TITLE
Recommendation to approve the Modification and Supplement of the Long Beach Unit Annual Plan (July 2012 through June 2013). (Citywide)
DISCUSSION
In accordance with Chapter 138, California Legislature, 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, amended Chapter 138 and requires the City and the Contractor, Occidental Long Beach, Inc., to prepare a one-year plan (Annual Plan), which includes an itemized budget of intended expenditures. The Annual Plan covering the period of July 1, 2012 through June 30, 2013 was adopted by the City of Long Beach on February 21, 2012 and approved by the SLC on March 29, 2012.
In accordance with the provision of Section 2.06 of the Optimized Waterflood Program 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, 2012 through June 30, 2013. The modification and the supplement are required to account for additional well-drilling activities to take advantage of the ongoing high oil price environment.
The Annual Plan is being modified to increase the number of wells drilled from 67 to 81 during the Plan period. The Annual Plan will also require a $29.4 million supplement because the additional drilling costs will exceed 120 percent of the budgeted amount in the Development Drilling Category. The requested supplement is wholly funded out of LBU operating profits and will increase the Development Drilling Category budget amount from $118.5 million to $147.9 million.
This matter was reviewed by Deputy City Attorney Richard Anthony on May 9, 2013 and by Budget Management Officer Victoria Bell on May 10, 2013.
TIMING CONSIDERATIONS
Chapter 941, California Legislature, 1991 Sessi...
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