A contractor hired by Eureka to install the main line for its new wastewater system walked off the job last week, citing an impasse with the city over how to proceed in conditions the company says are nearly impossible. And now the company, Portland-based Apex Directional Drilling, says it is considering suing to recover its costs.

Apex was working on a section of the Martin Slough Interceptor, a multiphase, $7 million-plus project jointly funded by the city and the Humboldt Community Services District. The interceptor, which has been planned for decades, is intended to streamline the path of wastewater to the city's Elk River Wastewater Treatment Plant on Humboldt Bay, reducing energy use and costs and, more to the point, the frequency of sanitary sewer overflows and stinky emissions of hydrogen sulfide gas that have long plagued the current system. The project involves getting rid of 16 decrepit sewer lift stations and old clay pipes and diverting waste into an increased-capacity system of modern plastic pipes and one modern lift station.

Apex's job was to drill a hole under Pine Hill, near the Eureka Municipal Golf Course, and place pipe that would connect to other sections of the new system. The company bid $3.6 million for the job. Apex president, Mike Lachner, says Apex planned to do the job in 12 to 15 weeks, and expected the first task — drilling a pilot bore hole along the entire 4,300-foot section — to take two to three weeks. Instead, he says, it took more than three problem-riddled months to drill the bore hole.

"We started shortly after Labor Day, in September, and we didn't achieve pilot until Jan. 11," Lachner says.

The problem, Apex alleges, is the ground through which the hole had to be drilled is mostly wet, sloppy sand and not the relatively stable sands, clays, organics, gravels and silts of the Hookton Formation promised by the project description. It's hard to drill through, Lachner says.

"At 600 feet in, we're still seeing sand," he says. "We kept going, thinking, 'We're going to get into the Hookton soon.'"

Lachner allows they should have quit earlier. Instead they tried adjusting the drill path and changing to lighter tooling, and eventually got through. Meanwhile, he says, Apex kept telling the city the troubles it was having with the drilling, and sent the city's engineering contractor who designed the project, SHN Consulting Engineers & Geologists of Eureka, daily soil analysis reports which, Lachner says, showed the sandy nature of the drill path. The city, he says, kept disagreeing with that assessment and saying to continue. Lachner alleges that SHN only did one soil test hole to verify the formation, and it was an eighth of a mile from the drill site.

Once the bore hole was completed, Lachner says, Apex stopped work and asked the city to revise the plan before the company proceeded with reaming the hole out larger so Apex could feed in the pipe. Among Apex' concerns were a 40-degree bend designed into the drill path that Apex feared, given the sand, would be eroded greatly when the reamer, or later the pipe, was being fed through the hole, creating excess material to remove and possibly causing the hole to collapse before the pipe was all the way through. Apex also wanted to put steel casing around the exit, to further fend off collapse, and it wanted a straight "laydown" path at the exit of the hole where it could pull its drill steel out. Apex also asked the city to split the millions in overrun costs already incurred.

"We've had countless meetings since Jan. 11," Lachner says. "I mean, we had bags of sand on the conference table at one point."

A couple of weeks into the negotiations, Lachner says, the city agreed to reinforcing the hole at the exit end. But by then, Lachner says, Apex's 12-inch-diameter drill steel had become stuck in the hole, which had collapsed on it.

On March 20, Lachner sent a letter to the city's public works director and city engineers proposing how to get the steel unstuck, and then how to proceed with the project. First, Apex would rent a 1.3 million-pound hammer and employ two massive tow trucks to coax the steel out of the ground. If that didn't work, Apex would insert a steel casing around the steel and try to blast the sand out from around the steel with water. If that failed, the steel was stuck and the job over. If it worked, Apex would work around the clock reaming the hole in stages. The letter said there was a 50 percent chance the reaming process would fail. If it didn't, they'd pull the pipe through. But there was "significant risk" it would get stuck at the bend, or even break.

Apex estimated, all things working out, the work could take another couple of months and asked the city to agree to pay the company on a time-and-materials basis going forward, canceling the fixed-fee part of the contract.

If the project failed, Apex wanted the city to hold it free of obligations and liability, and Apex would do the same for the city.

According to a statement from Jeff Nelson, president of SHN, the city sent a March 25 letter to Apex disagreeing with its claims about a "change of soil conditions" and saying it was terminating Apex's "control over the project work."

The SHN statement says that, because of potential litigation, SHN would not discuss the issue further. It does, however, call Apex's information in a press release last week "inaccurate and misleading."

The city of Eureka is also saying very little. City Engineer Charles Roecklein said by phone Monday that clearly the city and Apex "have a difference of opinion."

When asked if the city had seen the almost daily soil analysis reports that Apex says it sent SHN during the drilling process, Roecklein said, "We have not seen anything to back up their claim that there's a change in soil condition."

Apex, meanwhile, won't release copies of any of those soil analysis reports to the Journal, saying it wants to be cautious about releasing anything that might compromise a possible legal case. There's no claim filed, yet, but Apex has retained Eureka attorney John Lopez, who last week said only that "Apex is considering all of its options."

Roecklein says he was surprised that Apex walked away from the project.

"We worked very hard trying to come up with a reasonable way forward with Apex," he says. "We wanted them to finish the job. We were encouraging them to. But we weren't able to get anywhere with them, and that stalled the project. Now I'm focused on moving ahead and getting the job done."

He says the city has identified another contractor to possibly pick up the project where Apex left off, but declined to offer a name. Apex' steel, meanwhile, which Lachner says is worth $137,000, remains stuck in the ground. Lachner says whoever comes along after them can use it.