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Home My WebLink AboutC-4174 - Letter Agreement for Emergency Repairs Services for Oil Well No. 11LETTER AGREEMENT WITH OIL WELL SERVICE CO. FOR EMERGENCY REPAIR SERVICES FOR OIL WELL NO. 11 This Letter Agreement for Emergency Repair Services for Oil Well No. 11 is entered into as of this 14th day of April, 2009, by and between the CITY OF NEWPORT BEACH, a municipal corporation, (hereinafter referred to as "City ") and OIL WELL SERVICE CO., a California Corporation, whose address is 1241 Burnett St., Signal Hill, CA 90755 ( "Contractor "), and is made with reference to the following: RECITALS A. On November 27th, 2007, CITY and CONTRACTOR entered into an On -Call Professional Services Agreement, hereinafter referred to as "On -Call Agreement," for Oil Well Repair Services. The provisions of which are fully incorporated herein by this reference. B. City and Contractor entered into several amendments to extend the term of the Agreement, the most recent, Amendment No. 3, was approved by City Council on March 241h, 2009. The provisions of which are fully incorporated herein by this reference. D. On December 20, 2008 during routine maintenance for Oil Well No. 11, it was discovered that the Oil Well was not operating properly and required immediate shut -off. Emergency services were necessary to bring the Oil Well back on -line. E. The emergency repair work for Oil Well No. 11 set forth fees in excess of Thirty Thousand Dollars and No Cents ($30,000.00) and requires a separate Agreement in accordance with Council Policy F -14 and Section 4.0 of the Agreement. F. City and Contractor mutually desire to enter into this Letter Agreement, hereinafter referred to as "Emergency Services Letter Agreement," as provided here below. NOW, THEREFORE, the parties hereto agree as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate upon payment of final invoice by City for emergency repairs to Oil Well No. 11 or by April 30, 2009, whichever occurs first. 2. SCOPE OF WORK Contractor shall perform everything required to be performed, and shall provide and furnish all the labor, materials, necessary tools, expendable equipment and all utility and transportation services necessary for the emergency repair services pursuant to this Emergency Services Letter Agreement and according to the On- Call Services Agreement dated November 27, 2009, and all amendements thereto, the most recent amendment, Amendment No. 3, approved by City Council on March 24, 2009. 3. COMPENSATION TO CONTRACTOR Attached hereto as Exhibit A are the final invoices for all emergency work required to bring Oil Well No. 11 on -line. The total cost for all services, materials, labor and reimburseable expenses is One Hundred Twenty Nine Thousand Two Hundred and Nintey Five Dollars and 371100 ($129,295.37). 4. PREVAILING WAGES Pursuant to the applicable provisions of the Labor Code of the State of California, not less than the general prevailing rate of per diem wages including legal holidays and overtime work for each craft or type of workman needed to execute the work contemplated under the Agreement shall be paid to all workmen employed on the work to be done according to the Agreement by the Contractor and any subcontractor. In accordance with the California Labor Code (Sections 1770 et' seq.), the Director of Industrial Relations has ascertained the general prevailing rate of per diem wages in the locality in which the work is to be performed for each craft, classification, or type of workman or mechanic needed to execute the Agreement. A copy of said determination is available by calling the prevailing wage hotline number (415) 703 -4774, and requesting one from the Department of Industrial Relations. The Contractor is required to obtain the wage determinations from the Department of Industrial Relations and post at the job site the prevailing rate or per diem wages. It shall be the obligation of the Contractor or any subcontractor under him/her to comply with all State of California labor laws, rules and regulations and the parties agree that the City shall not be liable for any violation thereof. 