BILL NUMBER: AB 2165	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 26, 2008
	AMENDED IN SENATE  AUGUST 18, 2008
	AMENDED IN SENATE  JUNE 25, 2008
	AMENDED IN ASSEMBLY  APRIL 7, 2008

INTRODUCED BY   Assembly Member Karnette

                        FEBRUARY 20, 2008

   An act relating to tidelands and submerged lands granted by the
state to the City of Long Beach, and declaring the urgency thereof,
to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2165, as amended, Karnette.  Tidelands and submerged land: City
of Long Beach: oil reserves.
   Under existing law, the State Lands Commission and the City of
Long Beach are required to enter into a contractors' agreement and
any other necessary contracts or agreements for the production of
oil, gas, and other hydrocarbons from specified Long Beach tidelands,
in accordance with prescribed requirements.
   This bill would authorize the commission to negotiate and execute,
on behalf of the state, a contract with the City of Long Beach and
its tidelands oil operating contractor, that provides financial
incentives for the contractor to explore for and develop additional
oil reserves beneath the tidelands and submerged lands covering
specified parcels in a certain oil field.
   The bill would, with respect to that contract and the development
of additional oil reserves, provide for the sharing of revenues among
the state, the City of Long Beach, and the contractor, and the
payment of and purposes for which the revenues may be used. The bill
would also  extend   authorize the extension of
 the term of a related contract.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    The Legislature finds and declares that
the provisions of this act are necessary for the promotion of the
public interest and are of statewide concern. 
   SECTION 1.   SEC. 2.   The State Lands
Commission is authorized to negotiate and execute on behalf of the
State of California a contract with the City of Long Beach and its
tidelands oil operating contractor, that provides financial
incentives for the contractor to explore for and develop additional
oil reserves beneath the tidelands and submerged lands, whether
unitized or nonunitized, covered by the Long Beach Harbor Tidelands
Parcel and Parcel "A" Oil Contract and beneath the uplands parcels in
the Fault Block II Unit, the Fault Block III Unit, the Fault Block
IV Unit, and the Fault Block V Ranger Zone Unit in the Wilmington oil
field. This act and any contract entered into pursuant to this act
shall not supersede or amend the Long Beach Harbor Tidelands Parcel
and Parcel "A" Oil Contract except to extend its term as provided in
Section  3   4  . Furthermore, neither this
act nor any contract entered into pursuant to this act shall
supersede or amend the Unit Agreements or Unit Operating Agreements
for the Fault Block II Unit, the Fault Block III Unit, the Fault
Block IV Unit, or the Fault Block V Ranger Zone Unit, or any other
contract relating to the drilling for, developing, extracting,
processing, taking, or removing of oil, gas, and other hydrocarbons
from the tide and submerged lands and uplands parcels referred to in
this section. 
  SEC. 2.    The contract entered into pursuant to
Section 1 shall 
   SEC. 3.    The contract entered into pursuant to
Section 2 shall  provide for the preservation of the current
method for sharing among the contractor, the State of California, and
the City of Long Beach of revenues from the sale of production under
the Long Beach Harbor Tidelands Parcel and Parcel "A" Oil Contract
with regard to all current oil reserves. The contract shall provide a
means responsive to the market price of crude oil for determining
the additional oil reserves and a method for sharing the revenues
from the development of these additional oil reserves among the State
of California, the City of Long Beach, and the contractor that will
provide both an economic incentive to the contractor to pursue the
development of these additional oil reserves and a fair and equitable
return to the State of California and the City of Long Beach. The
contract shall require the contractor to spend an amount to be
negotiated for geologic and engineering evaluation and development in
any oil and gas zones beneath the tide and submerged lands covered
by the Long Beach Harbor Tidelands Parcel and Parcel "A" Oil
Contract. The contractor shall be required to prepare, on a regular
and continuing basis, plans and budgets for the exploration for and
development of the additional oil reserves. The staff of the State
Lands Commission shall be permitted to review these plans and budgets
for consistency with good oil field practice, compliance with the
goals of the program for the development of additional oil reserves,
and responsiveness to environmental and safety concerns. The contract
shall permit the City of Long Beach, the State Lands Commission
staff, and the contractor to take whatever actions may be necessary
to secure the approval of the working interest owners of the
determinations sought in furtherance of the exploration and
development plans pursuant to the terms of the Unit Agreements and
Unit Operating Agreements for the Fault Block II, Fault Block III,
Fault Block IV, and Fault Block V Ranger Zone Units.
   SEC. 3.   SEC. 4.   The term of the Long
Beach Harbor Tidelands Parcel and Parcel "A" Oil Contract 
shall   may  be extended upon the execution of the
contract authorized in Section  1   2  to
the time when oil, gas, or other hydrocarbons from the zones beneath
the tide and submerged lands covered by the contract no longer can be
produced in paying quantities, notwithstanding the termination of
any or all of the Fault Block II, Fault Block III, Fault Block IV,
and Fault Block V Ranger Zone Units, or anything to the contrary
 in Chapter 1163 of the Statutes of 1991, Chapter 138 of the
Statutes of 1964 (First Extraordinary Session), Chapter 29 of the
Statutes of 1956 (First Extraordinary Session), any other provision
of state law, the Long Beach City Charter, or any law or ordinance of
the City of Long Beach.   in Chapter 1163 of the
Statutes of 1991, or the Long Beach City Charter. 
   SEC. 4.   SEC. 5.   Any revenue payable
to the City of Long Beach solely from the sale of production of
additional oil reserves under the contract authorized by Section
 1   2  shall be paid to the City of Long
Beach before the distribution of "remaining oil revenue," as defined
in Section 4 of Chapter 138 of the Statutes of 1964, First
Extraordinary Session. This additional revenue, when received by the
City of Long Beach, shall be used for the purposes and in the manner
set forth in Section 6 of Chapter 138 of the Statutes of 1964, First
Extraordinary Session, as amended by Section 8 of Chapter 941 of the
Statutes of 1991.
   SEC. 5.   SEC. 6.   The contractor under
the contract authorized in Section  1   2 
may use any means of enhanced oil recovery consistent with good oil
field practice to develop additional oil reserves. Notwithstanding
anything to the contrary in Chapter 941 of the Statutes of 1991, the
contractor under the contract authorized by Section 1 of Chapter 941
of the Statutes of 1991 may use all types of enhanced oil recovery
applications that are consistent with good oil field practice to
increase oil recovery in the course of implementing the optimized
waterflood program for the Long Beach Unit. 
  SEC. 6.    Any oil extracted pursuant to Section 1
shall maintain 
   SEC. 7.    Any oil extracted pursuant to Section 2
shall maintain  the same environmental footprint that exists as
of July 1, 2008, including limiting any new wells to the
industrialized area of the Port of Long Beach or the Port of Los
Angeles, and requiring that any wells drilled pursuant to Section
 1   2  shall be drilled from an onshore
location. 
  SEC. 8.    To the extent any provision of this act
conflicts with Chapter 138 of the Statutes of 1964 (First
Extraordinary Session), Chapter 29 of the Statutes of 1956 (First
Extraordinary Session), the Long Beach City Charter, or any law or
ordinance of the City of Long Beach, the provisions of this act shall
prevail. 
   SEC. 7.   SEC. 9.   This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
   In order to implement as soon as possible the exploration for and
development of additional oil reserves that should produce more oil,
prevent waste of oil and gas resources, and bring additional money to
the State Treasury, it is necessary that this act take effect
immediately.