City Guards Its Cash Cow: 3 Municipal Oil Wells : Revenue: Council learned Huntington Beach’s black gold flow had been interrupted by a damaged pipeline. A new line will be paid off in three months.

Suppose you had a money machine that pumped dollars to the bank.

Suppose you found out that the line had fouled: The pool of money was still there, but it couldn’t get to the bank. You’d fix that line quickly, right?

That’s just what the City Council did when it was informed this week that three city-owned oil wells haven’t been able to deliver black gold since November because of a damaged underground pipeline. As a result, city government has been losing $35,000 a month in oil income.

As quick as you could say, “all ayes,” the council promptly voted Monday night to build a new pipeline. It will cost the city $101,231 for the new line, but the oil income will pay for that in less than three months.

“We’re talking oil, and that means money,” said Fire Chief Michael Dolder. “This is a revenue source.”

The oil wells are on the grounds of City Hall at Main and Yorktown streets. The three wells and the oil under them came as a bonus when the city purchased 11.7 acres of land in 1969 to build its new city hall.

The land and oil rights cost the city $360,000. Since then, the city’s wells have been faithfully paying off the cost, several times over. Although oil prices have fluctuated, the city has averaged about $350,000 to $400,000 annual income from its wells in recent years.

That bonanza, however, ground to a halt Nov. 5, when the pipeline broke.

Dolder, in an interview Wednesday, explained that he and other fire officials have been investigating the overall problem since the November breakdown. Dolder said he wanted to present a solution before telling the council details of the problem, and he said he thinks he offered the best answer at Monday’s council meeting.

“We’ve been using the Huntington Beach Co.’s oil pipeline since 1974,” Dolder said. “When a break occurred in part of that pipeline, the Huntington Beach Co. just shut down the section and that included us. The company said it didn’t need that part of the pipeline, but said that the city could repair it if we wanted to keep using the line.”

Dolder recommended that the city build its own pipeline. “We had to pay a charge to use the Huntington Beach Co. pipeline, and of course we wouldn’t have that expense if we had our own pipeline,” he said.

“Also, the private (Huntington Beach Co.) pipeline goes under the Pacific Ranch residential area, and that involves a possible liability to the city in case there’s a break. So, I thought it would be wiser to build a new pipeline on city-owned right-of-way along city streets.”

The council agreed and with only cursory discussion unanimously approved the plan.

Dolder said the city expects work on the new pipeline to be underway in two weeks. He said work could be completed in about two months.

“The oil is still there, so we’ll be pumping it out as soon as the pipeline is finished,” Dolder said.

The fire chief also had some good news for the city: More oil than ever is expected to come from the city wells in the near future because of underground reclamation work by a nearby private oil company. That company, Dolder said, is injecting water underground to raise the oil pool. Since nature knows no boundary lines, the city’s oil wells benefit, at no cost to the city, from the private reclamation work.

Mark Bodenbender, another city fire official, has estimated that city revenue from its wells may jump to $1 million a year as the available pool of oil increases. And Bodenbender said the city can expect to pump oil from its wells for at least 20 to 25 more years.

All of this was like a ray of sunshine for City Council members, who for weeks have been hearing forecasts of fiscal doom and gloom. They brightened Monday night at the prospects of a repaired money machine: city-owned oil wells on line once again.