HomeMy WebLinkAboutStudy SessionDRAFT PROPOSAL AND SCOPE OF WORK
FOR CONSULTING SERVICES
ANALYSIS OF CITY MUNICIPAL CODES, PIPELINE AUDITS, SLANT
DRILLING EVALUATION, AND CRUDE OIL REVENUE RECOVERIES
Submitted to
The City of Seal Beach
Prepared by:
Millennium Consulting, LLC
4401 Hazel Ave. Suite 255
Fair Oaks, California 95628
(916) 966 -0662
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TABLE OF CONTENTS
I. STATEMENT OF WORK
A. Analysis
B. Reporting — Findings and Conclusions
C. Statement of Confidentiality
II. COST PROPOSAL
I. STATEMENT OF WORK
A. Analysis - The goals of this analytical review are to assist The City of Seal Beach
(Seal Beach): 1) Determine and document revisions to the City's Municipal code,
Section 6.15 for Pipeline Franchises and Section 5.55 Oil and Gas Production to
strengthen its ability to monitor and collect all revenues due; 2) Review all
pipeline franchise agreements and fees. Independently compute and compare
payments made to ensure compliance with the above municipal codes for all
applicable periods; 3) Identify any slant drilling and/or line wells that are not
reporting production and paying the applicable fees to Seal Beach; 4) Identify all
additional revenue opportunities related to oil and gas production; 5) Assist the
City in designing and building a billing system and an annual review function of
crude oil volumes, values, and fees.
Accordingly, Millennium proposes to provide the following consulting services to
Seal Beach:
Project 1: Review, revise, and update the City of Seal Beach Municipal Code to
reflect current business trends and best practices in computing, compiling,
reporting, taxing, collecting, and reviewing fees associated with crude oil and
natural gas.
• Millennium will interview Seal Beach management to determine its
needs to update Municipal Code 6.15 and 5.55 to enable the City to have
better authority to oversee and enforce these codes.
• Further, review existing codes to determine the need to provide the City
the authority to impose interest and penalties for failure to comply with
code requirements.
• Assist the City in drafting any needed revisions or change to the
Municipal code
80 HOURS * $200/hour = $16,000
Proiect 2: Review all pipeline franchise agreements, fees due and payments made to
ensure compliance with the above municipal codes and collection of all related
revenues for prior periods and on an ongoing basis annually.
• This project involves reviewing the identified companies, as follows;
Breitburn, Crimson, DCOR, Golden State Water, Hellman, Pacific Terminal,
and Plains Marketing.
• Review each agreement and payments, monthly by the different type of fees
due to the City.
• The review periods are 2010 through 2017.
130 HOURS PER COMPANY = $26,0001 COMPANY for the noted review period actual
hours will only be billed as used. Ongoing period estimated hours should be less per
company.
Proiect 3: Evaluate available information to identify companies that may be slant
drilling and /or line wells that may draining City reserves that are not reporting
production and/or paying required fees to Seal Beach
• Obtain and review available production area maps, permits, and company
production reports.
• Identify new wells drilled in surrounding areas during the review period
• Conduct production site inspections to identify potential slant or line wells.
120 HOURS = $24,000
Project 4: Identify additional revenue opportunities for Seal Beach related to oil
and gas production within its boundaries
• Identify any non - paying operators of crude oil in the city other than those
previously listed.
• Identify any non - paying transporters of crude oil in the city other than those
previously listed,
• Identify any other potential revenue streams not currently in place.
This project is dependent on opportunities identified, if any. Initial survey and research we
estimate 30 hours = $6,000
Proiect 5: Assist the City to design and build a billing system that provides the
ability to:
• Bill operators and transporters on a periodic basis consistent with the provisions
of the Municipal Codes.
• Conduct annual reconciliations /reviews of production amounts, commodity
values, and fees collected with source documentation
• Identify late or non - payment of fees
• Update fee schedules for changes in the producer price index
80 HOURS = $16,000
Proiect 6: Additional items noted by Millennium that can aid the City:
• Review of Gas Tax Revenue fund
• Tidelands Review; MC to assist the City to ensure that is receiving all
revenues due pursuant to State Public Resource Codes.
• Indirect Cost Allocation Proposal
Hours and Cost to be determined
B. Reporting — Findings and Conclusions
At the completion of each of the identified projects or at other intermediate points
as appropriate, Millennium will provide reports summarizing its findings and
conclusions.
Millennium will limit its procedures to analytical work and related calculations,
and no additional work will be performed to verify the accuracy of information and
documents provided by Seal Beach to facilitate Millennium's work. Accordingly,
this work will be less extensive than an audit made in accordance with Generally
Accepted Auditing Standards (promulgated by the American Institute of Certified
Public Accountants), Government Auditing Standards (issued by the General
Accounting Office), or Standards for the Professional Practice of Internal Auditing
(issued by the Institute of Internal Auditors).
This contract will terminate, unless otherwise agreed to by both Millennium and
Seal Beach, at the time final payment(s) is/are received by Millennium for all of its
services performed. Any revisions to this contract must be made in writing and
evidence the consent of both parties.
C. Statement of Confidentiality
See ATTACHMENT #1
Il. Cost Proposal
For consulting services provided by Millennium relative to the identified projects
and estimated hours, Seal Beach will pay Millennium as noted in the attached PSA
document provided by Seal Beach. Millennium will submit amounts monthly and
approved by Seal Beach. Additional travel expenses will include airfare, hotel, and
rental car for approved trips.
Agreed to this day:
On behalf of City of Seal Beach
(Name)
(Signature)
(Title)
On behalf of Millennium Consulting, LLC
(Name)
(Signature)
(Title)
Attachment 1 — Confidentiality Agreement
Attachment 2 - PSA