In Beverly Hills, That Sinking Feeling : Oil: City and school officials are expected to approve a Texas company’s proposal to drill more wells.

“Come ‘n’ listen to my story about the Hills of Beverly, where the city and the schools are strapped financially . . .”

--with apologies to Paul Henning, author of “The Ballad of Jed Clampett”

One day, some men from Texas told local officials that they could make an extra $1 million or more by allowing some drilling beneath Beverly Hills High School and 700 nearby homes to increase the flow of bubbling crude (oil, that is . . . black gold . . . Texas tea).

But there was a catch: For the plan to fly, the city and the school district would have to give up half their share of the money from any new finds.

No Beverly hillbillies they, officials of the two government agencies brought in an outside expert and a lawyer or two to investigate the proposal to prime production from the public pump.

Now, a year and a half after talks began, it looks as if the recommendation will be in favor of the plan when the issue goes before the City Council and the school board in November.

The proposal comes from the Wainoco Oil Co., which has been pumping oil from the Beverly Hills West Field since 1985. The Houston-based company took over the lease from a predecessor, which sank 17 wells and went bankrupt.

“It cost so much to develop it that there was no way they could recover their costs,” said Jim Gibbs, president of Wainoco, whose soundproofed drilling rig looms over the high school’s athletic field, its base hidden from view behind anonymous brick walls on Olympic Boulevard.

“You can’t do that these days,” he said. “Bottom line is we need to drill some new wells in there, and with current oil prices, the economics won’t support it.”

With the price of Beverly Hills crude stuck at about $16 a barrel, Gibbs said, it won’t pay to keep pumping after 1995, unless Wainoco can sink as many as 13 new holes--and unless the city and the school district cut their share of the extra revenues by half.

Chevron, which also owns an interest in the field, has agreed to accept a lower percentage of the added revenue, Gibbs said. No concessions are being sought, however, from the 700 or so residents who own mineral rights to the oil beneath their property, he said.

Oil was discovered in the Beverly Hills West Field in 1919. The 17 wells that now tap into it, all concentrated at the high school site, now produce about 730 barrels a day. It is a heavy oil that sells at a discount to the light Texas crude, whose price, now about $23 a barrel, is the benchmark for the oil industry.

“When we first started, we got $23 a barrel, and at one point it was as low as $8.50,” Gibbs said. “It’s a sign of the times. If oil was selling at $25, we wouldn’t be asking the city and the school district to reduce their royalties, but we don’t see that happening any time soon.”

If the deal goes through, the life of the oil field will be extended at least two years, according to a report from the city’s petroleum geologist, Jack C. West of Fullerton, and the payoff to City Hall and the school district could total as much as $1.262 million in added revenue by 1997.

Even with the new production, oil would not yield enough money for a return to the free-spending days of yesteryear, before the school district was hamstrung by the passage of Proposition 13, and the city went into debt to build itself a $100-million-plus Civic Center.

Oil revenue, estimated to total $276,000 for the schools this year, makes up just 1% of the district’s budget. At $350,000 for the city, it represents about about 0.5% of the municipal revenues.

But every penny helps.

The school district, which clings to its reputation as one of the best in the country despite budget cuts totaling $7 million since 1984, relies on Sacramento for most of its money.

It cut 92 jobs in the last two years and denied its teachers and other workers a cost-of-living raise.

And the city government, in debt for the Civic Center and dependent on sales tax at a time of recession, lost 75 jobs when it scrambled to balance its budget this year.

“Naturally, we desperately need that revenue,” said Peggy E. Goldwyn, president of the Beverly Hills school board. “The problem with the public is that they say the Beverly Hills schools have an oil well, so they must be rich. They don’t realize how much it costs to pump oil. And the joke is that water almost costs more than oil these days, with the penalties for using too much.”

“Anything that increases our revenue is better for us,” said Don Fox, assistant school superintendent for financial and business services.

“The wells are going to become economically unviable in a few years under circumstances as they exist now, so if there’s something we can do to prolong their economic life, it’s in our best interests.”

Vice Mayor Bernard J. Hecht, who sits with school board members on a committee that deals with issues common to the city and school district, said that he, too, likes the idea.

“What they’re claiming . . . is there’s just so much oil down there, and we’re reaching the waning side--maybe that’s why they call it Wainoco--of availability,” Hecht said.

“They may be right, (but) for that kind of money, I want a confirmation with a second opinion,” he said.

If all the experts agree, Hecht said, he plans to urge the City Council to take the money and run when it comes up for a vote next month.

He said that Wainoco might use the city’s own untapped underwater reserves to flood the underground deposits, a technique that increases production by forcing petroleum deposits toward the surface.

Wainoco began an injection program last year, using as much as 78,200 gallons of water a day. The new demand forced the city to ask the Metropolitan Water District to increase its allocation of water.