Alaska Methane Hydrate Project

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION (JOFOC)
U.S. Department of Energy
National Energy Technology Laboratory
Alaska Methane Hydrate Project
89243321CFE000064

I recommend that negotiations be conducted only with ASRC Consulting and Environmental Services (ACES) for the
supplies or services described herein:

1. Identification of the agency and the contracting activity, and specific identification of the document as a “Justification
for Other than Full and Open Competition.”
The National Energy Technology Laboratory (NETL) seeks expansion of a contract modification on a sole source basis to
ASRC Environmental and Consulting Services (ACES) (a subsidiary of ASRC Energy Services Alaska, Inc. (AES
Alaska)), for continued services related to the Alaska Methane Hydrate Project, an international research and
development collaboration between Japan Oil, Gas and Metals National Corporation (JOGMEC) and the U.S. Department
of Energy – National Energy Technology Laboratory (NETL). The project is being implemented via two separate
contracts. JOGMEC and NETL split the work and services between the two contracts as follows: (1) a competitive action
awarded by JOGMEC that resulted in an award to AES Alaska (contract between JOGMEC and AES); and (2) a
previously established and approved sole source award issued by NETL to ACES subsidiary ASRC Consulting and
Environmental Services (ACES) to cover the NETL portion of work (contract between NETL and AES). The JOGMEC
and AES contract was the result of a solicitation issued by JOGMEC following Japanese laws and regulations as well as
Federal Acquisition Regulations (FAR).
NETL now seeks expansion of the prior sole source authorization with ACES to support costs in excess of previous
contract value resulting from overruns in planning, drilling, coring, surface facility installation and commissioning phases
of the contract as well as projected additional cost to extend the duration of planned production and post-production
activities through September 2024.
ASRC Consulting and Environmental Services (ACES) provides the necessary skilled personnel, facilities, equipment,
materials, supplies, and services to support NETL in its overall objectives of the Alaska Methane Hydrate Project. The
project is to produce methane gas by disassociation during a long-term production test (target of 9 months of production
operations to be followed by 3 months of post production reservoir monitoring), thereby acquiring reservoir and
production data and gaining further understanding of the technical and operational issues that affect, or potentially
interrupt, stable production. Implementation of assigned basic, applied, and technology development based energy
research.
Project is expected to run for up to five years and will remain within this five year period even with the extended
production and post-production periods sought herein.

2. The nature and/or description of the action being approved, i.e. sole source, limited competition, establishment of a new
source, etc. NETL requests approval of this Justification For Other than Full and Open Competition (JOFOC) to authorize additional
funding to support: 1) costs in excess of current contract budget for the original planned project period and 2) an extension
of planned activity duration under the sole source contract for continued services needed in support of the NETL elements
of the Alaska Methane Hydrate Project. Due to the complexity of all prior stages of the overall project activity (planning,
drilling, coring, surface facility construction and commissioning) substantial delays and associated increases in cost were
experienced in fully completing activities and finalizing all preparation necessary to enable the production testing stage of
operations. In addition to increased cost during these periods, this also resulted in the reduction of time available for the
production related activities (the scientific core objective of the project) from an original plan of 12+ months to under 4
months within the previously planned schedule which had production activities ceasing by end of December 2023. In
order to to enable completion of critical scientific objectives of the overall project, additional time in production and post
production monitoring are needed and as such an extension of the production period through 6/30/2024 and post
production monitoring through 9/30/2024 is necessary. This sole source action is requested to provide the additional
funding required to support cost increases experienced as part of originally planned contractual activity and cost required
to support this additional production phase duration. The required expertise encompasses high level scientific and engineering disciplines as well as project management and subcontracting and regulatory compliance appropriate for conducting scientific field testing of methane hydrate production within the Prudhoe Bay Unit of the Alaska North Slope. Prior to original project award, a competitive action was issued by JOGMEC with notice that the NETL portion of the scope would be issued in a follow on sole source action to the selected contractor from the JOGMEC competition. This action was done with consideration of the FAR and public notices of the intent to award a sole source negotatiated action to the selected vendor from the JOGMEC solicitation. The JOGMEC solicitation was created with FAR requirements considered and included in the document. NETL issued a Request for Information (RFI) prior to the JOGMEC solicitation to determine interested parties and to notify all interested parties of the intent to follow the JOGMEC award with a sole source action to the same operator once FAR requirements have been met. In addition, preliminary costs associated with the NETL portion were received and evaluated during the JOGMEC competition.
As determined by the State of Alaska, only one operator is authorized to be permitted to drill and operate the wells at this
location for this purpose. In addition, the working owners group (who is leased the property by the state of Alaska) will
also only allow for one operator to perform these functions. AES – ACES has been fully authorized by both the State of
Alaska and the working owner’s group to serve officially inthis role.