5. ADDITIONAL TERMS AND COVENANTS Except as expressly modified herein, all other provisions, terms, and covenants set forth in the On -Call Agreement shall remain unchanged and shall be in full force and effect. Page 12 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3 on the date first above written. APPROVED AS TO FORM: OFFICE OF CITY ATTORNEY By: /1�4ynede I?- Be u amp, Assistant City Afforney for the City of Newport Beach ATTEST: By: Q r Leilani I. Brown, City Clerk F i Attachment: Exhibit A - Invoices for services CITY OF'NEWPO% A Mun'0pal Corpor, tion !Edward Selich,' Mayor for the City of Newport Beach OIL WELL SERVICE CO. Titl Print Name: _S --- By: OejttL4�-p (Financial Officer) Title:0�Cea-VIM Print Name: Page 13 a Oil Well Service Cp. INVOICE Ou 1VIJ>>r, Sxltvx lip, 1241 East Burnott ' N� Signal Hill, CA 90755 562- 595 -4501 Fax: 562-424-8026 E -Mail: matt@owst.com OIL WELL SERVICE IS AN EMPLOYEE OWNED COMPANY 1 CITY OF NEWPORT BEACH invoice No. 00013344 ATM: U11[, DFPT Our Job No. 38-1,010S 949 W. 161Tr STR&8T. well# CNB oil AGREEMENT /AG14279 Sw Ryss 65062-65063 NEWPORT BEACH CA 92M Your customer code Is =589 Your total due is 8154.50 02/25!09 0022 am 1 00013344 �.... rz Ct� [1 DOxe t1On"J � -%. _ j •. µ R f RIG R038 18.5 firs ® 133.00 $2460.50 3-mAN CMV R038 19.5 firs m 29L00 $5694.00 W0 ✓ subtotal: 815450 .00 815450 .00 .00 .00 8154.50 Customor Copy a Oil Well Service Co. INVOICE 0XL1VkLT- SpAf%1X � Co� 1241 East Burnett' Signal Hill, CA 90755 562 - 595 -4501 Fax: 562-424-8026 E -Mail: matt@ows1 corn OIL WELL SERVICE IS AN EMPLOYEE OWNED COMPANY 1 CITY OF NEWPORT BRACII lo%rolce No. 00013345 A71N: VnL. DEPT Our Job No. 38 -L-0103 949 W. HIM STREET. We" CND El l AGREILNIENTIAG14279 avo ayu 6362163625 NEWPORT BEACII CA 926M Your customer code Is CITW9 Your total due Is 1SS95.00 02IZ5109 0023 nr30 ON13345 _'' >� RIG R03S 34.5 Firs ® I33.00 $4586.50 CIRC. PUNS POs 2.0 DAYS 1050.00 $2100.00 O/r SURCHARGE R038 1.S Hrs ® 135.00 $20250 POWER SWIVEL R038 1.0 DAY 900.00 $900.00 }MAN CREW R038 37.0 firs ® 292.00 SIOSO4.00 Subtotal: ISS95.00 .00 16595.00 .00 .00 .00 18595.00 Customer Copy A Oil Well Service Co. INVOICE vkyy sIgIEW CAL 1241 East Burnett Signal Hill, CA 90755 562 -595 -4501 Fax: 562-424-8026 E -Mail: matt@owsl.com OIL WELL SERVICE /SAN EMPLOYEE OWNED COMPANY CITY OF NEWPORT BEACH Invoice No. 00013322 ATTN: UTIL, DEPT Our Job No. 38- L-0103 949 W. 16M STREET. well# CNP All AGREEMENT AAG14279 sv Rpt# 63612 -63622 NEWPORT BEACH CA 92653 R038 Your customer code is CTT589 - Your total due is 52395.00 i,.i. 1 CHIC. PUMP P08 6.0 DAYS 1050.00 $6300.00 POWER SWIVEL R038 3.0 DAYS 900.00 $2700.00 3-MAN CREW R038 94.5 Hrs * 320.00 $30240.00 O/T SURCHARGE R038 1.0 Hrs ® 135.00 $135.00 Oil Well Service Co. V�yy, r co 1241 East Burnett , Signal Hill, CA 90755 562- 595 -4501 Fax: 562-424-8026 E -Mail: matt @ows1.00m 02 WELL SERVICE IS AN EMPLOYEE OWNED COMPANY CITY OF NEWPORT BEACH ATTN: UTH,. DEPT 949 W. 1611T STREET. AGAEF*CM # AGIC79 NEWPORT BEACH CA 92653 Your customer code is CITS89 C. PUMP SURCHARGE kN CREW 7717771 m 7 Invoice No. 00013425 Our Job No. 38 -L-0111 Well# CNB#11 i(A� �'•, Svc Rpt# 6506865074 Your tool due is 3550 R038 68.0 Jim ® 133.00 P023 4.0 DAYS 1200.00 R038 1.5 Hrs ® 135.00 R038 74.5 Hrs ® 292.00 INVOICE 1 $4800.00 $202.50 $21754.00 Oil Well Service Co. _ ._ ._,. WVOICE ga,lvkyy SNM 1241 East Burnett ' Signal Hill, CA 90755 562-595-4501 Fax: 562 - 4248026 E -Mail: matt@ows 1 -corn OIL WELL SERVICE IS AN EMPLOYEE OWNED COMPANY •:1 Ir ' NEWPORT BEACH CrrY O�RT A Invoice No. 00013539 ATTN. TT1.. DEPT Our Job No. 949 W. STREET. Wen# #11 AGREEMENT d AGIC79 Svc Rptd NEWPORT BEACH CA 92653 Your customer code is C1T589 Your total doe is 11567.81 0312&09 0104 nl30 00013539 AUSBURN OIL WELL CEMENTING 1.0 $11567.81 Subtotal: 11567.81 .00 11567.81 .00 .00 .00 11567.81 Customer Copy ---- Oil Well Service Co. INVOICE OI yy � CA 1241 East Burnett Signal Hill, CA 90755 562 - 595 -4501 Fax: 562-424-8026 E -Mail: matt@ows1.com ox WELL SERwcE is AN EMPLOYEE OWNED COMPANY h WPORT BEACH Invoke No. 00013540 UM. DEPT Our Job No. STREET. weal{ r10 d AG14279 Rw BEACH CA 92653 L9AGREUEM3W r code is CTT589 Your total due is 2782.56 03126/09 0105 0130 00013540 ,.. j AUSBURN OIL WELL CEMENTING 1.0 2782.56 $2782.56 Subtotal : 2782.56 .00 2782.56 .00 .00 .00 2782.56 Customer Copy 0 f CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT APP, 14 IQ Agenda Item No. 11 April 14, 2009 74 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Utilities Department Ed Burt, Utilities Operations Manager, 949 - 718 -3432 or eburt(ftity.newport- beach.ca.us SUBJECT: EMERGENCY REPAIR OF OIL PRODUCTION WELL NUMBER 11 RECOMMENDATION: Approve the Letter Agreement with Oil Well Service Co. for emergency repair services to repair Oil Production Well No. 11. DISCUSSION: The City owns 15 oil wells that annually produce over 31,000 barrels of oil that are currently selling for $41.50 per barrel. This production generates average annual revenue in excess of $1,500,000, which goes into the Tidelands fund. All of the wells were drilled in the 1950s. Like the other wells, Well No. 11 is located on West Coast Highway and has a steel casing that extends straight down 1,100 feet and then makes a 450 turn and runs out under the ocean to end at 3,272' in length (Exhibit A). The well currently produces approximately 20 barrels of oil per day. On December 20, 2008 during routine maintenance and inspection of Oil Well No. 11 by the oil field contract operator (Sampson Oil Company), the well's pump was found to be clogged and the well was not operating. Sampson ordered a repair rig from Oil Well Service Company (OWSC), the City's on -call well repair contractor. OWSC was authorized to proceed with well repairs on an emergency basis in order to minimize downtime and loss of revenue. It should be noted that there are relatively few responsible and responsive oil repair firms remaining in Southern California, and they are busy, hence delays in response time — as occurred in this case — are common. OWSC arrived on -site on January 15, 2009 to initiate repairs. An initial assessment was made that determined that, in addition to broken tubing and rods in the well casing, there was approximately 100 feet of sand covering the top of the pump at approximately 3,180 feet deep. The sand and shale were cleaned out, and the problem was diagnosed as a hole in the casing. Subsequently, a mortar mixture was pumped into Emergency Repairs toil Production Well No. 11 April 14, 2009 Page 2 the casing to plug the hole and provide some structural support to the steel pipe which had degraded. The well was tested and another sand leak hole was discovered. On January 30"', mortar was again pumped into the well, equipment was reinstalled and the well was tested and put back into production on February 5"'. Unfortunately, after 10 days, the pump again clogged and production stopped. At this time it was determined that the casing had cracked and that about 200' of steel had perforated. Two metal (lead) liners were fabricated and installed and ultimately resolved the problem. On March 11th, the well was put back into production and continues to operate properly to -date. A diagram showing the location of the repairs is also shown in Exhibit A. The total cost to repair Well No. 11 was $191,757.93, however, this exceeds funds available in the oil field maintenance and repair budget. The action being requested today for Oil Well Services Company will authorize payment of their $129,295.37 invoice and will be funded through the Capital Improvement Fund; the balance of $62,462.56 (equipment and materials) will be paid through the maintenance and repair account. The value of the lost oil production during this 75-day period was approximately $53,000; oil prices were near historic lows for about half of this period. The damages to the Oil Production Program may be covered by our pollution liability policy and our insurance broker is reviewing the facts of the incident to determine if any coverage is available for the loss. Environmental Review: There is no environmental impact. Funding Availability: For this emergency repair there are sufficient funds available in the Capital Improvement Fund account to cover these costs associated with this emergency repair: Account Description Oil Field Improvement Program Prepared by: U-- Ed Burt, Operkions Manger Account Number Amount 7231- C5400053 $129,295.37 Submitted by: e e M och, Lftffities Director Attachments: Exhibit A — diagram of Oil Production Well No. 11 BAN MEW • 0 Legend ® Suction Pump — Soil Oil Line "I► Flow Direction City of Newport Beach Utilities Department Well #11 0 400 800 1500 Feet w ft c- oV xwe 0 LETTER AGREEMENT WITH OIL WELL SERVICE CO. FOR EMERGENCY REPAIR SERVICES FOR OIL WELL NO. 11 This Letter ant for Emergency Repair Services for Oil Well No. 11 is - entered into as of this 14h day of April, 2008, by and between the CITY! OF NEWPORT REACH, a municipal corporation, (hereinafter reterred to as "City') and OIL WELL SERVICE CO.; a Caiifomla Coffin, .whose address is 1241 Ott St.. Signal Fill, CA 90755 ("Contractor"), and is made with reference to the following: RECITALS A. On November 270', 2007, CITY and CONTRACTOR entered into an On -Call Professional Services Agreemard, hereinafter referred to as "On -Call Agreement," for Oil Well repair Services. The proves of which are fully incorporated herein by this reference. t3. City and Confctor entered into several amendments to extend the term of the Agreement, the.most recent. Amendment No. 3. was approved•by City Council on March 20 2069. The provisions of which are fully Incorporated herein by this reference. D. On December 20, 2008 during routine maintenance for Oil Well No. 11, it was discovered that the OR Well was not operating Property and required immediate shut-off. Emergency services were necessary to bring the OR Well back on -line. E. The emergency repair work for Oil Well No. 11 set forth fees in excess of Thirty Thousand Dollars and No Cents ($30,000.00) and requires a. separate Agreement in accordance with Council Policy F -14 and Section 4.0 of the Agreement. F. City and Contractor mutually desire to enter Into this Leiter Agreement, hereinafter referred to as "Emergency Services Letter Agreement," as provided here below. NOW, THEREFORE, the parries hereto agree as follows: TERM The term of this Agreement shall commence on the above written date, and shall terminate upon payment of final invoice by City for emergency repairs to Oil Well No. 11 or by April 30, 2009, whichever occurs first. 2. SCOPERF WORK • Contractor shall perform everything required to be performed, and shall provide and furnish all the labor, materials, necessary tools, expendable equipment and all utility and transportation services necessary for the emergency repair services pursuant to this Emergency Services Leiter Agreement and according to the On- Call Services Agreement dated November 27, 2009, and all amendements thereth, the most recent amendment, Amendment No. 3, approved by City Council on March 24, 2009. 3. COMPENSATION TO CONTRACTOR Attached hereto as Exhibit A are the final invoices for all emergency work required to bring Otf Well No. 11 on -lire. The total cost for all services, materials, labor and reimburawlAe expenses is One Hundred TWvm* Nine ThOusarud Two Hundred and Nintey Five Dollars and 371100 ($129;295.37). 