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 Waiving Formal Written Bidding Requirement on the Basis of Sole Source and Approving a Construction Contract with Hydro Resources - Rocky Mountain, Inc., for the Drilling of the East Plum Creek Open Space Wells [Open space north of Plum Creek Water Purification Facility]
Body
________________________________________________________________________________
Executive Summary
The purpose of this memorandum is to request Town Council’s approval of a Resolution (Attachment A) approving a construction agreement with Hydro Resources - Rocky Mountain, Inc. (Hydro) for the construction, including drilling, completion, and testing for Wells CR-234, CR-235, and CR-236 located in the East Plum Creek Open Space (EPC OS) north of the Plum Creek Water Purification Facility (PCWPF). The future location of the EPC OS Well Facility is shown in Attachment B. The drives and pumping equipment installation will be under a separate contract as staff needs to have the aquifer testing information to properly size the equipment that will be the most efficient at this well facility. The contract is for the construction of three new wells, one Arapahoe Aquifer well, one Denver Aquifer well and one Dawson Aquifer well that will supply raw water to either PCWPF or Meadows Water Treatment Plant (Meadows) and have the capability for aquifer storage and recovery (ASR). The wells will add new capacity from the existing Denver Basin Aquifers and have the ability to store excess supplies (when available).
Since there are limited well drilling services available currently in the area and a large amount of demand for their services, Castle Rock Water (CRW) staff met with Hydro, who has been working for the Town on other projects, to determine if their schedule could accommodate the drilling of the EPC OS wells starting Fall of 2022. Project commencement in Fall 2022 is critical to completing the wells in a timely manner so that they are available by Spring 2024. Many of the electrical items have long lead times. For example, the drives currently have a 52-week lead time. Through the bidding of previous drilling and rehabilitation projects, staff has determined that Hydro’s prices are competitive. Hydro has completed recent projects on budget and on schedule. Staff recommends approving a construction contract agreement based on the qualified proposal from Hydro Resources - Rocky Mountain, Inc. in the amount of $4,483,540.00. In addition, CRW staff request a 10% Town-managed contingency in the amount of $448,354.00 for a total authorization of $4,931,894.00. The Construction Agreement is included as Exhibit 1 to the Resolution. The pumping and ASR equipment packages will be under a separate contract with Hydro. The facility and infrastructure construction packages will be sent out to bid in the late Fall of 2022.
History of Past Town Council, Boards & Commissions, Or Other Discussion
This item was presented to Castle Rock Water Commission (CRWC) on September 28, 2022. The CRWC unanimously recommended Town Council approve the sole source contract with Hydro for drilling of the three wells for $4,483,540.
Discussion
Based on the Water Resources Supply and Demand Model, aging infrastructure, and the need for ASR near PCWPF, it is necessary to keep pace with meeting our customers’ water demands. With the variability of WISE deliveries, renewable water variability, and lower demands in the winter months, a storage option is needed when these supplies exceed demand. One of the solutions is ASR, which is the ability to store water in the aquifer and recover the water through pumping when needed. The design of an ASR well is slightly modified to take into consideration the water that will be delivered into the aquifer through the well which will cause the water level in the well to increase. The project will include the drilling, completion, and pump testing of one Arapahoe Aquifer well, one Denver Aquifer well and one Dawson Aquifer well. Staff anticipates that the Arapahoe Aquifer well will produce 250 to 300 gallons per minute (gpm), the Denver Aquifer well will produce 200 to 250 gpm, and the Dawson Aquifer well will produce 50 to 80 gpm or approximately a total of 0.72 to 0.90 million gallons per day (mgd).
Upon direction from Castle Rock Water leadership that we need to continue to move forward on this project, staff met with Hydro to determine schedule availability and timing. Based upon this meeting, previous bidding information, and the desire to drill the wells during the fall/winter months, staff determined that sole sourcing (see Attachment C) the drilling construction contract would be in the Town’s best interest. Hydro has the availability to begin construction as early as the end of October 2022. Staff worked with Leonard Rice Engineers, Inc. to prepare site-specific well designs based on the locations in the aquifers for each well and for ASR. In addition, the well specifications were updated and refined to reflect changes in designs and lessons learned from previous projects. These new design features include increased length in the conductor casing in the Arapahoe Aquifer well to help mediate the potential for lost circulation between the Denver and Arapahoe Aquifer boundary; added swabbing which is a technique used during the development of the well; and changed the cement method to the Haliburton Method for both the Denver and Arapahoe Aquifer wells to meet the United States Environmental Protection Agency (EPA) ASR mechanical integrity standards.
The new well design includes using stainless steel casing, maximizing the screen intervals below the static water table and using stainless steel drop pipe in the pumping equipment. For ASR, additional stainless steel casing needs to be added to the casing string to take into account the recharging of water into the well and raising the water level. Using stainless steel increases the longevity and efficiency of the wells. Over the last few well rehabilitation projects, through the pre-cleaning videos and the condition of the drop pipe, staff has noted increased corrosion on the casing and the drop pipes due to the introduction of oxygen into the wells. In addition to reducing corrosion, the growth of iron bacteria will slow down with the reduction of an iron source, which could potentially reduce the overall costs of future rehabilitation of the wells and will increase the life of the wells.
