TITLE
Recommendation to approve the Modification and Supplement of the Long Beach Unit Annual Plan (July 1, 2015 through June 30, 2016). (Citywide)
DISCUSSION
In accordance with Chapter 138 of the Statutes of 1964, First Extraordinary Session, an Annual Plan of Development and Operations and Budget for the Long Beach Unit (LBU) must be adopted by the City of Long Beach and approved by the State Lands Commission (SLC).
Chapter 941, California Legislature, 1991 Sessions and amended Chapter 138 require the City and the Contractor, California Resources Corporation, Inc., to prepare a one-year Annual Plan, which includes an itemized budget of intended expenditures. The Annual Plan covering the period of July 1, 2015 through June 30, 2016 was adopted by the City of Long Beach on March 3, 2015 and approved by the SLC on April 23, 2015.
In accordance with the provision of Section 2.06 of the Optimized Waterflood Program Agreement (Agreement) and provisions of Part IV, Sections A and B of the Annual Plan, we are submitting the First Modification and Supplement of the Annual Plan covering the period of July 1, 2015 through June 30, 2016. The modification and the supplement are required to account for an increase in the Unit Field Labor and Administration category of the Annual Plan. The lower oil prices resulted in restructuring of the City’s Contractor and necessitated unforeseen pension payouts.
The Annual Plan’s overall expenses are below budget and the profit is expected to exceed the Plan despite the lower-than-anticipated oil prices. The Agreement dictates that no such expenditure shall be incurred that would result in any category of expenditures to exceed the budget. The requested supplement is wholly funded out of LBU operating profits.
This matter was reviewed by Deputy City Attorney Richard F. Anthony on May 4, 2016 and by Revenue Management Officer Julissa Jose-Murray on May 6, 2016.
TIMING CONSIDERATIONS
Chapter 941, California Legislature, 19...
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