TITLE
Recommendation to authorize City Manager to execute any and all documents necessary for a West Wilmington Optimized Waterflood Program Agreement between the California State Lands Commission, City of Long Beach, and Tidelands Oil Production Company to promote further oil exploration and production. (District 1)
DISCUSSION
The Department of long Beach Gas and Oil (lBGO) has finalized negotiations with Tidelands Oil Production Company (Tidelands OPC) and the State lands Commission (SlC) on an Optimized Waterflood Program Agreement (OWPA) for the West Wilmington oil field. The OWPA would provide Tidelands OPC with financial incentive to invest tens of millions of dollars of its own capital for further oil explorations and development in the field. The exploration will result in increased oil production above the volume that would otherwise be produced without this OWPA.
The OWPA will require amending the long Beach Harbor Tidelands Parcel and Parcel "A" Oil Contract. The general business terms of the OWPA agreement are as follows:
· Within 90 days of executing the OWPA, Tidelands OPC will initiate a comprehensive technical evaluation to identify potential development opportunities.
· The minimum new investment by Tidelands OPC will be $50 million, which must be initiated once the local price of oil has been sustained at a level of $65 per barrel for six consecutive months after signing, but investment by Tidelands OPC can be (and most likely will be) initiated well before the pricing threshold is achieved.
· The split of incremental revenues will be 49 percent (SLC), 49 percent (Tideland OPC), 2 percent (City). The City’s revenue will be allocated to the Tidelands Fund.
This matter was reviewed by Deputy City Attorney Richard Anthony on May 17, 2012.
TIMING CONSIDERATIONS
City Council Action is requested on May 22, 2012 as the OWPA is on the agenda for the California State Lands Commission meeting on May 24, 2012.
FISCAL IMPACT
Revenue from t...
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