Drilling down into the Hermosa Beach oil deal
To the drill
Layton, whose fast-growing company produces oil and gas from more than 20 fields in California, Louisiana, Kansas, Wyoming and Texas, said E&B’s potential oil project is “essentially the same” as the one planned by Macpherson. But, he said, the technology is much more sophisticated, and computerized, for what is now called directional drilling, rather than slant drilling, in the industry.
He said directional drilling is common in urban areas, and E&B conducts directional drilling at oilfields including one underneathBeverly Hills.
“I absolutely believe this will be a safe project. I understand a lot of questions will be asked, and we are looking forward to the opportunity to provide answers, to explain what we want to do, how to do it safely, and provide the city with a strong source of revenue,” he said.
He said the city’s environmental review, a next step in the process, “will be a very, very good source of information for the voters.”
Under the terms of the Macpherson project, a pipeline would be built to carry oil from Hermosa, Layton said.
“Where that route would go is uncertain at this point, the answer would depend on the city’s environmental review, and where the market for oil would be,” he said.
His company could lose $12.5 million if Hermosa voters reject the drilling project, butLaytonseemed eager to cast his lot with them.
“The great thing about this is that the voters will get to decide, and that’s the way it should be,” he said.
Agreement reached
An April 4 trial had been set to decide the Macpherson lawsuit, which had wound its way up and down the court system for a decade and-a-half, as Macpherson tried to prove that a Hermosa City Council acted illegally when it unilaterally barred the drilling project as unsafe in 1998.
Then on Friday afternoon, Mayor Howard Fishman met with company presidents Don Macpherson Jr. of Macpherson Oil and Layton of E&B, at theRosecrans Avenuelaw office of City Attorney Michael Jenkins, where the trio signed the legal settlement.
About two minutes later Fishman made a conference call to reporters, announcing that “the crippling litigation” had been ended.
Fishman, crediting DiVirgilio and Bobko with negotiating the settlement, said, “During the past 14 years, the city has attempted several times to reach a resolution of this case. Today, we have finally succeeded. Recently, Hermosa Beach Councilmember Kit Bobko, Councilmember Michael DiVirgilio and Macpherson Oil Co began a dialogue about an innovative new settlement [with E & B Natural Resources as a third partner].
“After extensive negotiations, the city successfully reached an agreement that limits the city’s liability to $17.5 million and provides for an alternative that would reduce the amount to $3.5 million.”
Fishman further noted, “The voters of the City of Hermosa Beach will decide…whether the oil drilling project will go forward. Whichever course the voters choose, they can know that through this settlement, we have removed the cloud of crippling litigation that has been hanging over the city for the past 14 years.”
Officials said a ballot measure could be placed before voters within about a year.