E & B Natural Resources proposes to drill 30 wells from the city’s maintenance yard at Sixth and Valley Drive into the city’s tidelands. In July, the city council approved a March 3 election date for the issue, called “Measure O.”
In May, Assemblyman Al Muratsuchi (D-Torrance) asked assembly budget leaders to place an $11.5 million loan for Hermosa Beach in the state budget for the 2014-15 fiscal year so the city can maintain its ban on oil drilling without suffering financially.
Residents opposed to oil drilling have rallied under the name Stop Hermosa Beach Oil while residents in favor of oil have named their group Protect Hermosa’s Future.
The proposed oil drilling project in Hermosa Beach will have no substantial impact on community health, according to a revised report on the project’s health impacts. An earlier report said drilling could lead to an increased likelihood of mortality and depression. The revised report was released in July. It differs substantially from a preliminary report completed in February that concluded air pollution, noise and increased traffic from the project would subject neighboring residents to numerous physical and mental problems.
The Hermosa Beach City Council voted unanimously to certify the final environmental impact report for E&B Natural Resource’s proposed oil drilling project at a July meeting.
In September, Kosmont Company’s “City of Hermosa Beach Oil Drilling and Recovery Analysis” was released. The final cost benefit analysis estimates Hermosa Beach will receive between $118 million and $270 million over the project’s 35-year lifespan, should voters lift the drilling ban.
If voters uphold the drilling ban the city will owe E&B $17.5 million, under the terms of an agreement approved by the city council in 2012. The city has set aside $6 million to pay the debt, leaving $11.5 million that would need to be financed. Kosmont Companies estimates the financing costs at $850,000 to $1.1 million a year for the next 20 to 30 years. Hermosa’s annual budget is approximately $40 million.
Proceeds from oil recovered from Hermosa Beach tidelands are largely restricted to uses benefiting all the residents of California. In September, the State Lands Commission told the city it may not use tidelands royalties to pay royalties to Macpherson Oil, which is entitled to three percent of all oil royalties.
As a result, the city’s potential proceeds from oil drilling for general fund uses could be reduced by an estimated 20 percent to 40 percent, based on figures in the project’s draft Cost Benefit Analysis.
E & B Natural Resources announced a plan in September that would commit additional funding to Hermosa Beach schools – an estimated $36.75 million over the course of their proposed 30-year oil drilling project in the city’s maintenance yard.
In November, a split council voted 3 to 2 to put the oil measure on the March 3, 2015 ballot.
