RUNNING ON EMPTY : HUNTINGTON BEACH’S LANDMARK WELLS ARE VANISHING ALONG WITH ONCE-FLOURISHING INDEPENDENTS
Don Weir left Kansas during the Depression in the 1930s, went to Bakersfield and to Long Beach and served in the Army. When he got to Huntington Beach, “it was (oil) rig after rig after rig. Used to be all along the coast and on the bluffs above the beach. Now it’s down to a handful of wells.”
“The oil industry, it’s been good to me. Through the years it’s treated me good.” But now he’s getting ready to quit. “I’m not gonna fight it.”
Independent oil men like Weir have a lot of concerns these days: environmental demands, local and federal taxes, the low price of oil, pressure from local developers to sell the wells, even encouragement from their children or grandchildren to ease their hold on their life’s work.
Marshall Tinsley, who says he’s been an oil man 90% of his life but no longer owns any wells, agreed with Weir. “Oil in California is on its way out,” he said. “Land is more valuable than natural resources.”
Since March 24, 1920, when oil was first discovered at the intersection of Clay Avenue and Golden West Street, the specter of rigs bobbing against the coastal sky has been a signature of Huntington Beach.
After World War II, when land was cheap and oil was expensive, people would buy a lot in Huntington Beach and drill for oil along with the major companies. As recently as five years ago there were still 400 “independents” operating back-yard wells.
Now there are 54.
“There aren’t too many of us left,” Weir said. The operators have “all died or got out.”
Jack Teberg, president of the Independent Oil Producers Assn. in Huntington Beach, agrees. “We’ve lost more than half the independent oil producers. Government agencies are putting them out of business,” he said.
Overall, the number of functioning oil wells in Huntington Beach has shown a drastic decrease. In the downtown area, where there used to be 200 to 300 wells run by independents, there are now 57.
And the trend toward abandonment of wells is not limited to the small producers. Where as many as five major oil companies used to operate in Huntington Beach, only Shell Offshore Drilling and Union 76 remain, said Oil Inspector Mark Bodenbender of the Huntington Beach Fire Department petrochemical division. A third major, Chevron, is in the process of abandoning wells.
Said Dennis Groat, a spokesman for the department: Oil drilling “used to be a little simpler. Find it, pump it, sell it.”
Jeanne Nevins and Nancy Setters are called “single-site operator/owners,” though they prefer the title “a dying breed” when discussing independent oil producers. The sisters are co-owners of Hardly Able Oil Co., which consists of one oil well--Donna No. 1, named after their mother.
Donna No. 1 rises tall in the back yard behind their childhood home on Seventh Street in Huntington Beach. Thanks to their mother’s insistence when purchasing the property more than 40 years ago, they also own the property’s mineral rights.
Nevins’ and Setters’ complaints are with the county assessor’s new estimate of the property and the oil well, which caused their taxes to rise exorbitantly.
“They say they’re taxing (oil) reserves,” the sisters said of the assessor’s explanation for effectively raising their taxes 500%. Last year their tax on oil revenue was $600. This year it was $1,800 for the first half alone.
The oil well “has been a marginal thing,” Jeanne Nevins said, explaining that it has been producing eight barrels a day at $14.65 per barrel. The recent assessment on her property just isn’t fair, she said. “They have to lower it, they just have to.”
“The point is not to drive the small producers out of the business but they are pushing out the little guy,” Nevins continued. ‘It’s not worth the hassle,’ the old guys say. Gross production is way down.”
But the sisters are grateful that their well is not within the massive redevelopment area of Huntington Beach’s downtown, where the city has planned new hotels and upscale shops to attract tourists. Ultimately, city government hopes that tourist dollars will replace the oil money that once largely financed it.
Developers “are taking out the wells as fast as they can” in the downtown area, Nevins said. Developers are even willing to pay $30,000 to $40,000 per well to take them out of production, but the sisters say that wouldn’t be enough to entice them to quit pumping.
“We’re one block away from the redevelopment,” Jeanne Nevins continued. “The land has gotten so expensive--they don’t want to tie it up with the oil wells.”
Oil production is no longer financially feasible, she continued. There were “more than 100 wells, mostly gone now. The oil industry isn’t paying.”
As long as 20 years ago oil producers complained about government regulation of oil drilling, saying at a 1971 City Council meeting that “the small operator is being taxed and badgered out of existence.”
But more recently oil drillers have been hit pretty hard by the Air Quality Management District, the state agency that monitors the wells and refineries for environmental concerns. Their rules have the independent oil producer on the defensive.
“The independent will never survive,” Don Weir predicted.
The Fire Department’s Groat explained: “Strict emission laws (are) coming down. Leaks from valves, pumps” have been traced, forcing oil producers to “map out every bit of piping and ‘eliminate fugitive emissions.’ ”
Fugitive emissions--leaks from valves and pumps--are the bane of oil producers’ existence.
Arnold Stein, AQMD senior enforcement manager, and Tom Eichhorn, media liaison officer, explained that the most recent additions are simply a tightening of existing rules.
There should be no leaks of hydrocarbons from any oil well machinery. Hydrocarbons, when exposed to sunlight, will create nitrogen-oxide to form ozone. The intent of the rule is to crack down on offending leaks.
