TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary to amend Contract No. 32869 between the City of Long Beach, Tidelands Oil Production Company, and Oil Operators, Inc., for the delivery and receipt of produced water, to extend the term for six years, maintain the provision to allow for automatic renewal for successive one-year periods, unless any party elects to terminate the contract within 30 days of its expiration, and adjust the produced water price. (Districts 1,2)
DISCUSSION
In 2001, the City of Long Beach (City), acting in its capacity as Unit Operator for Unit Agreements for Fault Block Units II, III, IV, and V Ranger Zone, as operator of certain non-unitized formations in the Wilmington Oil Field, and the Tidelands Oil Production Company (Contractor), the City’s oil field contractor, entered into a Produced Water Agreement (Agreement), with Oil Operations, Inc. (OOI), a private company operating in Long Beach and Signal Hill. The Agreement covered the terms of delivery of water produced by OOI as a normal by-product of its oil production operations. The City uses the water in its West Wilmington oil operations, which has an ongoing need for additional injection water.
City Council authorization is requested to execute the Third Amendment (Amendment) to the Agreement, Contract No. 32869, to extend the term for six years, and maintain the provision for automatic renewal for successive one-year periods, unless any party elects to terminate the Agreement within 30 days of its expiration. OOI plans to make significant capital improvements to its pipeline that delivers approximately 17,000 barrels of produced water per day to the City. The investment by OOI will increase the volumes of produced water delivered. In return, the City and its Contractor have agreed to collect revenue only on the first 17,000 barrels of water delivered per day at a rate of $0.027 per barrel. The rate charged will no longer be a...
Click here for full text