TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary for an Amended and Restated Oil and Gas Lease between the City of Long Beach and Beach Oil, LLC, for the continued operation and reworking of wells at an existing City-owned lease site in Recreation Park; and
Accept Categorical Exemption CE-19-214. (District 3)
DISCUSSION
Beach Oil, LLC (Beach Oil), is the current lessee under an oil and gas lease dated September 6, 1962, covering minerals below Recreation Park (as amended, the Existing Lease). The Existing Lease established a drilling site in Recreation Park where seven wells have been drilled along with associated processing facilities. The seventh and last well drilled at the location was in 1979. Since then, the well production has declined due to minimal investment and enhancement to the wells.
Under the current Existing Lease, the City is a partial royalty owner and working interest owner. As a partial working interest owner, the City shares responsibility with Beach Oil for investment and operating costs. This includes a share of future abandonment costs of the drill site once the wells are no longer economical. As a royalty owner, the City is entitled to its share of revenues derived from production. Net revenues derived from these operations are deposited into the Uplands Oil Fund and made available for General Fund purposes. Over the last ten years, total estimated net revenues to the Uplands Oil Fund has been around $4,000,000. However, due to declined well production, projected revenues under the Existing Lease are anticipated to decrease to $900,000 over the next ten years.
The proposed amendment will remove the City’s position as a working interest owner. In turn, the City will no longer be responsible for any portion of the operating and investment expenses related to the operations, which includes future abandonment and remediation costs required at the end of field life. Beach Oil has co...
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