3. A description of the supplies or services required to meet the agency’s needs.
The overall objective of the project is to produce methane gas by disassociation during a long-term production test (target
of 9 months of production operations to be followed by 3 months of post production reservoir monitoring)), thereby
acquiring reservoir and production data and gaining further understanding of the technical and operational issues that
affect or potentially interrupt stable production. During the project extension sought to achieve these targeted production /
post production testing durations, activity would continue to be performed in the below (previously established) work
categories (these work categories include the entire project effort – both the JOGMEC and NETL portions of work) with
focus during the extension period on production and post production operations, deconstruction, plug and abandonment of
wellsand site reclamation: Completed activities Review and provide comments on Implementation Plan. Develop Overall Plan, Drilling Plan, Surface Production Test Facilities Plan, Procurement Plan, Operation Plan for Production Facilities, Data Acquisition Plan, and Post Flow-Test Activities Plan. Initiate permits, bonding, and related requirements. Issue purchase orders for critical, longest-lead equipment for the Surface Production Test Facility. Set aside funds for drilling of Production Test Well (PTW-1).
Drill and acquire data from Geo Data Well (GDW), complete GDW, drill and complete PTW-1 and PTW-2. Finalize
contract for Surface Production Test Facility, fabricate and ship modules, construct the surface facility, and commission
all elements of the facility to be ready for operation including all rework / modifications necessary to rectify issues
identified within commissioning such that all surface facility elements are able to meet their defined need within
operational plans for the production phase of testing. Obtain permits as needed, verify permit compliance, compile permit
records and renew permits as required throughout the project period. Conduct data acquisition before the production test.
Establish contracts for water and solids disposal. Startup, detailed shakedown and system revision / modification as
necessary to enable safe and effective operation of production facility and wells. Ongoing activities
Continue operating production facility and wells through completion of test. Perform well intervention(s) as necessary to
assure effective operations (coordinated with JOGMEC). Dispose of produced water and solids through either evaporation
of produced water, hauling and disposal of produced water at approved disposal locations within the Prudhoe Bay
Operating Unit or some combination of these methods as needed to effectively handle the volume of water and solids
produced during production operations. Conduct detailed and continuous data acquisition from wells and all relevant
locations within the surface facility during and after production testing. Deconstruct surface production facility. Plug and
abandon all four wells (STW (already drilled in prior contracts), GDW, PTW-1, and PTW-2), and complete site
restoration and clearance as required to meet all applicable state and federal requirements and to enable formal handover
of well operator status from ACES back to the designated PBU operator.

4. The statutory authority permitting other than full and open competition.
The authority permitting other than full and open competition is 41 U.S.C. 3304(a)(1), the property or services needed by
the executive agency are available from only one responsible source and no other type of property or services will satisfy
the needs of the executive agency.

5. A statement demonstrating the unique qualifications of the proposed contractor or the nature of the action requiring the
use of the authority. Project is an international research and development collaboration between JOGMEC and NETL. The project is currently being implemented based on two separate contracts, one with JOGMEC and the other with NETL. JOGMEC maintains a
contract with AES and NETL with AES Subsidiary ACES.
NETL now seeks sole source authorization to provide funding in support of costs in excess of previous NETL-ACES
contract value resulting from increases in actual costs for planning, drilling, coring, surface facility installation and
commissioning phases of the contract as well as projected additional cost to extend the duration of planned production and
post-production activities through September 2024.
As determined by the State of Alaska, only one operator is authorized to be permitted to drill and operate the wells at this
location for this purpose. In addition, the working owners group (who is leased the property by the state of Alaska) will
also only allow for one operator to perform these functions. Given that activities to date have been fully and completely
conducted by AES-ACES as the authorized operator for the test by the State of Alaska and through agreement with the
Prudhoe Bay Working Interest Owners group, it is not reasonable to consider any other entity to take over these in place
operations during the extended production / post-production period currently being sought.

