ANNUAL AND PROGRAM PLANS BRIEFING

C109Long Beach Unit

April 2015

Marina Voskanian, P.E.California State Lands Commission

Mineral Resources Management Division

Productive Limit

Banning

POLA

Productive Limit

OxyBelmont

Thums Long Beach Co.

Tidelands Oil Production Co.

Long Beach Unit

PRC 186-Belmont

Tidelands

Wilmington Oil Field

Wilmington Oil Field discovered in 1932

Field is divided into two main parts:• West Wilmington • East Wilmington (Long Beach

Unit)

LBU development began in 1965

Currently:• City of Long Beach, the

Operator

• Thums Long Beach Company, a subsidiary of California Resources Corporation, the Contractor

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Chapter 138

Provided for the formation of the Long Beach Unit (LBU)

City of Long Beach, trustee of the granted lands and the Unit Operator

State retains a financial interest and reviews the Annual Plan and Program Plan

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Optimized Waterflood Program Agreement

1991 - Chapter 941. Legislation authorizing profit sharing with City and Contractor

1992 - “Optimized Waterflood Program Agreement” (OWPA), implemented.

Incremental Profit Sharing:• 49% to Contactor • 42.5% to the State • 8.5% to the City

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Long Beach Unit55

Long Beach Tidelands

Long Beach Unit Statistics (2013/14)

DescriptionsLong Beach

Unit

Total Active Number of Wells 1,486

Average Daily Oil Production (Barrels) 24,848

State Share of Net Profit ($Million) 292.4

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Historical Revenue to State

Since its inception the LBU operations have yielded approximately $6 billion in net profits revenue to the State of California.

LBU Revenue:(FY 2013/14)

• State: $ 292 Million• CRC: $ 149 Million• City: $ 22

Million

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Every Other Year Review the 5-year Program Plan to ensure:

• It is consistent with good oil field practice • It is consistent with the Unit & Unit Operating Agreements• Does not involve significant safety or environmental risks

Every Year Review the coming year plan and budget for consistency with

the 5-year Program Plan Approve costs related to subsidence studies

Every 6-months Receive update on subsidence surveys

Long Beach Unit – Commission Actions

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Long Beach Unit Safety Audit 2012 – 2013

4 Islands + 3 Onshore Facilities

Urban Setting & Major Commercial Port

Safety Audits in 2002 & 2012• All Action Items resolved

• Safety Assessment of Management Programs also completed

• Safety Audit Report from 2012 available on website

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Safety Audit Observations

Human and Organizational Factor Improvements

• Safety and environmental programs are well established

• Operating procedures & Operations Manual are followed

• Responsible operating practices are utilized

• Employees exhibit plant ownership, teamwork, and

responsibility for the environment.

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Safety Audit Comparison2002 & 2012

Action Items in 2002:

• 198 Priority One Action Items

• 3197 Action Items identified

• All Action Items resolved

Action Items in 2012-13:

• 2 Priority One Items (98% improvement)

• 1506 total Action Items (53%

improvement)

• All Action Items quickly resolved

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CSLC Staff Involvement in LBU12

Participate in Monthly Engineering Committee Meetings

Reservoir Management Consultation, With the City & CRC

Analysis of Drilling Safeguards Involving Blowout Prevention Equipment Certification

Oil Spill Prevention Exercises

Onsite Inspector Presence in the Field

Conduct Safety and Oil Spill Prevention Audit

Subsidence Monitoring and Prevention

Monitor Production and Financial Information

Financial Audit

Long Beach Unit- Program Plan2015 through 2020

Budgeted expenditure during 5 years estimated $1,769.5 million

City projected Unit net income during 5 years at $304.1 million

City’s projected oil price varying from $45 to $60 per Barrel

Production forecasted varying from 21,900 to 18,700 BOPD

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Long Beach Unit - Annual PlanJuly 1, 2015 through June 30, 2016

Budgeted expenditure estimated $325.2 million

City projected Unit net income at $45.8 million

City’s projected oil price of $45 per Barrel

Production forecasted to average 21,856 BOPD

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Staff Recommendation

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Commission Staff has Reviewed Proposed Plans and Finds:

Program & Annual Plan Expenditures meet objectives of LBU &

OWPA

Program Plan is Consistent with Good Oilfield Practice

Program Plan is Consistent with OWPA, Unit Agreement, and Unit

Operating Agreement 

Annual Plan is Consistent with Program Plan

Contractor adheres to industry codes, State oil and gas safety and

environmental regulations

Commission staff recommends the Commission accept the Long Beach Unit July 1, 2015 – June 30, 2020 Program Plan and July 1, 2015 – June 30, 2016 Annual Plan as submitted

Long Beach UnitProgram Plan Review Process

Each Program Plan shall be submitted to SLC at least 100 days prior to expiration of the current Program Plan

SLC has a period of 45 days following submission to complete its review of the Program Plan

If SLC does not order any changes within 45 days, the Plan is deemed to be reviewed & accepted by SLC

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Facility Safety Audit Analysis 1818

On-site verification of Piping and Instrumentation Drawing (P&ID) accuracy

Assess condition of platform or facility and adequacy of maintenance

Check for compliance with other safety and environmental requirements

Determine serviceability of Tanks and Pressure Vessels

Check design of safety systems for compliance with MRMD regulations and

other codes

Use third party electrical contractor to validate design of electrical system

and assess condition

Verify oil spill prevention features and equipment are in use and check

response equipment

Evaluate Safety Management Practices

Provide report, action item list, and monitor resolution of action items

LBU Safety Audit Activities

Key Safety Audit Activities:

Comprehensive facility condition surveys at• Islands White, Chaffee, Grissom, Freeman• Pier J-2 Production Facility• Broadway Mitchell Gas Processing Facility• Onshore Well Areas and J-6 Tank Farm

• Design review and safety system analysis• Compliance check – regulations / rules / standards• Review modifications to the 50 year old facilities

Human Factors Activities:• Safety Management Programs and practices• Assessment of Safety Culture

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LBU Financial Performance Largest Source of Income to CSLC

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*Administrative Overhead Revenue to CRC and City of Long Beach not included

Field Development

Oil production peaked at 148,495 barrels per day in August 1969 before beginning a rapid decline.

During 1982 to 1986, a redevelopment program was undertaken.

In 1990, ARCO Long Beach, Inc. (ALBI: Contactor for the City), approached the City and State with a proposal to fund and implement a program to optimize waterflood operations in exchange for a share of the incremental tidelands revenue.

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