Legislation Could Revive Oil Boom, Earn Millions for City Over 20 Years

Legislation is on the governor’s desk that would enable the Atlantic Richfield Co. to abandon oil exploration in Santa Barbara and resume it in Long Beach, an arrangement local officials say would earn the city millions of dollars over the next 20 years.

If the bill is signed into law as expected, ARCO would halt drilling at Coal Oil Point near UC Santa Barbara, where environmentalists have fought for years to force the oil giant to abandon its leases. A 3-year-old lawsuit between ARCO and Santa Barbara would also be dropped once the bill took effect Jan. 1.

Although some local environmentalists initially questioned whether Santa Barbara wasn’t dumping its oil woes into Long Beach’s back yard, there was virtually no opposition to the Assembly bill when it whizzed through both houses of the Legislature this month.

“Consummation of the agreement provided by this legislation will be of great benefit to everyone,” said Assemblyman Jack O’Connell (D-Santa Barbara), who carried the bill. “Our community benefits because we will not have additional oil platforms off our coast; our county and state benefit because they won’t be engaged in costly litigation; and ARCO benefits because it can abandon the lawsuit and produce more oil from existing oil fields without the need for new wells.”

Although the profits from Arco’s new venture could be as much as $650 million over the next 20 years, only a sliver of that would go to the city, officials said.

Arco officials say Long Beach’s slice could be as much as $74 million over the next 20 years. But city officials earlier placed the amount at $5 million the first year, depending on the price of oil, and less every year after that.

Still, renewed drilling could replenish the city’s depleted tidelands fund that maintains the shorelines and waterways, a fund that survives on oil money, city officials said.

Although offshore oil drilling has been spurned by most coastal cities, Long Beach has been an oil town for decades. Some of that money built a convention center, a harbor and an Olympic swimming pool. But legislation passed in 1964 gave most of the profits to the state. The money and the oil have been drying up ever since.

City officials were not available for comment Wednesday on the bill’s passage. At a hearing last year, however, they welcomed Arco’s offer to renew exploration as a deal in which “everybody wins.”

Under the agreement, Arco would spend at least $100 million injecting water underground in hopes of squeezing more black gold from the ocean floor and the coastline. If the plan fails, Arco assumes all losses. If it succeeds, the city and state would repay their share of exploration costs out of their profits.