To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Mark Marlowe, P.E., Director of Castle Rock Water
Matt Benak, P.E., Water Resources Manager
Heather Justus, P.G., Water Resources Project Manager
Title
Resolution Approving the Amendment to the ASR and Downhole Pumping Equipment for Wells CR-232 and CR-233 Contract with Hydro Resources - Rocky Mountain Inc. for the Downhole Power Generation Pilot Agreement
Body
________________________________________________________________________________
Executive Summary
The purpose of this memorandum is to request Town Council’s approval of a Resolution (See Attachment A) approving an amendment to the Pumping Equipment Contract with Hydro Resources - Rocky Mountain Inc. (Hydro) to include the Downhole Power Generation Pilot Agreement (Pilot Agreement). The amendment clarifies Hydro’s responsibilities relative to the experimental Downhole Power Generation Equipment including replacement or removal of this equipment at no cost to the Town if it fails to perform as specified.
The pumping equipment contract was approved by Town Council 7 to 0 in Resolution No. 2020-029 on March 3, 2020. The original contract included the installation for the pumping equipment and the aquifer storage and recovery (ASR) and downhole power generation valve for wells CR-232 and CR-233 located at the Ray Waterman Water Treatment Plant (RWWTP). Attachment B is a map of the well locations. The construction including drilling, completion and testing of the wells was covered under a construction contract approved under Resolution Number 2019-130. The facility design contract was awarded to PSI, Inc. and was approved by the Town Manager on March 10, 2020. The facility design is 90% complete and will be sent out for bids for construction of the facility in late October. The project did experience a six-month delay to determine the potential financial impacts due to the COVID-19 pandemic; however, we have determined that the project can now move forward.
At the time of the contracting for the pumping equipment, staff and Hydro were not prepared to complete the terms and conditions for the Downhole Power Generation Piloting Test. In addition, CR Water staff and Hydro wanted to understand the Environmental Protection Agency (EPA) requirements and testing for the aquifer storage and recovery permit, which will be included in the pilot testing for the downhole valve. The amendment does not include a change in fees associated with Resolution No. 2020-029. The amendment also includes provisions in case of equipment failure. The Downhole Pilot Testing Agreement is included as Exhibit 1 to the Resolution.
Notification and Outreach Efforts
CR Water staff held an open house on February 20, 2020 at the Ray Waterman Water Treatment Plant (RWWTP) for residents to discuss the project. Notification postcards were sent out to residents near the well sites prior to commencing drilling activities. In addition, the project information is posted on the Town’s development Activity map as one of the Water Projects and is updated.
History of Past Town Council, Boards & Commissions, or Other Discussions
This item will be presented to the Castle Rock Water Commission on October 28, 2020.
Resolution 2020-029 was approved by Town Council on March 3, 2020; 7 for and 0 against.
Resolution 2020-029 was presented to CR Water Commission on February 26, 2020 and it was voted unanimously (5-0) to recommend approval to Town Council.
Resolution 2019-130 was approved by Town Council on December 17, 2019; 6 for and 0 against.
Resolution 2019-130 was presented to CR Water Commission on December 11, 2019 and was unanimously recommended for Council approval of the resolution.
Discussion
Hydro proposed a collaborative effort with Castle Rock Water to pilot test their new ASR downhole power generation valve. In 2018, Hydro invited CR Water Staff to Colorado State University (CSU) to witness some of the benchmark testing they were working on. Since then Hydro has been developing improvements to the design of the valve and the variable frequency drive. At this time, Staff is proposing to collaborate with Hydro and their team on pilot testing their proprietary ASR downhole power generation valve. To our knowledge, this type of pilot project is novel and Hydro has advanced the technologies to a point that it is time to move the testing outside of bench marking and laboratory to a real world application. In participating in the pilot program, Castle Rock would become a leader in advancing a new renewable energy technology in the attempt to prove the technology beyond bench testing and the theoretical. In the white paper provided by Hydro, Dr. Sale of CSU theorizes the following: “Using the results..., the following solution and example calculation is advanced for estimating power generation from a flow rate (Q) and total dynamic head (TDH) data. The result suggests that a single ASR well, equipped with the study pump, with a flow of 500 gpm, and a TDH of 1000 feet, would generate 48 kW of electrical power, enough electrical power for approximately 50 homes.” At this time, power generation only occurs during ASR operations of the wells. CR Water will also work with IREA using their net metering program.
A key piece to the project fell into place in late September with the approval of the EPA Final ASR Permit. The permit is a well field permit which allows us to add new wells and water sources as we grow and diversify our system. With the variability of the WISE deliveries, this storage option is important.
CR Water staff, consultants, and contractors completed an initial meeting with IREA to discuss the net metering program with them and what additional power items would be needed at the project site.
The Pilot Agreement includes the scope of the testing with a more detailed defined scope to follow. A maintenance and operation plan is included that includes provisions for equipment failures due to the valve which will be replaced at the cost of Hydro. The initial term is for three years with the option to renew for an additional one-year term. A performance requirement is also defined with pre-defined terms for success and a pre-defined scope of work in case of failure that will be completed at the expense of Hydro. The agreement also allows for either party to terminate with 90 days’ notice.
Budget Impact
The amendment does not add additional costs to the original contract approved under Resolution 2020-029. However, CR Water staff wanted to update Town Council on the current project status.
Additional background on the total estimated cost of the project is provided in the table below.
|
Consultant/ Contractor |
Duties |
Proposed Budget^ or Staff Estimated Budget* |
|
Leonard Rice Engineers, Inc. |
Design of wells and oversight of drilling |
$108,306.58^ |
|
Hydro Resources, Rocky Mountain Inc. |
Drilling, completion and testing of wells |
$2,931,416^ |
|
Hydro Resources, Rocky Mountain Inc. |
Pumping equipment installation |
$2,293,335^ |
|
Facility Design Consultant |
Design well facility |
$151,940^ |
|
Facility Contractor |
Construction of the facility and yard piping |
$1,100,000* |
|
Leonard Rice Engineers, Inc. |
ASR, power generation, reporting and oversight |
$35,000* |
|
Estimated Total Cost |
|
$6,619,997.58* |
^ = Proposed Budget
* = Staff Estimated Budget
The construction contract for drilling, completion and testing of the wells is expected to come in at approximately $400,000 under budget.
Town Council approved the Water Service Intergovernmental Agreement (IGA) with Dominion Water and Sanitation District (Dominion) on September 20, 2016 for shared use of infrastructure. As part of the Water Service IGA, Dominion reimbursed the Town for all costs associated with the design and construction of the Founders Well Facility infrastructure and will pay the costs associated with the ASR equipment for the two wells CR-232 and CR-233 as part of the Infrastructure Fee.
Staff Recommendation
Staff recommends Town Council’s approval of the Amendment Agreement to the Pumping Equipment Construction Contract between the Town of Castle Rock and Hydro Resources - Rocky Mountain, Inc. for the Downhole Power Generation Pilot Agreement.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Downhole Power Generation Pilot Agreement
Attachment B: Location Map