HomeMy WebLinkAboutAppropriation for the Repair of Civic Center Oil Well CC #1Council/Agency Meeting Held: 02-19--02.
Deferred/Continued to:
Approved ❑ Conditio
Council Meeting Date:
Approved
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February 19, 2002
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INd- City Cle 's Signature
Department ID Number:
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY:
PREPARED BY:
SUBJECT:
RAY SILVER, City Administrator aW
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MICHAEL P. DOLDER, Fire Chief/Information Systems Director
APPROVE APPROPRIATION FOR THE REPAIR OF CIVIC CENTER
OIL WELL CC #1
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: Should the City authorize an expenditure from the unreserved,
undesignated General Fund to replace the funds expended for the major repair of Civic
Center Oil Well CC #1?
Fundinq Source: An appropriation of $48,000 from the undesignated, unappropriated fund
balance of the General Fund to. the Fire Department PetroChem Oil Well Maintenance
account (10065302.67500) is recommended to fund repair of Civic Center Oil Well CC #1.
The Fiscal Impact Statement is attached (Attachment 1).
Recommended Action: MOTION TO: Approve and authorize the appropriation of $48,000
from the undesignated, unappropriated fund balance of the General Fund and transfer to the
Fire Department's FY 2000/01 PetroChem Oil Well Maintenance account (10065302.67500).
Alternative Action(s): Do not appropriate the funds and suspend oil production from this
site when current fiscal year budget funds for routine maintenance are exhausted.
Analysis: Civic Center Oil Well CC #1 became nonproductive due to wear and excessive
corrosion from long-term exposure to salt water, resulting in well casing perforations at 2,300
feet below the surface. These perforations allowed excess sand and rock to enter the well
bore preventing oil removal. Because the current price of oil ($13/barrel) provides a $5 per
barrel profit, and the repairs were feasible, the well was repaired in twelve (12) working days
and is back in production. Repairs included a sophisticated casing patch, a significant
amount of new pumping equipment and pump, and sand removal operations.
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REQUEST FOR COUNCIL ACTIN
MEETING DATE: February 19, 2002 DEPARTMENT ID NUMBER: FD 02-002
Analysis: (continued)
The Fiscal Year 2001/02 Budget did not include money for the major repair of Civic Center
Oil Well CC #1. The only money allocated in the budget was for routine maintenance for all
three wells located on Civic Center property. The actual cost of repairs to CC # 1 was
$48,000. After repair, daily production increased to 15 barrels per day, which is two barrels,
or 12%, above previous production. At the current price for oil, $13 per barrel, revenues
generated by this well will repay the additional appropriation of $48,000 within 21 months.
Additionally, CC #1 is the major gas source for the City's new co -generation project. Repair
and production from this well is essential to provide sufficient gas volume to operate the
microturbines for the project.
New Appropriation Criteria: In March 1998, the City Council adopted three criteria to follow
in requesting a new appropriation: 1) It is an unanticipated emergency, 2) It is required to
implement labor negotiations, or 3) It is a new expense that is offset by related new
revenues. This request primarily falls under Criteria 3 with new oil revenues offsetting the
repair costs. The repairs could also be considered an unanticipated emergency (Criteria 1)
in that failure to complete the repair would have increased subsequent repair costs and oil
revenues from Civic Center Oil Well CC #1 would cease. That would be an annual revenue
loss of $27,000 at today's price ($13/barrel).
Environmental Status: Not applicable.
Attachment(s):
RCA Author: Greaves/Justen/Burney/Dolder
FD02 002 Repair Civic Center Oil Well CC1.doc -2- 2/5/02 6:30 PM
ATTACHMENT 1
�CITY OF HUNTINGTON BEACH
INTERDEPARTMENTAL COMMUNICA TION
To: Ray Silver, City Administrator
From: Clay Martin, Director of Administrative Services
Subject: FIS 2002-06 Approve Appropriation for the Repair of Civic
Center Oil Well
Date: February 4, 2002
As required by Resolution 4832, this Fiscal Impact Statement has
been prepared for "Approve Appropriation for the Repair of Civic
Center Oil Well ".
If the City Council approves this request (total appropriation $48,000),
the unappropriated fund balance of the General Fund at September
30, 2002 will be reduced to $10,603,000.
Clay Ma
Di rector
of Administrative Services
Fund Balance - General Fund Adopted Budget Current Estimate
Beginning Fund Balance 10/1/20001
$ 12,000,000
$ 12,000,000
Plus: Estimated Revenue
133,633,000
132,170,000
Less: Estimated Expenditures
(134,813,000)
(133,519,000)
Pending/Approved FIS's:
-
less fis 2002-06
(48,000)
Estimated 9/30/2001 Unreserved Balance
$ 10,820,000
$ 10,603,000
RCA ROUTING SHEET
INITIATING DEPARTMENT:
FIRE
SUBJECT:
APPROVE APPROPRIATION FOR THE REPAIR OF CIVIC
CENTER OIL WELL CC #1
COUNCIL MEETING DATE:
February 19, 2002
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Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
I Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorney)
Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the City Attorney)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Attached
Bonds (If applicable)
Not Applicable
Staff Report (if applicable)
Not Applicable
Commission, Board or Committee Report (if applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
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FORWARDED:. A PPLK
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Administrative Staff
Assistant City Administrator (Initial)
City Administrator (Initial)
City Clerk
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EXPLANATION F0 ,, :',p- �'_'Q.F
RCA Author: Greaves/Justen/Burney/Dolder