Union Pacific to Sell 725 Acres of Land on Waterfront to Port : Harbor: The $405-million deal will increase port size by 35% so it can expand cargo operations, create jobs and more revenue.

Harbor commissioners have voted to buy 725 acres of waterfront land from Union Pacific Corp. for $405 million, increasing the size of the Port of Long Beach by 35% to allow for expansion of cargo operations.

The expansion is expected to create 1,000 jobs at the port and about $1.4 million a year in tax revenue for Long Beach, officials said.

It will allow the port to expand without the expense of filling in part of the outer harbor as it has done in the past to create land for piers. Such landfill is subject to strict environmental regulations.

“This is an ideal acquisition for us,” said David L. Hauser, president of the Board of Harbor Commissioners. “It gives us ready development potential, which we have never had.”

The Harbor Commission voted last week to buy the land. Union Pacific officials are expected to approve the sale agreement later this month.

The Harbor Department plans to use reserves and future profits to pay for the property. The port has a reserve of about $290 million and generates more than $60 million a year in profit from leases and dockage fees.

The Union Pacific land is along Cerritos Channel, north of the Long Beach Naval Station. Of the 725 acres, 289 acres are north of the channel, 354 acres are on the south side, and 82 acres are under water.

Although the Harbor Department wants the land for cargo operations, it also is buying Union Pacific’s oil operation on the property. The property has about 300 wells producing 7,000 barrels of oil a day.

The Harbor Department is expected to contract with Tidelands Oil Production Co. to operate the wells. But oil production will be reduced once the land is developed into cargo terminals, said Steven R. Dillenbeck, Harbor Department executive director.

The Harbor Department also will receive 70% interest in a plant that produces steam for oil production and electricity for customers of Southern California Edison Co.

The Harbor Cogeneration Plant, north of the Cerritos Channel near the Terminal Island Freeway, produces about 76 megawatts of electricity, enough to power about 76,000 homes, a spokesman said. It also produces steam, which is injected into the ground to increase oil production on the property.

An Edison Co. subsidiary will continue to run the steam plant and hold 30% interest in the facility.

The oil operation and the electricity and steam plant produce a pretax profit of more than $11 million a year, officials said.

The Harbor Department plans to develop a 200-acre terminal on the northern parcel in the next few years, Hauser said. Development of the southern parcel would follow.

Because a portion of the property is used for oil operations, there is considerable oil contamination that must be cleaned up before development can take place.

The Harbor Department is working to determine the extent of contamination and cleanup costs. The department will share those costs with Union Pacific, which is required to pay as much as $87 million under the agreement.