Contract Subject:Water Pipeline Retrofit Project
Total Contract Price:$403.3 million
Project Location:Southern California
Owner:Fenner Gap Mutual Water Company

A massive but controversial water pipeline retrofit project in the American Southwest has moved one step closer to becoming operational.

An affiliate of Cadiz, a Los Angeles-based water infrastructure company, has signed a guaranteed maximum price construction contract for the Northern Pipeline retrofit project. According to a press release issued on July 28, this contract, along with other components, brings the project's total estimated cost to $403.3 million.

The project aims to convert a 220-mile natural gas pipeline into a water conveyance system, sourcing water from the Cadiz area in California's Mojave Desert and delivering it to Inland Empire communities in San Bernardino County. Cadiz stated that upon completion, it will be used for water conveyance.

According to a filing submitted to the U.S. Securities and Exchange Commission on July 27, Cadiz affiliate Fenner Gap Mutual Water Company has entered into construction management risk contracts with W.M. Lyles and Mike Bubalo Construction. Both contracts cover the design, procurement, and construction work for the Northern Pipeline project.

Among them, Fresno, California-based Lyles, which also serves as the project's construction manager, has a contract valued at $218.9 million for the construction of pumping station facilities. Baldwin Park, California-based Bubalo has been awarded a $54.9 million contract for pipeline replacement and related facility modifications to accommodate water conveyance.

The filing shows that Cadiz has also allocated $129.5 million for owner-purchased pumps, pipeline replacement, power generation equipment, necessary additional well field facilities, and general project contingency costs.

Mojave Groundwater Bank Project

The pipeline retrofit is a key component of Cadiz's Mojave Groundwater Bank Project. According to Native News Online, it is one of the largest new water supply and groundwater storage projects in the Colorado River Basin.

Cadiz says the project will provide an alternative conveyance route for water from its Cadiz Ranch property, supplying areas that currently rely on water imported from Northern California through the State Water Project. According to the SEC filing, the Northern Pipeline's potential total conveyance capacity is estimated at 25,000 acre-feet per year.

Cadiz CEO Susan Kennedy wrote in a May letter to shareholders that the company's approach helps meet Southern California's growing water demand in a more cost-effective manner. However, critics, including the environmental group Sierra Club, argue that the company's efforts could further strain an already overburdened groundwater system.

Despite opposition, the project has continued to gain momentum this year.

In February, the U.S. Environmental Protection Agency approved the Northern Pipeline project's application for up to $194 million in low-interest loans to cover capital costs under the Water Infrastructure Finance and Innovation Act. In July, the U.S. Bureau of Land Management approved the pipeline's right-of-way for operations on federally owned land.

In recent years, water projects have been a significant source of business for infrastructure construction firms, with related transaction volumes continuing to grow. Meanwhile, the Water Resources Development Act of 2026, currently before Congress, could provide more than $30 billion in federal funding to communities for critical water infrastructure projects.

Although Cadiz did not set a construction start schedule in its press release, the SEC filing indicates that the agreements are based on pricing and schedule assumptions for a notice to proceed issued in September 2026.