E&B Natural Resources announced a plan Wednesday that would commit additional funding to Hermosa Beach schools – an estimated total of $36.75 million – over the course of their proposed 30-year oil drilling project in the city’s maintenance yard.
E&B would contribute one percent of gross revenue from the project –$0.20 per barrel would go to the Hermosa Beach City School District and the remainder would be committed to the Hermosa Beach Education Foundation, according to E&B spokesman Eric Rose. The school district’s share was part of a 1992 agreement between the city and Macpherson Oil, which had proposed a different oil drilling project in the city, that E&B took over as part of a settlement agreement with Hermosa Beach.
The percent-per-barrel contribution to the foundation would fluctuate from year to year, according to Rose.
“E&B wanted to support both (the) education foundation and the district and this allows us to do both,” Rose said.
According to data from the Berkeley Research Group LLC, which E&B hired to draft an economic impact report on its proposed Hermosa Beach project, the school district could receive roughly $7 million and the foundation roughly $30 million during the course of the project.
Most of the money would be paid over the first 10 or 15 years, according to Rose.
The Hermosa Beach Education Foundation is a nonprofit organization that fundraisers for specific programs and projects in the district. Member Laurie Baker said as a matter of policy, the foundation does not participate, support or provide an opinion on any political parties or issues.
“The issue of oil in Hermosa Beach is clearly very polarizing and one that will likely be heavily debated over the next few months,” Baker wrote in an email. “The HBEF will continue with fundraising efforts and we encourage all to share their personal opinions on oil drilling by voting in March.”
Patricia Escalante, superintendent of the Hermosa Beach City School District, said it’s hard to guess how the school district would use the additional funding if E&B’s project moves forward. The amount would be paid over a 30-year period, and the “needs of the district and the students will change over time,” she said.
The district will also end up with an altered amount of state education funding based on the royalties they’d receive from E&B, Escalante said.
In 2012, the city and E&B Natural Resources signed a settlement agreement that allows the company to ask voters to lift Hermosa’s ban on oil drilling. If successful, the ballot measure will allow E&B to install 30 oil wells at the city’s 1.3-acre maintenance yard.
The agreement calls for Hermosa Beach to repay E&B $17.5 million if the ballot measure fails, the amount E&B loaned the city to help settle a lawsuit with Macpherson Oil. So far the city has set aside about $6 million in the event the ban is maintained.
Before the deal with E&B, Hermosa Beach was facing up to $500 million in damages for breaking a 1984 agreement with Macpherson to allow oil drilling from the city maintenance yard.
Residents will vote on whether to allow drilling in the city March 3, 2015.
While the district and foundation haven’t voiced opinions on the subject, supporters and opponents of the E&B oil project see the additional donation promise in a much different light. Jim Sullivan, one of the founding members of pro-oil group Protect Hermosa’s Future, said he thinks the extra income will give Hermosa Beach schools a good way to flesh out programming in arts and sports, and even additional teachers.
“It’s just one more piece of evidence that E&B wants to be a good corporate citizen,” Sullivan said. “I think it’s a double win for Hermosa. … I don’t see any downside.”
But Stacey Armato, committee chair for Stop Hermosa Beach Oil, said her organization sees a ploy to attract voters in E&B’s announcement.
“I think our general perception is that (E&B feels) like they’re losing, and they’re getting desperate,” Armato said. “They’re going to try to bribe Hermosa Beach into voting for their project. Hopefully the voters can see that.”
Staff writer Ryah Cooley contributed to this report.
