Interior Department awards $12.6M contract for Alaska oil field remediation to Olgoonik Oilfield Services

Contract Overview

Contract Amount: $12,633,501 ($12.6M)

Contractor: Olgoonik Oilfield Services, LLC

Awarding Agency: Department of the Interior

Start Date: 2024-01-10

End Date: 2026-02-27

Contract Duration: 779 days

Daily Burn Rate: $16.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: PLUGGING AND ABANDONMENT (P&A) OF KNIFEBLADE #1, #2 AND #2A WITH REMEDIATION OF THE SURROUNDING AREA.

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99503

State: Alaska Government Spending

Plain-Language Summary

Department of the Interior obligated $12.6 million to OLGOONIK OILFIELD SERVICES, LLC for work described as: PLUGGING AND ABANDONMENT (P&A) OF KNIFEBLADE #1, #2 AND #2A WITH REMEDIATION OF THE SURROUNDING AREA. Key points: 1. Contract focuses on plugging and abandonment of oil wells and site remediation. 2. The award is a delivery order under a larger contract, indicating potential for future work. 3. Fixed-price contract type suggests cost certainty for the government. 4. The project is located in Alaska, a region with significant environmental considerations for oil and gas operations. 5. The contractor, Olgoonik Oilfield Services, LLC, is likely a key player in the Alaskan oilfield services sector.

Value Assessment

Rating: fair

The contract value of $12.6 million for plugging and abandonment with remediation appears to be within a reasonable range for such specialized environmental services in Alaska. Benchmarking against similar projects is difficult without more specific details on the scope of work, such as the number of wells, depth, and complexity of remediation required. However, the firm fixed-price nature of the contract provides a degree of cost control for the government, assuming the scope is well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This suggests that while the competition was intended to be broad, specific criteria or circumstances led to the exclusion of some potential bidders. The exact reasons for exclusion are not detailed, but it implies a more limited pool of qualified offerors than a truly full and open competition. The number of bidders is not specified, which hinders a full assessment of price discovery.

Taxpayer Impact: The limited competition may have resulted in less aggressive pricing than if all qualified sources were able to bid. Taxpayers may have paid a premium if the excluded sources could have offered competitive pricing.

Public Impact

The primary beneficiaries are the Department of the Interior and the Bureau of Land Management, fulfilling their mandate for environmental stewardship of federal lands. The services delivered include the critical environmental tasks of plugging and abandoning oil wells and remediating the surrounding area. The geographic impact is specific to the Knifeblade oil field in Alaska, addressing legacy environmental issues. This contract supports specialized jobs in the oilfield services and environmental remediation sectors within Alaska.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the scope of remediation is more complex than initially assessed.
Dependence on a single contractor for a critical environmental task.
Limited competition could lead to higher prices than a fully open bid process.

Positive Signals

Firm fixed-price contract provides cost certainty.
Contractor is likely experienced in the specific operational environment of Alaska.
Addresses a critical environmental compliance and safety requirement for the agency.

Sector Analysis

This contract falls within the Oil and Gas Support Services sector, specifically focusing on post-operational activities like well plugging and site remediation. The market for these services in Alaska is specialized due to the unique environmental challenges and regulatory landscape. Comparable spending benchmarks are difficult to establish without detailed project specifics, but large-scale environmental remediation projects can be substantial investments.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem for this specific award is likely minimal unless the prime contractor actively engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight will likely be managed by the Bureau of Land Management contracting officers and technical representatives. Accountability measures are inherent in the firm fixed-price contract, requiring the contractor to complete the work to specifications. Transparency is facilitated by the federal contract award database, but detailed project progress and specific remediation outcomes may not be publicly available.

