by George Schmeltzer
Twenty years ago the issue of oil drilling in Hermosa Beach was put to bed by a vote of the people, or so we thought. Now, it’s back with a vengeance and the residents of this “best little beach city” must do battle once again with a very well-funded and determined oil company.
When I heard about the settlement agreement between E&B and the city my first thought was to weigh its possible financial benefits against the known risks and blight of oil drilling.
After several meetings with E&B’s president, I learned that calculating oil revenues is much, much more difficult than I had supposed. “Where’s the money?” is simple to ask. The answer is anything but. The promise of “several hundreds of millions” much trumpeted in recent E&B ads and letters to the editor is pure speculation.
In a settlement agreement some characterize as “a $30 million dollar loan with the health, safety, and property values of Hermosa’s residents used as collateral,” the City Council decided to give, without bid or review, to a small, independent oil drilling company, the exclusive right to stuff 35 wells, permanent storage tanks, oil production facilities, toxic and highly flammable chemicals, and a large trucking operation right smack down in the middle of the 20,000 residents who make up California’s most densely populated coastal city, and the 11th most densely populated city in the state. Fortunately, they must first obtain the voters’ permission.
“Let’s leave it up to the voters” is a phrase we will hear a lot in the coming months, as if the city and E&B decided that was a good thing to do. They didn’t. Oil drilling in Hermosa Beach is banned. They cannot proceed without a vote to lift the ban.
How can we expect an informed vote when it’s impossible to provide an answer to “where’s the money?” The money presumably being the only benefit the people of Hermosa Beach could ever hope for.
The three most important variables in calculating oil revenues are price, quantity, and location (on-shore of off-shore).
You can go to the newspaper to determine the price of oil, although what you’ll read today is that “crude and gasoline prices will drop through 2014, EIA projects,” (Energy Information Administration.) Quantity and location are a lot harder to get a handle on. If you’re an oil company that means your company takes a risk, but if you’re a small beach side community that means the people take the risk.
Macpherson estimated that anywhere from two million to nine million barrels of oil were available, all of it off-shore. This estimate was made by consultants hired by Macpherson to press his claim that the city owed him $400 million in lost revenues. The more recoverable oil the more money Macpherson could seek. Keep in mind that the City always thought Macpherson’s estimates were inflated, which is supported by his decision to settle. If he really thought he could have made $400 million, why would he settle for $17 million?
Along comes E&B with studies not available to the public claiming estimates of anywhere from six million to 43 million barrels of oil, according to E&B. Two of the studies were conducted by Entera for Shell Oil, and there are other studies. Not only do these estimates disagree with Macpherson’s by a factor of five, they don’t even agree with each other. It’s unlikely that dueling estimates will be cleared up in the coming year. Why? Because it’s in oil’s interest to keep the higher numbers out there and because until five wells are drilled no one will know how much oil there is, if any. But they don’t want the voter to know that. They want permission to drill. Then they can spend the next five years trying to find oil.
The studies don’t even agree on where the oil is. That’s important because Macpherson’s estimate say there’s no oil on-shore. Revenues received by the city from on-shore oil can go into the city’s general fund to meet the everyday expenses of running a city. Revenue from oil recovered off-shore is governed by the Tide Lands Trust, which lays out a very limited number of uses for the money because the oil itself is held in trust for all of the people of California. In other words, it isn’t Hermosa’s oil.
Some of the revenues from off-shore or tide lands oil may be used for things like harbors, fisheries, lighthouses, and piers. But, as far as I know, Hermosa has no plans to build a harbor, a fishery, or a lighthouse, and you can only rebuild the pier so many times every century. We cannot use this off-shore oil money to mend streets, pay police and fire personnel, or spruce up city hall, nor can it be used to help our schools.
