Robb Fulcher

Hermosa Beach oil foes look north

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An overhead view shows the location of a defeated oil drilling project in Carpinteria.

As a ballot battle looms over oil drilling in Hermosa Beach, some opponents are turning their attention 80 miles north, where voters in another coastal town overwhelmingly rejected a drilling project two years ago.

Hermosan Jeff Cohn, who spearheads the anti-drilling website, said opponents have contacted their counterparts in Carpinteria, where drilling was defeated by a whopping 70 percent of the vote, to determine what lessons can be brought to Hermosa.

There are some similarities between the two oil drilling projects, and there are many key differences as well.

Tall question

In Carpinteria, a town of 15,000 people, opponents of oil drilling raised concerns about environmental impacts of the project, and how it would affect the community’s village atmosphere. In Hermosa, a town of 19,000, opponents are raising similar concerns.

In Carpinteria, the Venoco Inc. oil company wanted to erect a 15-story tall rig on land, and slant-drill for oil under thePacific Ocean. Under a city permit for the Hermosa project, E&B Natural Resources Management Corporation would be allowed to build its own 15-story-tall rig — three times the height of the town’s tallest commercial building — to slant-drill for undersea oil.

However, oil company officials promise a more “visually discrete” project in Hermosa than the 19-year-old permit would suggest.

“We’ll improve on the previously proposed project by utilizing significant technological and engineering advancements that have occurred over the last few decades. This progress in engineering not only makes this project safer, it also enables us to design a facility that is quieter, more energy efficient and more visually discrete,” said E&B officials in a prepared statement.

“There have been some significant advancements in the design of the rigs and in their capabilities, and one of the results is a lower profile,” said E&B President Steve Layton in an interview. “We do not anticipate a rig of the same design that [E&B predecessor Macpherson Oil Company] would have used 20 years ago. We expect the rig to have a significantly lower profile, and I will be able to be more specific about that in the not-too-distant future.”

Layton said E&B has been working with companies that design and make oil rigs to determine how much they could shrink a rig’s visual profile.

The Hermosa permit would allow the drilling rig to remain in place throughout the first four years of the project, but Layton anticipates a shorter duration.

“We do not anticipate that long a period for the drilling of the wells. Just how long it might take is something I wouldn’t be comfortable addressing at this point in time. We’ll have a better grasp of it down the road,” he said. “…We will be incentive-ized to move along more quickly so we can finish the drilling, and get [the project] online and producing.”

Key differences

Supporters of drilling in Hermosa might take comfort in two significant differences in the projects.

In Carpinteria, Venoco backed a pro-drilling ballot measure despite lack of support by the City Council. In Hermosa, the City Council itself is placing a measure before the voters, as part of a lawsuit settlement with Macpherson, which held drilling rights before selling them to E&B.

In Carpinteria, it cost voters nothing to vote down the project, but in Hermosa, a “no” vote will cost the city $17.5 million, under terms of the settlement.

And in Carpinteria, the rig set up to drill the oil wells would have been closer to the ocean than the proposed rig in Hermosa, which would stand seven blocks inland.

Ted Rhodes, a prominent drilling opponent in Carpinteria, said voters saw Venoco’s ballot measure as a heavy-handed attempt to drill over the objections of concerned civic leaders.

“It was seen as the wrong way to do business,” he said. “A lot of people were upset by the process that was used.”

In addition, Rhodes said the anti-drilling side in Carpinteria might have benefited from the memory of the 1969 Santa Barbara oil spill just off the coast, which was then the largest spill in U.S. waters, and now ranks third behind the 2010 Deepwater Horizon spill in the Gulf of Mexico and the 1989 Exxon Valdez spill inAlaska.

“One thing they could not promise was that they would not have an accident or a spill,” said Nathan Alley, an attorney for the nonprofit Environmental Defense Center.

Carpinteria oil opponents were outspent $800,000 to $80,000 in a town where a candidate might spend $5,000 running for a city council seat,Rhodessaid.

“We were able to rally a huge amount of grassroots effort,” he said.

Northern rig

Carpinteria residents were concerned that their 15-story rig would have stood “immediately adjacent to a residential neighborhood” and a harbor seal rookery under the coastal bluffs.