Related Government Programs

Bureau of Land Management Environmental Remediation Contracts
Alaska Oil and Gas Infrastructure Decommissioning
Federal Oil Well Plugging and Abandonment Programs
Support Activities for Oil and Gas Operations Contracts

Risk Flags

Limited competition may impact price competitiveness.
Scope definition for remediation is critical for cost control.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $12.6 million to OLGOONIK OILFIELD SERVICES, LLC. PLUGGING AND ABANDONMENT (P&A) OF KNIFEBLADE #1, #2 AND #2A WITH REMEDIATION OF THE SURROUNDING AREA.

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 $12.6 million.

What is the period of performance?

Start: 2024-01-10. End: 2026-02-27.

What is the track record of Olgoonik Oilfield Services, LLC with the Department of the Interior and similar agencies?

Olgoonik Oilfield Services, LLC has a history of receiving contracts from federal agencies, particularly within Alaska. While specific details on their track record with the Department of the Interior for plugging and abandonment services require deeper database analysis, their presence in the Alaskan oilfield services market suggests experience. Examining past performance evaluations and contract completion history would provide a clearer picture of their reliability, quality of work, and adherence to schedules and budgets on similar projects. A review of their contract history would reveal if they have successfully managed projects of comparable scope and complexity, particularly those involving environmental remediation in challenging Arctic conditions.

How does the $12.6 million award compare to the typical cost of plugging and abandonment projects of this nature?

The $12.6 million award for plugging and abandonment with remediation is a significant sum, reflecting the specialized nature and potential complexities of such work in Alaska. Without detailed project specifications (e.g., number of wells, depth, geological conditions, specific remediation needs), a direct cost comparison is challenging. However, plugging and abandoning oil wells, especially older ones or those in remote or environmentally sensitive areas, can be extremely costly due to specialized equipment, personnel, and environmental compliance requirements. The firm fixed-price nature of this contract suggests the government has a defined budget, but the actual cost-effectiveness depends heavily on the thoroughness of the initial scope definition and the contractor's ability to execute efficiently within that scope.

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

Key risks include potential underestimation of the scope of environmental remediation required, leading to cost overruns or incomplete cleanup. Unforeseen geological conditions or equipment failures could also delay the project and increase costs. Environmental risks, such as spills during operations, are another concern. Mitigation strategies likely involve detailed site assessments prior to contract finalization, robust contract language defining responsibilities and performance standards, and close oversight by the Bureau of Land Management. The firm fixed-price structure incentivizes the contractor to manage costs, but contingency planning and clear communication channels are crucial for addressing unexpected issues.

What is the historical spending pattern for plugging and abandonment services by the Bureau of Land Management in Alaska?

Historical spending patterns for plugging and abandonment (P&A) services by the Bureau of Land Management (BLM) in Alaska are influenced by factors such as the number of orphaned or inactive wells, regulatory requirements, and available appropriations. The BLM manages numerous oil and gas leases, and a portion of its budget is dedicated to ensuring environmental compliance, including the P&A of wells that are no longer producing or have been abandoned. Spending can fluctuate year-to-year based on specific project needs and the prioritization of remediation efforts. Analyzing historical data would reveal trends in contract awards for P&A, the average contract values, and the types of contractors typically engaged. This specific $12.6 million award represents a substantial single investment, suggesting a significant remediation effort is underway.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply for the procurement process and potential savings?

This designation indicates a procurement process that initially aimed for broad competition but ultimately excluded certain sources. The reasons for exclusion are not specified but could range from specific technical requirements, past performance issues with certain contractors, or unique capabilities needed. While it's a form of competition, it's less competitive than 'full and open' without exclusions. This limited competition might reduce the number of bids received, potentially leading to less downward pressure on pricing compared to a scenario where all capable firms could participate. The government may have justified the exclusion based on specific needs, but it raises questions about whether the most competitive pricing was achieved for the taxpayer.

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 BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Olgoonik Oilfield Services LLC

Address: 3201 C ST STE 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: $12,633,501

Exercised Options: $12,633,501

Current Obligation: $12,633,501

Actual Outlays: $12,633,501

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 140L0621D0011

IDV Type: IDC

Timeline