TITLE
Recommendation to approve an amendment to the Crude Oil Pricing Provision of the Long Beach Unit Contractors’ Agreement to include the posted oil prices in the Midway-Sunset oil field and remove the posted oil prices in the Huntington Beach, Long Beach (Signal Hill), and Inglewood oil fields. (Citywide)
DISCUSSION
The Long Beach Unit consists of two offshore tracts (Tract 1 and Tract 2) and over 90 onshore town lot tracts. Tract 1 is the largest tract in the Unit and consists of tide and submerged lands granted by the Legislature to the City of Long Beach subject to the public trust. Tract 1 is operated pursuant to the Long Beach Unit Contractors' Agreement authorized by Chapter 138 of the Statutes of 1964, First Extraordinary Session.
A provision of the Contractors' Agreement governs the calculation of the value of the oil. The initial oil price valuations are based on posted prices and are determined as the higher of the average of posted prices in the Wilmington oil field, or the average of posted prices in the Wilmington, Huntington Beach, Long Beach (Signal Hill), and Inglewood oil fields (named fields). After the City obtains data on prices paid by purchasers of oil in the named fields, the City calculates the average of the oil prices paid for these purchases in the Wilmington oil field and in all of the four named fields. The City and the State then adjust the initial oil valuation into the higher of either the average of prices for purchases of oil in the Wilmington oil field or in the named fields.
Since the mid-1960s, the amount of production in the four fields from which valuation data are to be used has decreased and the number of companies posting prices in these fields has decreased. Because of this situation, an amendment changing the existing Contractors' Agreement is needed. The first change will involve the inclusion of the posted prices for the Midway-Sunset oil field in Kern County. Because the Midway-Sunset oil field is a large fi...
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