TITLE
Recommendation to authorize City Manager to execute the Gas Sharing Agreement among the City of Long Beach, Oxy Long Beach, Inc., and the California State Lands Commission. (District 2)
DISCUSSION
The City of Long Beach (City), in its capacity as Unit Operator for the Long Beach Unit
(LBU), desires to enter into a gas sharing agreement with its field contractor, Oxy Long
Beach, Inc. (OLBI), and the California State Lands Commission (SLC) to explore and
develop new sources of natural gas under the Long Beach tidelands. The new sources of
natural gas are expected to come from: 1) the exploitation of the LBU shallow gas sands
(the shallow gas sands), and 2) a deep exploration program by OLBl to identify additional
reserves that may potentially exist under the LBU (the deep exploration). This agreement
is pursuant to Chapter 1, Statutes of 2001-2002 Second Extraordinary Session of the
California State Senate. The agreement does not supersede or amend any existing
contract or agreement related to the extraction of oil and gas in the LBU. The basic terms
of the negotiated agreement are as follows:
The City, through its Tidelands Operating Fund (TF401), shall receive a fixed
percentage of the SLC’s royalty share. The SLC’s royalty shall be variable
between 35 and 55 percent based upon the prevailing market price for gas (per
million BTU).
For the shallow gas sands, the City’s share of the SLC’s royalty shall be fixed at 15
percent. If there is a deep gas discovery, the City shall receive 8 percent of the
SLC’s royalty revenues from deep exploration.
No investment is required from the City or SLC. OLBl will be responsible for all
gas related drilling, development, and facilities capital investments.
If, instead of gas, a commercial oil discovery is made, then profit sharing between
the parties shall be dictated by existing contracts underlying the Agreement for
Implementation of an Optimized Waterflood Program.
OLBl will be responsible for future welllfacili...
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