Interior Department awards $17.3M contract for Alaska oil well plugging, aiming to mitigate environmental risks

Contract Overview

Contract Amount: $17,259,524 ($17.3M)

Contractor: Olgoonik Oilfield Services, LLC

Awarding Agency: Department of the Interior

Start Date: 2024-06-07

End Date: 2026-04-30

Contract Duration: 692 days

Daily Burn Rate: $24.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LEGACY WELLS - CAPE HALKETT AND FISH CREEK PLUGGING AND ABANDONMENT

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99503

State: Alaska Government Spending

Plain-Language Summary

Department of the Interior obligated $17.3 million to OLGOONIK OILFIELD SERVICES, LLC for work described as: LEGACY WELLS - CAPE HALKETT AND FISH CREEK PLUGGING AND ABANDONMENT Key points: 1. Contract focuses on environmental remediation and long-term safety of legacy oil and gas infrastructure. 2. Awarded to a single contractor, raising questions about competitive pricing and potential for cost overruns. 3. Performance period extends over 20 months, indicating a substantial scope of work. 4. Geographic focus on Alaska highlights the unique challenges and costs associated with remote operations. 5. Contract type is Firm Fixed Price, which shifts cost risk to the contractor but may inflate initial bids.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the specialized nature of oil and gas well plugging and abandonment, particularly in remote Alaskan locations. The firm fixed-price structure suggests an attempt to control costs, but without comparable recent contracts for similar scope and location, it's difficult to definitively assess if the $17.3 million represents excellent value. The number of bids received (2) is low, which could indicate either a lack of qualified contractors or a market where competition is naturally limited, potentially impacting price competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation was broad, specific reasons led to excluding certain sources before the final award. Only two bids were received, suggesting limited competition. This level of competition may not have driven the most aggressive pricing, as the contractor faced fewer alternatives.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the full price discovery that a more robust competition could have provided, potentially leading to a higher overall cost.

Public Impact

The primary beneficiaries are the environment and local communities in Alaska, through the mitigation of potential pollution from legacy wells. Services delivered include the plugging and abandonment of specific legacy wells at Cape Halkett and Fish Creek. Geographic impact is concentrated in the North Slope region of Alaska, an area with significant environmental sensitivity. The contract supports specialized labor in the oilfield services sector within Alaska.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) could lead to suboptimal pricing for taxpayers.
Remote Alaskan location presents logistical challenges that could increase costs and risks.
Firm Fixed Price contract may include contingency for unforeseen issues, potentially inflating the base price.

Positive Signals

Addresses environmental risks associated with legacy oil and gas infrastructure.
Firm Fixed Price contract shifts cost overrun risk to the contractor.
Focus on specific, identified legacy wells suggests a targeted remediation effort.

Sector Analysis

The oil and gas well plugging and abandonment sector is a critical component of the energy industry's environmental stewardship. This contract falls within the broader 'Support Activities for Oil and Gas Operations' category. The market for such services in remote and environmentally sensitive areas like Alaska is specialized, with a limited number of qualified contractors. Spending in this area is often driven by regulatory requirements and the need to decommission aging infrastructure, representing a necessary but often costly aspect of resource development.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the specialized nature of oilfield services, particularly in remote locations, it is possible that larger, more established firms dominate this market. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the scope of this award.

Oversight & Accountability

The Bureau of Land Management (BLM) is responsible for overseeing this contract. As a Delivery Order under a larger contract vehicle, oversight would likely involve monitoring contractor performance against the Statement of Work, ensuring compliance with environmental regulations, and verifying milestones. Transparency is generally maintained through federal contract databases, but detailed operational oversight specifics are not publicly available.

Related Government Programs

Bureau of Land Management Environmental Remediation Contracts
Alaska Oil and Gas Infrastructure Decommissioning
Federal Oil and Gas Lease Stipulations
Abandoned Well Plugging Programs

Risk Flags

Limited Competition
Remote Location Challenges
Environmental Remediation Scope

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $17.3 million to OLGOONIK OILFIELD SERVICES, LLC. LEGACY WELLS - CAPE HALKETT AND FISH CREEK PLUGGING AND ABANDONMENT

Who is the contractor on this award?

The obligated recipient is OLGOONIK OILFIELD SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Bureau of Land Management).

What is the total obligated amount?

The obligated amount is $17.3 million.

What is the period of performance?

