Long Beach Considers New Drilling in Oil Field

Long Beach - Long Beach officials are studying the environmental impact of tapping a depleted underground oil field that could be pump $130 million into the city's general fund, it was reported today.

The Long Beach Press-Telegram reported that new, high-tech drilling techniques would breathe new life -- and extract new profits -- from the historic Wilmington Oil Field, which stretches across the Long Beach Harbor area and into Lomita and Carson. But environmentalists are unhappy with a proposed change in state law that would pave the way for the new oil derricks.

"In terms of actual revenue that will fund general fund requirements, additional police, additional recreation, there's nothing like this," Long Beach mayor Bob Foster told the Press-Telegram. "If you could see additional revenue without significant environmental impact, why wouldn't you do it?"

State officials say they may not approve the project. "We won't take anything to the commission for consideration if we are not comfortable with environmental aspects of the project," Greg Scott, chief of State Lands Commission's Mineral Resource Management Division, told the Press-Telegram.

Jesse Marquez, a Harbor area activist with the Coalition for a Safe Environment, told the Press-Telegram that his group would have like more time to negotiate mitigation for the deal on behalf of residents affected in Long Beach, Wilmington and other harbor communities -- perhaps a biodiesel project. He also wants an environmental impact report since new drilling will be performed.

State Sen. Alan Lowenthal said there were assurances that the project would not lead to significant spoke in carbon emissions while also providing funding to the city and state.

Because the oil field belongs to the state, Long Beach and the Westwood- based Occidental Petroleum have to work with the State Lands Commission on the plan. It is worth $150 million into the city's Tidelands Fund, and as much as $240 million to the rights holder, Occidental Petroleum.

The Lands Commission is composed of the California lieutenant governor, the state treasurer, and a designee appointed by the governor. Scott told the Press-Telegram that he expects the Lands Commission staff to bring the issue before commissioners for formal review in late 2010 with a goal "a fair rate of return to the state and city."

Negotiations are focused on the western flank of the Wilmington Oil Field, an area that roughly spans Pier J and Pine Avenue to the Dominguez Channel and the Los Angeles side of the harbor.

Occidental officials told the Press-Telegram that it would require a significant investment, some $50 million, to use modern recovery techniques to extract harder-to-reach oil. They have asked for new contract terms in an area it is already drilling that would reallocate how revenue is shared among the city, state and the oil company to make additional investment worthwhile.

"We're reasonably confident that investment should pay off for everyone," Occidental executive James Eastlack, told the Press-Telegram. "Until you start drilling a couple of wells there, that's the only true way to determine whether the oil is there or not."

The Wilmington oil field has been worked for 77 years, and was considered depleted until new drilling and extraction techniques were developed.