The City Council tells us that the settlement agreement “puts the Macpherson matter behind us,” which sounds harmless enough. But the same elected officials weren’t nearly so blasé in their city-wide “Dear Neighbor” letter of September 7, 2010. They wrote about “30 oil wells” and “permanent storage tanks and production facilities” at 6th and Valley Drive “next to the Greenbelt, homes and businesses.” Back then, the City Council warned us about the risks of oil drilling. They concluded, there was a risk of “31 leaks, 2 major releases and 1 rupture over the 35-year life of the project,” and “risk of a methane gas cloud that could cause an explosion.” An they pointed out that “disastrous oil spill[s] . . . can and do happen.” They go on to say that “oil and gas operations in other urban areas have harmed people and property, and other California cities are now taking action to halt further drilling.” In 2010 this City Council wanted to “protect the residents and visitors from a potential disaster [which] was supported by substantial evidence.” Oil drilling, they declared, was “. . . too dangerous to proceed.”
Nothing about this project has changed since the City Council wrote that letter in 2010, but today the council has adopted a veneer of complacent neutrality.
When the subject of oil drilling comes up we’re urged to wait until the EIR is complete, wait until the data is in. But this doesn’t stop the council and E&B from advancing their arguments.
When it comes to costs ask yourself the following:
Who is calculating the cost of real estate transactions already being canceled or postponed because of oil?
Who is calculating the cost of sleepless nights wondering and worrying about the effects of oil on yours and your children’s health in what is supposed to be the “best little beach community?”
Who is calculating the cost of new and refinanced real estate loans denied because of the “environmental threats” to the area?
Who is calculating the environmental cost of hundreds of oil tanker truck trips?
Who is calculating the cost of visual blight? The drilling rig will be 80-feet high, visible from half of Hermosa residences.
Who is calculating the loss of peaceable enjoyment of property when vibrations impact the surrounding area 24 hours a day, seven days a week?
Who is calculating the ‘slippery slope” on the entire SouthBay of a drilling project going forward in Hermosa?
Who is calculating the multiplier effect of a new AES plant joining 30 oil wells to spew tons of pollutants into the atmosphere every year?
If you don’t have the time to study the thousands of pages of data that will be generated by the EIR process just remind yourself of the following: it doesn’t take a PhD, a degree in environmental studies, or a costly report to know that with oil drilling:
Air quality will not improve.
Noise will not decrease.
Particulate matter in the air we breathe, so damaging to our lungs, will not decrease.
Noxious fumes spewed into the air by increased traffic will not decrease.
Dangerous pollutants seeping into the air from stationary equipment, chemicals, etc. will not decrease.
Risk of a seismic event triggered by drilling will not lessen.
Risk of oil spills both great and small in the ocean and on the land will not lessen.
Threats to the health of our children and seniors will not diminish.
Risk of catastrophic fire and explosions will not decrease.
Risks of terrorist attacks will not decrease.
Need for increased police and fire protection will not decrease.
A City Council that cannot enforce the simple provisions of single page-long conditional use permits (CUPs) on bars and restaurants will suddenly be required to enforce a book-length set of complicated regulations on an industry that has shown itself capable of fighting the federal government to a standstill.
It is unrealistic to suppose that a small beach community’s City Council has the expertise to enforce a CUP covering hours of operation, truck routes, safety provisions, health protection, toxic chemical storage, fire control, security, noise levels, etc. on an organization having greater financial clout than the City itself, along with a boatload of attorneys well-trained in the art of evading the very provisions that public safety demands and requires.
If recent history is any indication the City is plainly not up to the task. A City Council that cannot get bar owners to honor their health and safety commitments cannot be relied on to enforce the far more serious regulations imposed on a large oil drilling, production tank farm, and trucking operation.
Let’s also recognize that E&B is “drilling for oil.” All of the fine words, all of the mitigation in the world by E&B will not produce a cleaner, safer environment than we have today. In this case “doing nothing” is the best alternative. E&B is not “recovering petroleum,” or “providing an energy mix,” or whatever the latest green-sounding euphemism is. They’re drilling for oil, one of the globe’s most dangerous, dirty, and risky industrial processes. The next thing you know E&B will be joining the Sierra Club, Natural Resources Defense Council, and Heal the Bay, just before introducing a picture of mating sea turtles into their corporate logo.
If your readers have any questions I can be reached at g.j.schmeltzer@att.net
Thanks for the opportunity to address this very important topic.
George Schmeltzer is a former Hermosa Beach mayor and city councilman and retired Information Technology executive. g.j.schmeltzer@att.net
