into, it
shall promptly be recorded.
ADOPTED this 12th day of December, 1983
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ATTEST:
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(Sample letter to accompany "A Request for Proposal to Operate
City Owned Oil Facilities ")
Gentlemen:
Attached is a Request for Proposal and a Proposal Form to operate and
maintain 16 City owned Tideland oil wells and related oil production facilities
in the West Newport Area.
You are.invited to submit a proposal on the attached form. All Proposal
Forms must be sealed and must be received by the City.Clerk on or. before
10:00 A.M., August 1, 1983.
Arrangements can be made to inspect the oil producing facilities by con-
tacting Mr. Robert Dixon, Utilities Department Administrative Assistant at
(714) 640 -2221. The office of the Utilities Department is located in the City's
Utilities Yard at 949 West 16th Street, Newport Beach, California 92663.
The insurance certificate need not accompany the Proposal Form but will
�,J be required before starting any work.
Selection of an Operator will be based on the following considerations:
1. Professional qualifications.
2. Monthly service fee.and hourly rates..
3. Capability of the firm to accomplish the work in conformance with
the requirements of the City of Newport Beach.
4. Specialized experience of the firm in the type of work required.
5. Demonstrated performance of similar work with governmental
agencies or with private industry.
6. Familiarity with the geographical area of the project.
If you have any questions regarding the Request for Proposal or,the opera-
tion of the facilities, please contact Mr. Dixon at (714) 640 -2221.
Yours truly,
Joseph T. Devlin
Utilities Director
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EXHIBIT
Rev. 4%26/83
• • Rev. 4/W83
DRAFT
REQUEST FOR PROPOSAL
The City of Newport•Beach is inviting proposals from qualified.oil field
l' operators with oil field engineering experience to operate and maintain 16 City
owned tideland oil wells and related oil production facilities in the West
.Newport area. (See attached Exhibit
All proposals must be sealed and must be received by the City Clerk on or
before 10:00 A.M., August 1, 1983.
To assist in determining the qualifications of the Operator all proposals
must include a resume of the Operator's oilfield experience and a statement
of financial condition.
I. SCOPE OF WORK
A. Duties of the Operator included in the Months Service Fee.
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I. Perform all work necessary to manage, operate, produce, protect and
maintain the City owned tideland wells, tank farm, pipelines and
related oil production facilities in accordance with good oil field
practice.
2. Respond to all emergencies and provide for personnel to safely and
continuously operate the oil facilities 24 hours a day, 7 days a week.
3. Provide a full.time qualified pump operator with field truck and pay,
all costs, direct and indirect, relating to the employment of the
Pumper and use of the truck.
4. Provide the City with detailed recommendations, cost estimates and
technical advice to improve production; maintenance and security of
the oil facilities.
5. Keep accurate-daily records of all production, treatment of oil, cut
and temperature of oil, deliveries and field testing on forms provided
by the City.
6. Recommend, schedule, coordinate and inspect the work of all oil field
service contractors.
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Request for Proposal
Page 2
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7. Schedule, supervise and coordinate the transfer of all oil and gas sold
and shall gauge and measure promptly the quantity of oil and gas pro-
duced, saved and shipped.
8. Keep a detailed record and submit signed invoices for all material,
equipment, and services to be reimbursed by the City.
9. Perform individual well tests at least every 6 months, indicating rate
of production, the quantity of oil, water and sand produced.
10. Furnish small hand tools required in the normal operation.
11. Pay all State and Federal income taxes on Operators compensation and
all transportation, administrative and overhead costs.
Duties of the City.
1. Pay the Operator each month the monthly service fee stipulated in the
Proposal Form.
2. Pay for all major repair and improvement work done on the oil wells and
related production facilities by oil field service constractors and
vendors.
3. Unless otherwise specified, pay for all utilities, chemicals, materials
and supplies required to operate and maintain the oil wells and related
production facilities.
4. Be responsible for the marketing of the oil and gas produced.
5. Obtain all operating permits.
6.. Pay all property taxes and all taxes on the production and mining of
oil and gas.
rr SPECIAL PROVISIONS
A. Assignment.
No agreement or portion thereof. may be assigned without the consent
of the City.
B. Authority of City_
The City shall have the final authority-in all matters affecting the work.
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Request for Proposal
Page 3
C. Term.
The term of the operating agreement shall be for a period of 2 years.
D. Cancellation.
The operating agreement may be cancelled at anytime by the City without
liability for damages, when in:the City's opinion the Operator is not
complying in good faith.
E. Inspection.
All work and operations shall at all times be subject to inspection and
approval by the City. All material and work shall be of highest quality
and shall be in accordance with good oil field and construction practices.
F. Protection of Environment.
The Oil production facilities are located in and near environmentally
sensitive wet -land habitats. The Operator shall exercise every reason-
able precaution to.protect the wet - land, channels and bodies of water
from pollution of any kind.