In Hermosa, a rig would stand cheek-to-jowl with light-industrial buildings, and homes located across the greenbelt parkway.

Carpinterians were concerned that the tall oil rig would be “an eyesore,” said Rhodes.

“People didn’t really want a new landmarkfor southern Santa Barbara County,” echoed Alley.

The rig and the wells would have operated near an area set aside for bicycling, picnicking and other public uses, he said.

In Hermosa, if a 15-story rig was built, it would have been “partially visible from most prominent public coastal viewing places within the city of Hermosa Beach, including the waterfront and pier,” concluded a California Coastal Commission report, prepared in 1998 before Macpherson Oil Company sold its rights to E&B.

The drilling rig and a subsequent “work-over rig,” which could stand for up to three months a year throughout the 35-year length of the project, “would also be visible at night because they must be lighted to ensure the safety of aircraft,” the report stated.

The commission approved the Hermosa project as it was outlined by Macpherson, but to actually drill, E&B would have to undergo a separate permitting process before the commission, and a city-approved environmental review.

Revenue questions

For 14 years the potential Hermosa drilling project has been in the hands of the justice system, but the lawsuit settlement returns the project to the voters, reviving questions of oil revenues as well as safety and aesthetics.

If voters allow E&B to drill, the City of Hermosa Beach would get about 15 percent of the oil and gas revenue under a complex royalty system. The Hermosa Beach City School District would get a smaller royalty plus 20 cents per barrel, and Macpherson would get almost 5 percent in royalties.

(Decades ago Macpherson planned to drill from a school site in addition to the city-owned site. The school-site drilling was scrubbed from the plan, but the school district retained some royalty rights.)

In the Hermosa project, oil company officials have been preparing to report on how much revenue the city could see, and city officials are studying possible restrictions on how the bulk of the money could be spent.

Hermosa might be barred from spending revenues from undersea oil on any endeavors east of the beach. But E&B would be allowed to recover oil from under the city as well, and that “uplands” revenue would not face such a restriction.

In addition, owners of the mineral rights underneath more than 60 Hermosa property parcels, including homes and businesses, continue to be partial stakeholders in the proposed drilling project, having individually leased their mineral rights to Macpherson between 1984 and 1998.

Those leases are held by a total of 45 individuals, trusts, and businesses, and lie between the drilling site and the sea. In most cases, the owners of the parcels likely own the mineral rights underneath as well.

The City of Hermosa Beach would get royalties from oil recovered from underneath city-owned land, which includes the beach, and would be paid for the use of the drill site as well.

Most of the oil that E&B is after lies in the “tidelands” – that is, under the ocean and on the beach west of the mean high tide line. Other cities have found themselves restricted in how they can spend oil royalties from the tidelands.

In 1955 the California Supreme Court barred the City of Long Beach from spending tideland oil revenue on projects except those aiding “navigation, commerce and fisheries.” The ruling was based on a state grant that gave tideland oil rights to the city in trust, and state laws on how the money could be spent.

A 1919 grant from the state gives Hermosa its tidelands in trust, to be used “solely for the establishment, improvement and conduct of a harbor and for the establishment of bulkheads or breakwaters for the protection of lands within its boundaries, or for the protection of its harbor, and for the construction, maintenance and operation thereon of wharves, docks, piers, slips, quays and other utilities, structures and appliances necessary or convenient for the promotion or accommodation of commerce and navigation, and the protection of the lands within said city.”

Alley said discussions about oil revenue restrictions took place in Carpinteria as well.

“We pointed out that most money from oil royalties comes with restrictions,” he said. “It’s hard to spend that money on the fire department, or the police department, or schools.”

In Hermosa, the city’s legal settlement ended a potentially bankrupting $750 million lawsuit by Macpherson, but also revived the decades-long, on-again off-again debate over oil drilling in town. Next year city officials will ask voters whether they want to repeal at least part of a citywide ban on oil drilling, which was imposed by the voters themselves in 1995.

If voters uphold their ban, the city would pay $17.5 million. If they repeal the ban, E&B would drill wells on a city maintenance yard at Sixth Street and Valley Drive, to slant-drill for oil and gas. If the drilling occurs, the city would get roughly 15 percent of the oil revenue, unless it turns out there is little or no oil to drill. In that case the city would pay as much as $3.5 million.


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