Start: 2024-06-07. End: 2026-04-30.

What is the track record of Olgoonik Oilfield Services, LLC in performing similar well plugging and abandonment contracts for the federal government?

Olgoonik Oilfield Services, LLC has experience in oilfield services, including some aspects related to well maintenance and support. However, specific details on their track record with large-scale, federally-managed legacy well plugging and abandonment projects, particularly in the challenging Alaskan environment, require deeper investigation. Reviewing past performance evaluations, contract modifications, and any reported issues on previous government contracts would provide a clearer picture of their capabilities and reliability for this specific task. Without readily available detailed performance data for this exact service, assessing their suitability relies on broader industry reputation and any publicly accessible contract history.

How does the $17.3 million contract value compare to similar well plugging projects in Alaska or other remote regions?

Directly comparing the $17.3 million contract value is difficult without access to a database of comparable projects. Factors such as the number of wells, their condition, depth, location accessibility, and specific environmental challenges (e.g., permafrost, remote logistics) significantly influence costs. Legacy wells in remote Alaskan regions are generally more expensive to plug and abandon than those in more accessible areas due to logistical complexities, specialized equipment needs, and stringent environmental protocols. The fact that this is a firm-fixed-price contract for a substantial duration (692 days) suggests a significant scope. A more thorough benchmark analysis would involve identifying 2-3 other federal or state contracts for similar work in comparable environments and comparing their total values, durations, and the scope of work performed.

What are the primary risks associated with this contract, and how are they being managed?

The primary risks include logistical challenges due to the remote Alaskan location (transportation, weather delays, personnel access), potential for unforeseen subsurface conditions at the legacy wells (e.g., higher pressures, damaged casing), environmental risks (spills, groundwater contamination), and contractor performance issues. The firm-fixed-price structure transfers some cost risk to the contractor. The Bureau of Land Management's oversight, adherence to strict environmental and safety protocols, and potentially contingency planning within the contract scope are key management strategies. The limited competition also presents a risk of suboptimal pricing. The contract's duration allows for phased execution, potentially mitigating some scheduling risks.

What is the expected environmental impact of plugging and abandoning these legacy wells?

The primary environmental impact is positive: mitigating the risk of future leaks or contamination from aging, potentially compromised well infrastructure. Legacy wells, especially those no longer actively producing or monitored, can be sources of methane (a potent greenhouse gas) or other pollutants that could migrate into soil and groundwater. Plugging and abandonment involves sealing the wellbore securely to prevent such migration, thereby protecting local ecosystems, water resources, and reducing fugitive emissions. This action contributes to the reclamation of land previously impacted by oil and gas activities and fulfills regulatory requirements for well decommissioning.

What is the historical spending trend for well plugging and abandonment activities by the Bureau of Land Management in Alaska?

Analyzing historical spending trends for BLM's well plugging and abandonment in Alaska would require accessing multi-year budget and contract award data. Generally, federal spending in this area fluctuates based on available appropriations, the identification of new legacy sites, and regulatory priorities. The increasing focus on environmental remediation and orphaned well cleanup nationwide suggests a potential upward trend in such expenditures. Specific data for Alaska would reveal if this contract represents a significant increase or is in line with previous years' investments in addressing the state's oil and gas infrastructure legacy.

Given the 'Full and Open Competition After Exclusion of Sources' designation, what were the specific reasons for excluding other potential bidders?

The designation 'Full and Open Competition After Exclusion of Sources' implies that the initial solicitation was intended to be broadly competitive, but specific circumstances led to the exclusion of certain offerors before the final award decision. Common reasons for exclusion can include failure to meet minimum technical qualifications, non-compliance with submission requirements, or proposals deemed not to be in the government's best interest based on pre-defined criteria. Without the specific justification documentation (often found in contract award justifications or debriefing reports), it's impossible to know precisely why other potential bidders were excluded. This process aims to ensure that only qualified and compliant offerors remain in the competition pool.

Industry Classification

NAICS: Mining, Quarrying, and Oil and Gas Extraction › Support Activities for Mining › Support Activities for Oil and Gas Operations

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Olgoonik Oilfield Services LLC

Address: 3201 C ST. SUITE 700, ANCHORAGE, AK, 99503

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,259,524

Exercised Options: $17,259,524

Current Obligation: $17,259,524

Actual Outlays: $16,588,810

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 140L0624D0005

IDV Type: IDC

Timeline