G. Safety.
The highest possible priority is to be placed on conducting a safe
operation. The Operator shall comply with the Safety Orders of the
State Division of Industrial Safety and all other applicable laws, ordi-
nances and regulations relating to safety.
H. Cooperation with Others.
The Operator shall cooperate and take direction from the City and its
authorized representatives. The City has a "non- exclusive" property
right to operate and maintain its oil production facilities. Other oil
companies and utilities have operating rights over the same area. The
Operator will be required to fully cooperate with others and to schedule
and coordinate work so as not to interfere with the rights of.others.
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Request for Proposal
Page 4
Use of City Personnel.
It is the policy of the City not to use City personnel in connection
with the normal operation of the oil field. Every effort shall be
• made by the Operator to accomplish the required work by using outside
contractors and labor.
J. Labor.
The Operator shall comply with all applicable Federal, State and Local
labor laws'.
K. Liability Insurance.
The Operator shall furnish the City a policy or certificate of liability
insurance . in which the .City is named as the insured or.as an additional
insured.
The coverage shall provide the following minimum limits;
Bodily Injury ......... $250,000 each person
$500,000 each occurrence
$500,000'aggregate products
completed operations
Property Damage ............... $100,000 each occurrence
$250,000 aggregate
A combined single limit policy with aggregate limits in the amount of
$1,000,000 will be considered equivalent to the required minimum limits.
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Request for Proposal
Page 5
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Insurance companies shall be assigned Policyholders' Rating 8 (or
better) by the latest edition of Best's Key Rating,Guide: Property -
Casualty.
• The Operator shall save, keep and hold harmless the City, its
officers.and agents from all damages, costs or expenses in law or
equity that may at any time arise or be set up because of damages to
property, or of personal injury received by reason of or in the course
of performing work, which may be caused. by any willful or negligent
act or omission by the Operator, any of the Operator's employees, or
any subcontractor.
All liability insurance policies shall bear an endorsement or
shall have attached a rider whereby it is provided that, in the event
of expiration or proposed cancellation of such policies for any reason
whatsoever, the City shall be notified by registered mail, return .
receipt requested, giving a sufficient time before the date thereof
to comply with any applicable law or statute, but in no event,less than
30 days before expiration or cancellation is effective.
The cost of this insurance shall.be included in the Operator's
monthly service fee.
L. Worker's Compensation-Insurance.
The Operator shall comply with Section 3800 of the Labor Code by
securing, paying for, and maintaining in full force and effect for
the duration of the contract, complete Workmen's Compensation.Insurance,
and shall furnish a Certificate of Insurance to the City. The City,
its officers, or employees, will not be responsible for any claims.
in law or equity occasioned by failure of the, Operator to comply with
this paragraph.
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Request for Proposal
Page 6
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All compensation insurance policies shall bear an endorsement or
�J shall have attached a rider whereby it is provided that, in the event
of expiration or proposed cancellation of such policies for any reason
•whatsoever, the City shall be notified by registered mail not less than
.30 days before expiration or cancellation is effective.
The cost of this insurance shall be .included in the Operator's
monthly service fee.
M. Extra Work.
When the City determines that required work is not covered by the monthly
service fee it shall be classified as "extra work ". If the price for
extra work is not covered in the Proposal Form and cannot be agreed upon,
the City will pay for the extra work based on the accumulation of costs
of labor, materials and tools and equipment, plus a 15 percent markup for
all overhead and profit. Vendor's invoices shall be submitted with the
request for payment. The Operator shall not proceed with any "extra work"
unless a cost estimate has been prepared and authorized by the City.
N. Authority of Other Agencies.
1. The well heads and production facilities are locatded in the County of
Orange and the operation at all times will be subject to the rules
and regulations of the County of "Orange Environmental Management
Agency.
2. The oil reservoir is located in Tidelands under the Pacific Ocean and
the operation at.all times will be subject to the authority of the
State Lands Commission of the State of California.
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• DRAFT •
CITY OF NEWPORT BEACH
UTILITIES DEPARTMENT
CJ PROPOSAL FORM
10To the Honorable City Council
City of Newport Beach
3300 Newport Boulevard
P. 0. Box 1768
Newport Beach, CA ,92663 -3884
Gentlemen:
The undersigned declares that he has carefully examined the site and the oil
production facilities, has read the Request for Proposal, and hereby proposes
to furnish all services and do all the work required to operate and maintain
the oil production facilities in accordance with the Request for Proposal,
(+ and will take in full payment therefor the following prices for the work:
1. Operate and maintain the City owned oil production facilities for a monthly
service fee of $ per month.
2. Provide requested extra engineering work for an hourly rate of
$ per hour. .
3. Provide requested extra administrative and office work for an hourly
rate of $ per hour.
Date
EXHIBIT
Fluthorized Signature
Company
Address
Telephone Number