E&B Natural Resources President Steve Layton plans to be in Hermosa a lot over the next year to fifteen months. He and his wife just bought a house on Monterey Boulevard a couple weeks ago, and the company will open an office in town this summer.
Layton plans to split time between the Hermosa office and his company’s headquarters in Bakersfield.
“I understand why this is a place that people are very concerned about preserving their way of life,” Layton said. “If you are a guest in someone’s house, you need to adopt the rules and customs of that place. And if I’m here then I’m going to understand that.”
Layton, 54, said his company will file its application to drill for oil in Hermosa before the end of the summer. He said the design of the rig has not been finalized yet, but the footprint will be different than the rig proposed 20 years ago by Macpherson Oil Co.
Macpherson Oil Co. had won city approval to drill for oil but voters subsequently banned oil drilling in 1995, prompting Macpherson to sue in 1998 after the city rejected the project for safety reasons.
E&B Natural Resources Management Corp. paid Macpherson $30 million as part of a March settlement between the city and Macpherson, ending 14 years of legal limbo for the city. The settlement returns the project to the voters, who will decide the question of oil revenue and city image probably in November 2013.
Voting down the proposal will cost the city $17.5 million. Approving it means E&B would slant-drill wells for oil and gas on the city maintenance yard at Valley Drive and Sixth Street.
Layton said he contacted CEO Don Macpherson soon after the first of the year with the proposal.
“He wasn’t necessarily interested at first but interested in thinking about it,” Layton said. “And after a little while he got back to me and said he had interest in engaging in a conversation. So that’s how it all started.”
The city would receive about 15 percent of the oil and gas revenue under the royalty system if voters allow E&B to drill. Macpherson would get nearly 5 percent in royalties, and the Hermosa Beach City School District would receive a small royalty plus 20 cents per barrel.
Layton said his company’s job is to inform the public about the specifics of the project, and that will happen as soon as the application is filed. Over the past month, he has spoken at the Kiwanis Club and the Hermosa Beach Chamber of Commerce.
“What our challenge is to provide as much information as we can to as many people as we can in a way that is understandable so that people can make informed decision,” Layton said. “Because we really don’t want to feel like we are selling this project. We have an obligation or job to provide the facts and try to do so in as an objective way as we possibly can. It’s a little difficult to be totally objective when you’re sitting where we are, but we are trying as best we can.”
Layton said new technology, unavailable twenty years ago, will make the rig less noisy and safe.
“We absolutely believe this project can be done safely and in an environmentally responsible way. We believe it’s a good project for the city. It’s worthwhile to have made the type of investment we have made,” Layton said.
The city’s job is to conduct the environmental review, which is being paid for by E&B, including consultants.
“We need to be open minded about the info that may come out in these studies and the environmental review process. If things come out that need to be addressed that we haven’t thought about, we need to address it,” Layton said. “For this project to go forward, it’s got to be safe. We can’t get into a discussion with anyone about how beneficial the potential revenues might be to the city if we can’t demonstrate that this project can be done safely and in an environmentally responsible way.”
Mayor Jeff Duclos said that as long as there is a commodity underground that has a significant value, the issue of drilling for oil in Hermosa will never truly go away, which is why it has regularly been a part of the city’s history.
“What’s more important, these oil wells or what we see as our tourist destination? It’s a fundamental question,” Duclos said. “What is our biggest equity: The income we have from oil or this beautiful beach and this city, this environment?”