Hydro’s proposal addressed the full scope of work and alternative scope items, and staff believes the proposal amount to be of good value to the Town based on previous similar scopes of work. In addition, staff completed a detailed line item comparison of the items included in this scope of work and the actual costs for Wells CR-232 and CR-233. Staff expected an overall increase of 40% due to increases in construction and materials and engineering estimates. The actual increase averaged closer to 30%. The CR-232 and CR-233 drilling contract with Hydro was executed in 2019. When comparing the Denver construction and material indexes between September 2019 and September 2022, the increases are 16% and 29%, respectively. There have been steady and significant cost increases in fuel, steel, grout, filter pack, and labor due to the inflationary economy and continued delivery issues in the industry. LRE Water completed a cost comparison of the Hydro proposal to the bids a nearby water provider received in February /March 2022-time frame. The Hydro proposal is very similar to the two bids that were received with the exception of two line items: drilling and well screen assembly. The drilling line item per unit cost increase is due to the increase in delivered bulk diesel fuel since March from $3.35 to the current cost of $5.00 to $5.25 range, which is the primary driving factor of the cost increases for drilling programs. The drilling rigs use between 35 to 45 gallons per hour during operations and can advance 6 to 7 feet per hour. Once drilling starts, the operations continue 24 hours a day and 7 days a week until completed.
The increase in the per unit cost for the well screen assembly is due to the increase in steel costs. The suppliers stock of well screen assembly produced from lower rate stainless steel is exhausted and the new well screen assembly is produced from higher priced stainless steel. The stainless steel costs have doubled since January. In addition, the cost for welding has increased. While we are in a very favorable location of the aquifers, it also means that the Town wells will be deeper and require more welding per well. In the comparison, there were also a couple of line items that were less per unit cost. In addition, the added design elements were not included in previous well constructions completed by CRW. Hydro also explained that their pricing and cost structure remain the same for bidding programs and sole source opportunities and provided a recent publicly available bid tab as an example for comparison. Through sole sourcing we are better able to discuss and design better efficiencies in drilling programs to enhance the quality of the end product.
The well construction, which includes the drilling, completion, and testing for the wells is planned to start in the Fall of 2022 and is expected to continue through the end of February 2023. The drilling, completion, and development activities for the three wells will occur back to back with CR-234 drilling starting first. Once CR-234 is completed, then Hydro will mobilize to CR-235 and upon completion they will then mobilize to CR-236. Once drilling and construction of the wells is complete, the drilling rig will mobilize off-site and the pump rig will mobilize on-site to complete the pumping tests of the three wells. Pump testing for the wells will start in February with the installation of the new pumping equipment and controls to follow in a separate contract that is anticipated for Spring 2023. CRW staff is currently in the process of designing the facility which will combine the well supplies and deliver them to the treatment plants. We anticipate awarding the construction contract in the timeframe between March 2023 and April 2023. Staff anticipates overall completion of the project in April of 2024. In addition and most important related to sole sourcing this contract, staff plan to have the wells ready for emergency purposes for the 2023 demand season.
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 |
$210,703^ |
|
Hydro Resources, Rocky Mountain Inc. |
drilling, completion and testing of wells |
$4,483,540^ |
|
Hydro Resources, Rocky Mountain Inc. |
Pumping equipment installation |
$2,500,000* |
|
Facility Design Consultant |
Design well facility |
$172,000^ |
|
Facility Contractor |
Construction of the facility and yard piping |
$3,000,000* |
|
Estimated Total Cost |
|
$10,366,243* |
^ = Proposed Budget based on actual cost proposals
* = Staff Estimated Budget
Public Outreach
Notification letters will be sent to the residents and businesses near the well facility site prior to commencing drilling activities. In addition, the project information will be posted on the Town’s Development Activity map as one of the Water Projects.
Budget Impact
The funding for the construction contract will come from CIP Account 210-4275-442.75-39 (New Wells), which has a balance of $0. Staff had decided not to carry forward 2021 funds as an estimate, opting to budget when actual project costs were established. Therefore, a budget amendment will need to be completed for this project. The Town will use these capital funds in reserve for the construction, which includes drilling, completion, and testing of this project. The Hydro proposal fee is $4,483,540.00. Staff requests a Town-managed contingency in the amount of $448,354.00 for a total authorization of $4,931,894.00.
Project Amount Contingency Total Amount
210-4275-442.75-39 $4,483,540.00 $448,354.00 $4,931,894.00
New Wells
Staff Recommendation
Staff recommends Town Council’s approval of the construction agreement between the Town of Castle Rock and Hydro Resources - Rocky Mountain, Inc. for the drilling, completion, and testing for the construction of EPC OS Wells.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Alternative Motions
“I move to approve the resolution as introduced by title, with the following conditions: (list conditions).
“I move to continue this item to the Town Council meeting on _____ date to allow additional time to (list information needed).”
Attachments
Attachment A: Resolution
Exhibit 1: Construction Contract
Attachment B: Location Map
Attachment C: Sole Source