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Home My WebLink AboutREPAIR OF CIVIC CENTER OIL WELL CC#1 - APPROPRIATION OF $60,o4Sva.1 Council/Agency Meeting Held: Deferred/Continued to: &'A"pprove Conditionally Approved ❑ Denied �- C My Clerk's Signature Council eeting Date: 3/5/2007 Department ID Number: FD 07-004 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: PEN 7OPEC LBRETH-GRAPA, CITY ADMINISTRATOR PREPARED BY: DUANE OLSON, FIRE CHI SUBJECT: APPROVE APPROPRIATION FOR THE REPAIR OF CIVIC CENTER OIL WELL CC #1 Fstatement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: An additional appropriation is requested from the unreserved, undesignated General Fund for major repairs to Civic Center Oil Well CC #1. Funding Source: An appropriation of $60,000 from the undesignated, unappropriated fund balance of the General Fund to the Fire Department Fire Prevention business unit account (10065201.67500) is recommended. The Fiscal Impact Statement is attached (Attachment 1.) Recommended Action: Motion to: Approve and authorize the appropriation of $60,000 from the undesignated, unappropriated fund balance of the General Fund and transfer to the Fire Department's FY 2006/07 Fire Prevention Oil Well Maintenance account (10065201.67500). Alternative Action(s): Do not appropriate the requested funds, suspend oil production from this site when current fiscal year budget funds for routine maintenance are exhausted and incur the possibility of well failure. ZE-5 REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 3/5/2007 DEPARTMENT ID NUMBER: FD 07-004 Analysis: Civic Center Oil Well CC #1 is currently losing production due to sand build up at the base of the casing. The loss of production is indicated by the well pump controller operation and the physical gauging of the amount of oil produced. The current price of oil ($50/barrel) provides a $21 per barrel profit. Currently the loss of production is estimated at four (4) barrels per day, or $2,520 per month. Repairs would restore production and the associated revenue. At this rate, revenues generated by this well will repay the additional appropriation of $60,000 within 24 months. The repairs include removal and replacement of pumping rods, removal of excessive sand build up at the base of the well casing, rebuild of the pump, hydro -testing of the casing, rebuilding of the compressor and miscellaneous parts. The Fiscal Year 2006/07 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 estimated cost for repair of CC # 1 is $30,000. In addition, the oil well maintenance account has already been used to perform similar repairs to Civic Center Oil Well CC # 3. Repairs to this well were performed in January 2007 at a cost of approximately $30,000. These repairs increased the amount of oil produced by this well by three (3) barrels per day. 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 $30,000 at today's price of $50/barrel. Environmental Status: None. Attachment(s): -2- 2/16/2007 5:05 PM ATTACHMENT #1, CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION FINANCE DEPARTMENT TO: PENELOPE CULBRETH-GRAFT, DPA, CITY ADMINISTRATOR FROM: DAN T. VILLELLA, CPA, FINANCE DIRECTOR SUBJECT: FIS 2006-07-15 APPROVE APPROPRIATION FOR THE REPAIR OF CIVIC CENTER OIL WELL CC # 1 DATE: FEBRUARY 20, 2007 As required by Resolution 4832, this Fiscal Impact Statement has been prepared for " Approve Appropriation for the Repair of Civic Center Oil Well CC # 1" If the City Council approves this action (total appropriation $60,000), the current balance in the Second Tier Reserve for the General will be reduced to $4,985,000. Dan T. Villella Finance Director RCA ROUTING SHEET INITIATING DEPARTMENT: Fire Department SUBJECT: Approve Appropriation for the Repair of Civic Center Oil Well CC # 1 COUNCIL MEETING DATE: March 5, 2007 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable ❑ Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable ❑ Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable ❑ Contract/Agreement (w/exhibits if applicable) Attached ❑ (Signed in full by the City Attorney) Not Applicable ❑ Subleases, Third Party Agreements, etc. Attached ❑ Approved as to form by City Attome) Not Applicable ❑ Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Ap licable ❑ Fiscal Impact Statement (Unbudgeted, over $5,000) Attached Not Applicable ❑ Bonds (If applicable) Attached ❑❑ Not plicable Staff Report (If applicable) Attached ❑ NoA tl Applicable ❑ Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable ❑ Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable ❑ EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FOR A ED Administrative Staff ( ) Assistant City Administrator Initial City Administrator Initial City Clerk ( ) I EXPLANATION FOR RETURN OF ITEM: I RCA Author: Olson/Engberg/Justen