“Chevron has made up its mind that they’re not gonna comply with the rules and regulations,” contended Carl Weaver, owner of Beach Supply, a company that provides oil field equipment such as pipes, spare parts and lubricants.
Rumors that Chevron has decided to abandon its wells in Southern California suggest, to his mind, a revolt against AQMD regulations.
“Chevron is the company that we see the most as abandoning production and idle wells,” said Bodenbender of the Huntington Beach Fire Department. He said that Chevron “doesn’t want to get into the secondary recovery phases"--that is, recovery efforts to attain whatever remains underground after the original pump ceases to produce.
Seventy-five percent of the oil is still likely to be available, Bodenbender contended. But, he said, “the land will be turned over to development in the long range.”
Sam Monroe of Chevron USA said the company is actively abandoning wells in Huntington Beach, but doesn’t blame it on stricter environmental enforcement.
“It’s currently unattractive to go into secondary recovery with the current oil prices,” he said. The price of oil has been down since 1986 so it would be uneconomic to go back into wells that have been shut for years, he continued, and there’s encouragement to abandon if the wells have been idle for five years.
“What Chevron is doing today is trying to clean up some wells that probably should have abandoned some years ago,” Monroe said.
The real cause for what independent producer Weir perceives as the oil industry’s death in the last three or four years is economics.
For oil drillers, 50% of what they produce goes to expenses such as maintenance and taxes. The oil producer sells his crude oil to a refiner, a broker, at a set price. “The independents can’t tack on more (costs) to make a profit,” Weir added, as the majors are able to do.
The independents were “always at the mercy of the majors because we can’t refine it ourselves,” oil man Tinsley observed. A special permit is required.
But Tinsley is convinced that the independents had the ingenuity all along. Around 75% of the wildcatting was done by independents, he said, and the majors would make inroads on the independents’ productive territory. The independents would take their cases to court and, as the majors would tell them, “You’ll win. We’ll appeal and you’ll still win. We’ll appeal again and you’ll win again. And pretty soon you’ll run out of money.”
Tinsley is a native of Huntington Beach. His father was the first chief of police, and only had one deputy helping him at night; over time, he served as well as the first fire chief and the first city marshal.
“The romance and fun of oil operations is pretty well done,” Teberg mused.
Still, the independents and their wells won’t go down without a fight. Melissa Caresosa, communications spokesperson for CIPA, the California Independent Petroleum Assn., calls the independents “tough survivalists.
They’ve gone through a lot through the low oil prices.” She believes that the ones who have made it through the 1980s are determined to see it through.
Independent oil producers express concern about dependence on foreign oil. They wonder what will happen to oil prices if local wells are shut down.
A recent report by the American Petroleum Institute confirms these fears. Imported oil accounted for 46% of the oil consumed in the United States last year, the second-highest ever after the 47.7 level of 1977.
Mirroring the independent oil producers’ observations, U.S. crude oil production last year recorded its biggest decline ever, averaging 7.6 million barrels a day. That was the lowest in 26 years, the petroleum institute said, and a record decline of 6.8% from the 1988 total.
Teberg was familiar with the figures. At the time when Proposition 13 came into being, “there were about 400 wells operating. By next year there’ll be 50 wells.”
“Oil wells and houses do not mix,” observed oil man Weaver. “People just don’t like ‘em.”
A derrick is needed to service oil wells and new residents consider such a device an eyesore. But knowing that the derricks are a fact of life for the oil producers, new residents “will move in right next to them (the wells), then call the city and complain,” he said.
Weaver has no problem living beside his oil well. “It’s the best neighbor I’ve got,” Weaver said, calling it Mr. Lufkin after the Lufkin pump on the well.
Weaver was born into the oil business: his father and uncles owned the Weaver Brothers Drilling Co. and drilled 10% of the oil wells in Huntington Beach and 10% of those in Long Beach. Weaver has been in business since 1956, when he drilled his own first well.
The pumping unit visible on his land is his own, but wells may be leased from the landowner. The lease may include a clause that the owner gets a percentage of what ever is dredged. According to Weaver, the biggest percentage of what the owner is due is one-sixth of what is pumped. If a well gets six barrels a day, a landowner gets one barrel’s worth--that is, $15 these days, or the going price.
“The oil business has been so bad,” he said. “The price of crude oil is so low that it’s prohibitive--you can’t afford to drill new wells.”
Oil inspector Bodenbender suggests that the Huntington Beach city government is aware of the danger of losing all the oil wells in the city: “The city of Huntington Beach is looking for consolidation projects so their sources aren’t (entirely) lost.”
Keith Bohr, of the Huntington Beach downtown redevelopment office, said the feasibility of drilling sites within new developments is under study. Pending approval by the Planning Commission, the City Council and the Coastal Commission, and the completion of working drawings, he said, “You’d see some drilling sites (within the developments) but wouldn’t recognize them as drilling sites.” The wells would be surrounded by six-foot walls and would be soundproofed.
If oil wells entirely vanish from the landscape, automobile-dependent Americans will suffer and regret their disappearance, Weaver said. “The general public dislikes oil wells,” he said, “but they’re gonna learn to love ‘em before it’s over.”