City of Lacey eyes new production well to meet water rights target

The City of Lacey is gearing up for a new production well project in order to meet a state-mandated water rights development goal.

The project supports the city’s S06 water rights and must be finished by 2030 to retain the Washington State Department of Ecology’s full authorization. 

The well would serve as the production source required under water right permit G2-27373(A). The permit authorizes the city to withdraw 600 gallons per minute and 967 acre-feet per year. 

The Lacey City Council awarded a drilling contract to Holt Services Inc. for $1,001,122.20 at a meeting on Tuesday, Nov. 18.  

Holt Services Inc. submitted the only bid, which came in higher than the engineer’s estimate of $864,929.65. 

Project scope

City of Lacey Utility Engineer Gagan Brar briefed the council on the project and explained why it is necessary. 

He said the Department of Ecology issued a superseding permit for the S06 water right in 2011, and that action reset the timeline for completing required development steps. 

The city’s existing S06 well, Brar shared, had produced declining yields, and a 2012 attempt to drill a new well did not meet the required production level. Following that attempt, the city applied for an extension while studying other options to protect its water rights. 

Brar said the city then began evaluating undeveloped parcels within the quarter-quarter section required under the permit. The Grays parcel at 5012 21st Ave. SE was the only property that met the geographic boundary. At the time, it was owned by Herberta L. Gray. 

To examine the targeted site, the city negotiated an easement in 2023 that allowed staff to conduct groundwater work on the property. 

Brar said groundwater exploration was conducted in 2024. It confirmed the parcel could support a production-scale well. The process included exploratory drilling and the installation of monitoring wells, which verified potential production zones in both shallow and deep aquifer layers. 

He said the results showed that either zone could supply the pumping volume required under permit G2-27373(A). 

Based on those findings, the city moved forward and purchased the property in May. Brar informed the council that acquiring the parcel was the only viable option for meeting the S06 development requirements. 

During the discussion, Mayor Andy Ryder asked whether the city had completed exploratory drilling before acquiring the parcel. 

Brar explained the city installed two monitoring wells during its earlier site evaluation with both indicating multiple zones capable of producing water. He said only a production well can establish enduring performance and determine the final depth. 

In terms of well development, Brar said the project would use a cable-tool drill rig. He regarded cable-tool drilling as the preferred approach for large municipal wells because it offers precise control during drilling. 

The method helps identify accurate production zones and allows staff to assess soil conditions in both shallow and deep aquifers. 

The project includes two possible well design completion depths. A shallow option places the well screen between 255 and 300 feet. A deeper option places it between 400 and 500 feet. The final depth would be selected based on soil conditions encountered during drilling and on a hydrogeologist’s recommendations. 

Concerns

Ryder then raised concerns about receiving only one bid. He said it is uncommon for the council to see a contract of this size draw only one response and noted limited competition places the city in a difficult position.  

“I don’t remember a time where we’ve only received one bidder,” said Ryder, adding the situation left the city “at a considerable disadvantage” because it was unclear “if it’s the true low bidder out there or not.” 

Brar said two factors contributed to the lack of competition.  

“So, the first reason … we’re still in the inflationary market conditions,” said Brar, adding cable-tool drilling is “highly specialized.” 

He also emphasized that “two of the three major cable-tool drilling companies retired.” He said Holt acquired the equipment from one of those firms, while another new driller purchased the second set but “didn’t have enough experience to drill large-scale municipal wells.” 

Council member Robin Vasquez asked if the contract required urgent action.  

Brar said the contract is time sensitive and explained the city needs to meet the 2030 deadline under the S06 permit. He said staff are now in communication with the Department of Ecology and hopes the agency recognizes the city’s progress. 

Construction timeline 

The contract provides 120 working days with construction scheduled to begin in March 2026 based on the contractor’s availability. 

The city targets Oct. 31, 2026, as the anticipated end date for drilling and related field activities. 

After the drilling, the city would proceed into subsequent phases of the S06 program. Brar said those phases may include construction of a well house or treatment facility, depending on groundwater quality test results. 

The project is funded through the 2025 Water Capital Fund in the city’s 2025 budget.