Torrance Rejects Plan to Drill for Oil Near Homes

Bowing to the wishes of hundreds of homeowners, the Torrance City Council has unanimously denied a plan by a Delaware-based energy company to extract 27 million barrels of oil from beneath a southeast Torrance neighborhood.

Following more than three hours of public testimony Tuesday, the council rejected the proposal by Kelt Energy Inc. to drill 108 slant wells from a 2.2-acre site on the northeast corner of Sepulveda Boulevard and Border Avenue into an oil field beneath a 560-acre area.

The council members said they rejected the 30-year project because Kelt failed to ease the residents’ concerns about safety and liability. The proposed project would have recovered oil by injecting salt water into the field and forcing the petroleum up through wells.

“There are just too many unanswered questions for me to vote for this,” Councilman Dan Walker told the 260 people in the council chambers. “But I’m sure that someone else is going to come along and propose a project acceptable to the community.”

Mayor Katy Geissert said that the proposed drilling site, which is less than 500 feet from residents, is too close to homes.

After the meeting, Gregg Martin, Kelt’s Pacific division manager, said Kelt has not decided whether it will reintroduce the project. Any project rejected by the council must wait six months before being reintroduced, city officials said. Martin said that until a decision is made, Kelt will keep the nearly 1,300 mineral rights contracts it has leased from residents for a nominal fee.

Residents Urge Support

“I really can’t say what’s going to happen tomorrow, just as I can’t say what will happen next year,” he said.

During the meeting, some residents, many of whom said they leased their mineral rights to Kelt, urged the council to support the project.

But after the decision was made, dozens of residents, many of whom have been fighting the project since Kelt first proposed it in 1982, applauded and congratulated each other as they left the council chambers.

Sue Herbers, president of the 2,500-member Southeast Torrance Homeowners Assn., said she was relieved that the long fight is over and surprised that the vote was unanimous.

“The council took the pulse of the neighborhood,” she said. “I was a little surprised.”

Residents are concerned that the project would cause noise, dust and gas leaks, as well as damage to structures because of ground movement.

In his company’s defense, Martin said similar oil-producing projects in Wilmington, Long Beach, Huntington Beach and other parts of Torrance have been operating for years without problems.

Kelt brought a petroleum expert who told the council that an underground water-flood project near residential homes is safe.

Joe Mendoza, a Torrance petroleum engineer, noted that Kelt has operated two similar projects in Torrance, the Santa Fe Energy Co. Torrance Unit Waterflood Project, since 1971, and the Del Amo Energy Co. Waterflood Project, since 1981.

“They have had a minimum of trouble to communities surrounding the area,” he said. “None have caused any serious deleterious effects to the area.”

But his assurances did not minimize the concern of Milan D. Smith Jr., an attorney for the Torrance Co., which runs the Del Amo Fashion Center. One of the existing Kelt oil projects operates under the center.

He called the proposed project “a significant risk” to residents and suggested that if it goes ahead, the city raise the amount of liability insurance required of Kelt from $20 million to $50 million and that the firm’s credit line also be increased from $5 million to $10 million.

No Problems, So Far

Smith said that because of the potential risk to property, the Torrance Co. has always opposed the Kelt-operated Del Amo water-flood project that extracts oil from beneath the center. He said that so far the project has caused the mall no problems.

In order to ease concerns over liability, Kelt agreed in October that its parent company, Kelt Energy PLC of England, would be liable in United States courts.

Most residents were not put at ease, however.

Robert Smith, who said he has lived on West 230th Place almost all his life, told the council: “At this point in my life, when I want to sit back and relax, I don’t want to be bothered with unexpected oil problems.”

At the moment that Geissert asked the council to vote, Kelt’s attorney, Peter LaCombe, requested that the project be withdrawn so that Kelt representatives could meet with residents about their concerns. If the request had been granted, Kelt could have brought the project back without waiting six months.

But, with the crowd chanting, “NO, NO, NO!” the council rejected LaCombe’s request.

Standard Procedures

Kelt had asked to drill the diagonal wells under an area roughly bounded by Sepulveda Boulevard, Crenshaw Boulevard, Western Avenue and the southern city limits. There are more than 2,000 residents and business 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, salt 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 be used to bring the oil to the surface. From there it would be piped to local refineries.

The company has said it expected to extract $300 million in oil and gas.

Kelt has leased the mineral rights to about 77% of the acreage from about 1,300 residents and businesses, Kelt officials said. All the mineral rights in the drilling area do not need to be obtained for Kelt to operate its project, state officials have said.

If the project were approved, the city and school district would have received about $1 million a year in royalties, taxes, permit and license fees, according to a Kelt study. The amount that Kelt would pay to its lessors would depend on the amount of oil recovered. The average lot owner would have receive about $2,000 a year from the project if it were successful, the study said.

Marjorie Maxwell, a longtime Torrance resident was skeptical. “How do they know how much oil they will get?” she asked the council. “How do they know how much money the residents will get?”

Geissert, however, said that the council’s decision was based on land-use issues, not on whether the city or residents stood to profit.