Despite protests from weary residents, the City Council this week delayed a decision on a plan to extract 27 million barrels of oil from beneath a southeast Torrance neighborhood.
At the request of Kelt Energy, the council voted unanimously to postpone action on Kelt’s plan to drill 108 slanted wells from a 2.2-acre site on the northeast corner of Sepulveda Boulevard and Border Avenue.
Residents, who have been fighting the project for months, were visibly upset over the delay. Some of the nearly 75 people in the audience accused Kelt of trying to wear down community opposition.
“It’s just another stall action on their part,” longtime resident Marjorie Maxwell told the council. “We are getting a bit tired of this now.”
Ron Lovelady, who has lived in Torrance for 49 years, agreed. “Last time we protested we had 100% more people,” he said, referring to a Planning Commission meeting on Aug. 17. “They know that if they stall they’ll wear some people down.”
Decision Due Nov. 29
Kelt’s attorney, Peter LaCombe, said he asked for the delay so the company could answer some of the concerns raised by the residents. Following a brief closed council meeting to discuss legal concerns, Councilman Bill Applegate told the audience that delaying the decision until the Nov. 29 council meeting will benefit everyone.
“I would like to ask everyone in the audience to show some faith in the council,” he said. “It’s legally in our best interest to continue this.”
In an interview Wednesday, Mayor Katy Geissert said that by approving Kelt’s request, the city gained time to study the proposal without having to worry about a state law that requires the council to act on a project within 1 year of its introduction.
Under the law, if a year passes without action, the project is automatically approved. Geissert said that since Kelt requested the delay, it will not apply to the 1-year limit. It is unclear when the project was originally proposed.
City Manager LeRoy Jackson said the delay gives the city time to study concerns expressed by the audience. “It would be advantageous for the city to go this way,” he said Wednesday.
Kelt plans to sink the diagonal wells under a 560-acre area roughly bounded by Sepulveda and Crenshaw boulevards, Western Avenue and the southern city limit. More than 2,000 residents and businesses are located there, officials said.
The area is an oil field that has already been tapped by standard drilling and pumping methods. To force out the remaining oil, salty water from deep underground would be pumped into some of the wells, known as “injection wells.” That would force the remaining oil toward “recovery wells,” which would bring the oil to the surface. From there it would go by pipeline to local refineries.
Construction of the drilling site would take about 7 months and would include grading, landscaping, and building walls, pipelines, an electrical system and at least one area.
Sharon Schell and her husband Larry, who live 800 feet from the proposed drilling site, said they are concerned that the project may bring down the value of their property. They said they are also worried that if the project causes damage to their property, they will not be able to get compensation.
“How do I, a little homeowner, sue a company like this one?” she asked.
The same question has been posed by the City Council. The city attorney’s office has tried to untangle Kelt’s corporate structure and determine its assets.
“Kelt is intermixed and intertwined with a myriad of foreign corporations based primarily in England, " Assistant City Atty. William Quale told the council in a letter intended to define Kelt’s corporate structure.
According to Quale, Kelt Gas & Oil is owned by the Delaware-based Kelt Energy Inc., which is wholly owned by Kelt Energy PFC, an oil company based in Great Britain whose stock is publicly traded on the London Stock Exchange. That firm is controlled by a French businessman, Hubert Perrodo, who owns a majority of the stock and is chairman of the board.
City Atty. Stanley Remelmeyer said he is still not sure of the company’s assets. He recommended imposing the insurance and liability conditions.
John Bailey, a member of the city’s advisory Environmental Quality & Energy Conservation Commission, said: “I’m looking for an honest, responsible, dependable operator and I don’t see it in this proponent.”
LaCombe said the amount of insurance and bonds the city is requiring should satisfy residents.
In exchange for mineral rights, Kelt has offered property owners 16.6% of the project’s revenues, with each person’s share based on the size of his property. The company has said it expects to extract $300 million in oil and gas. That would work out to an average of $2,165 for each of the approximately 2,300 parcels in the project area.
Kelt officials have said that under California law, the company does not need approval of every property owner to tap the oil beneath the neighborhood, as long as it has mineral rights to the land where its wells are. The company has obtained mineral rights to about 77% of the acreage.