6. A description of efforts to ensure that offers were solicited from as many potential sources as is practicable. Include
whether or not a FedBizOpps announcement was made and what response, if any, was received, and include the exception
under FAR 5.202 when not synopsizing. Describe whether any additional or similar requirements are anticipated in the
future. (This may not be included as an addendum, but must be in the body of the JOFOC.) The original proposal
received from the JOGMEC solicitation and the FAR terms and conditions that were provided in a boiler plate document
for the follow on NETL contract. The NETL contract was previously synopsized in sufficient detail to comply with the
requirements of 5.207 with respect to the current proposed contract action.
The current proposed contract action (expansion of prior sole source authorization for contract between NETL and ACES)
is based on ACES documentation of current increases in cost for activities within original planned operational duration
and a preliminary government estimate of cost for activities to take place during the planned production and postproduction
activities sought through September 2024. A revised formal estimate of cost from AES-ACES (for activities
during extension of production and post-production activities through September 2024) has been requested and will be
used in the formal contract modification for this action.

7. Cite the anticipated dollar value of the proposed acquisition including options if applicable and a determination by the
Contracting Officer that the anticipated cost to the Government will be fair and reasonable.
NETL estimates revised costs for the awarded NETL-ACES contract (inclusive of prior contract value as well as
increases in cost for activities within original planned operational duration and projected cost for extended production /
post-production operations through September 2024) activities to be approximately $58.7 million which is an increase of
approximately $9.8 million over the current contract value . ACES has currently provided documentation of current
increases in cost for activities within original planned operational duration. ACES has provided costs through end of
December of $2,322.095.00 A revised formal estimate of cost from ACES has been requested and will be used in the
formal contract modification for this action to perform continued services past December 2023. The Contracting Officer
will determine the revised award price to be fair and reasonable upon execution.

8. A description of the market research conducted and the results or a statement of the reason market research was not
conducted. Do not simply refer to the sources sought synopsis.
In support of the original sole source award between NETL and ACES (of which the current action would be an extension
/ expansion) to following was undertaken: JOGMEC issued a competitive RFP and selected AES Alaska as the winning
offeror. Market analysis was done by NETL in the form of a RFI resulting in two interested parties both of which
proposed on the JOGMEC competitive action.

9. Any other facts supporting the use of other than full and open competition, such as:
a. Explanation of why technical data packages, specifications, engineering descriptions, statements of work or purchase
descriptions suitable for full and open competition have not been developed or are not available.
b. When FAR Subpart 6.302-2 is cited for follow on acquisition as described in FAR 6.302-1(a)(2)(ii), an estimate of cost
to the Government that would be duplicated and how the estimate was derived.
c. When FAR 6.302-2 is cited, data, estimated cost, or other rationale as to the extent and nature of the harm to the
Government.
The intent of NETL placing a sole source award for its scope to the same entity selected by JOGMEC is to ensure that
both the JOGMEC Scope and the NETL Scope can be implemented in an efficient cohesive manner. The State of Alaska
and the Worker Owners Group who owns the lease for the land will only allow for one operator to perform these services
(the services cannot be divided between two drilling companies).

10. A listing of the sources, if any, that expressed a written interest in the acquisition.
Petrotechnical Resources of Alaska, LLC. and AES Alaska.

11. A statement of actions the agency may take to remove or overcome any barriers to competition if subsequent
acquisitions are anticipated. Subsequent acquisitions for these services will be conducted on a competitive basis based on agreements between parties through the existing CRADA agreements. Therefore, no further action is required to remove the barriers to competition.

Awarded contract 89243321CFE000064 to unknown vendor for unknown amount on 2021-08-04.