4. PREVAILING WAGES Pursuant to the applicable provisions of the Labor Code of the State of California, not less than the general prevailing rate of per diem wages urAK lrug leg l holidays and overtime work for each craft or type of workman needed to execute the work contemplated under the Agreement shall be paid to all workmen employed on the work to be done according to the Agreement by the Contractor and any subcontractor. In accordance with the Caffonnia. Labor Code (Sections 1770 at $eq.). the Director of Industrial Relations has ascertained the general prevailing rat% of Per diem wages in the locality in which the work is to be performed for each Craft, Classification*, or type of workman or mechanic needed to execute the Agreement. A copy of said determination is available by calling the prevailing wage hotline number (415) 743.4774, and requesting one from the Department of Industrial Relations. The Contractor is required to obtain the wage determinations from the Department of Industriat Relations and post at the job site the prevailing rate or per diem wages. It shaft be the obkgation of the Contractor or any subcontractor under hirrr/her to comply with all State of California tabor laws, rules and regulations and the parties agree that the City shall not be liable for any violation thereof. 5. ADDITIONAL TERMS AND COVENANTS Except as expressly modified herein, all other provisions, terms, and covenants set forth in the On -Call Agreement shall remain unchanged and shall be in full force and effect. Page 12 0 0 IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3 on the date first above written. APPROVED AS TO FORM: OFFICE OF CITY ATTORNEY ATTEST. By: Leilani I, Brown, City Clerk Attachment: Exhibit A — Invoices for services CITY OF NEWPORT BEACH A Municipal Corporation By: Edward Selich, mayor for the City of Newport Beach OIL WELL SERVICE CO: By a ° = 114 Print Name: By: (FrnancfafOffroer) Print Name: Pap {.S t Oil Well Service GA V, ®ma y t 1241 East Erumett ' Signal Hill, CA 90755 562 - 595 -4501 Fax- 662-42"026 E -Mail: matt@owst.com OA WELL SERVICE IS AN EMPLOV0 OWNED COMPANY LAGRU0dZaIAG14279 9 EwpoRTBEACK loveloe Na. 00013W E..MWr ourJobm.3 4AI08 rs'iRm. Wdw 1m/i1 s FIPtA BM(S EA 97.653 ,,'�ti w due h 8mS m Some 20-00 INVOR I - costswer owk t, cars» tew due is.19mof INVOR 1 C. PUMP On Well Service Co. w ir. r 1241 East Burnett Signal Hill, CA 90755 1.5 Iris a WAO 137.0 582 - 595 -4ffi01 Fax: 562-424-8026 VER � E -Mail: mett@owsi.00m OIL MU S6TV/CEI6ANMftO19F0WMM COMPANY SA00 OLN CRKW CrrY OF NEWPORT BEACH UM— 0292.00 lnvalm Ho. 00013345 ATTAi 1%1 L DBPT Oar Job No. 39 -"103 949 W. 161sT STPMT. I wdw Cm #11 l�IAG14M :&W arc# 63693-63625 O WPORT BEACH CA 92653 costswer owk t, cars» tew due is.19mof INVOR 1 C. PUMP POO 2,0 DAIS 1450A0 S7I0D RM 1.5 Iris a WAO 137.0 VER � RM 1.0 DAY 9000 SA00 OLN CRKW R038 UM— 0292.00 $10804 Customer Cnnv as . Oil Well Service doo yy .r 1241 East Bumett C. PUd+4P Signal Hill, CA 90755 6.0 DAYS iQ:S0.00 563oa 562- 595 -4501 Fax: 562-424-8026 8438 IRM E -Mail: matt@owsl.com AN CREW OIL WELL 36: ME IS AN EMMOYM OWNER COMPANY %.5 IIss 0 30010 534249 SURCHARGE CnY OF NNWPDRTMCH hwok6 No. 00013322 ATM. UTM DEff oar Job No. 384:4103 90 W.16HT'STRIMr. WdW CNP111 AGRERMEICIAD14M ow spts 63612-63622 NSWPORT'BRACH CA 92653 Yow toil doe is 52395.00 INVOR 1 customer copy R008 R4.A )1K ® Tasav s�vse. C. PUd+4P POg 6.0 DAYS iQ:S0.00 563oa VER SWTVEL 8438 IRM 3.0 DAYS 900:00 52100 1 AN CREW R438 %.5 IIss 0 30010 534249 SURCHARGE 1.0 un 0 13510 5135 customer copy Oil Well Service Co. sj`jw 1241 East Burnett Signal Hill, CA 90755 562-595-4501 Fax: 562-424-8026 E-Mail: matt0owsl.corn OIL MU SMVICE IS AN EARLOVW O%UW COMPANY Crry OF14EWPORT BEACH ATIN; Emor. Dzpr 949 W. 16Hr &7vjwr. &CWJ=mmNr#Aw4m NEWPORT MACH CA 9260 cuswmw CO& b Crrm C. PUAW SURCMEAWN Uf CREW to No. 00134M Feb No. 35-1.-0111 F CNB III W 650664W4 CoW dw Is 3" 4.0 DAYS IMAO 1.5 HmO 13680 KS Him 0 292.00 INVO11 q (M Welt Servke Co. • 9241 East Burnett SWW HM, CA 90755 662 -€96 -4501 Fax: 562-424-8026 E-mail: eott @ovwsl.com . cowiM� 2 WVOtCE t r� s> SubtaW, 11SG/.81 o 0il'Weff Serviae Co. INVOICE 1,241 East Burnett Slant W, CA 90766 f4LI) 40 Wj ` '• 562- 6-4W1 Faye: 502-424 -8026 E- ma: c wneowssi xm CA IWU SMWAW JV AN SMOM OMM COAWAMY {�myM�o(.� VWldW e�- \a 278256