Chevron Was Overtaxed $1 Million, Board Rules

The Orange County tax assessor’s office severely overestimated the value of an offshore oil platform and overcharged its owners more than $1 million in taxes, a county appeals board has ruled. But lawyers for the county said Tuesday that they may appeal that ruling in Superior Court.

If the county elects not to appeal, it would have to return almost $1.2 million to Chevron USA for taxes that the company paid from 1986 to 1988 on an oil platform 1.5 miles off the coast of Seal Beach.

“We’re certainly satisfied,” said Darrell Burruss, western regional property tax manager for Chevron. “This has been a long and complex procedure, but we’re glad it’s over with.”

It may not yet be over, however. Deputy County Counsel David R. Chaffee said Tuesday that he is meeting with the tax assessor and considering an appeal to Orange County Superior Court. Such appeals are rare, he said.

After meeting seven times during the past four months, the Orange County Assessment Appeals Board ruled in favor of the company last week, finding that an offshore oil facility that was damaged in a 1983 storm was worth about $800,000, not the $36 million to $39 million that the assessor’s office had claimed.

The discrepancy, according to Chevron officials, was partly based on a disagreement about the value of mineral rights in the area. Before the 1983 storm, Chevron operated a man-made island with 90 wells pumping oil from beneath the seabed off the shoreline of Los Angeles and Orange counties.

The storm, however, wiped out the island, and although the wells remained, the company stopped pumping from them, making them essentially worthless.

“There is oil in the ground; we don’t dispute that,” Burruss said. “It was just that the cost of getting the oil out of the ground exceeds what it’s worth to sell it.”

After the storm destroyed the man-made island, Chevron built a platform on top of the 90 pipes that the island once contained. According to county officials, the assessor’s appraisal was based on the value of that platform as well as on estimates of the value of the oil that would be pumped at the site.

The price of oil plunged in 1986, however, and as a result the oil field was never reopened, even with the platform poised above it.