Hermosa Beach Pulls Plug on Oil Drilling Plan

The future of oil prospecting along the California shore suffered an unlikely blow at the hands of the Hermosa Beach City Council, which called a halt to a controversial drilling project that surfers and other residents of this maverick South Bay beach town feared would spoil their sandy oasis.

On a 3-0 vote, reached late Thursday after a lengthy and contentious hearing, the council ordered a stop to Santa Monica-based Macpherson Oil Co.’s novel “slant-drilling” plan to tap oil under Santa Monica Bay from wells a few blocks inland.

Under development since 1984, the project had been closely watched by the oil industry, which, faced with tightening federal restrictions, is eager to employ new technology to reach oil reserves off the California coast.

The vote brought a standing ovation from the crowd of more than 200 that jammed Hermosa Beach City Hall--including more than a few surfers in shorts and flip-flops as stoked as if they’d just caught a killer wave.

“You don’t want our beach to smell,” said one such surfer, who identified himself only as Peter and said he’d lived in town since 1962. “. . . That’s all I’ve got to say.”

The vote came despite a city lease with Macpherson, signed in 1986 and described by the city attorney as still binding. The company had spent the past dozen years obtaining various regulatory permits and winning in court against opponents, primarily nearby homeowners and environmentalists.

Over the past 12 years, opponents of the project were vastly outspent by Macpherson--on the order of about 7 to 1, estimated Rosamond Fogg, the head of Hermosa Beach Stop Oil.

Debate Over Oil Goes Back Decades

If the small South Bay town permitted slant-drilling, opponents argued, derricks for undersea slant drilling would sprout up and down the California coast.

“Nobody believed we could stop this,” said Susan Jordan of the League for Coastal Protection. “Everybody told me it couldn’t be stopped.”

The council’s vote almost certainly portends more litigation. Donald R. Macpherson Jr., the company’s president, said afterward that he was disappointed and believed the vote was based upon a “lack of evidence the project poses risks that had not already been evaluated.”

The council’s action marked the latest twist in a drawn-out debate over oil in Hermosa Beach that dates back to 1932.

That year, prompted by the noise and fumes from several wells that had been dug in the prior few years, the city banned oil drilling.

By 1984, however, the city found itself with a limited tax base and little cash. Voters, hoping to raise money to repair a crumbling infrastructure, approved an exception to the ban.

Two years later, Macpherson and the city signed the lease. The company’s plan would involve drilling nearly three dozen wells at the site of a city maintenance yard, a half-dozen blocks from the beach.

The yard’s immediate neighbors include small businesses, among them surfboard manufacturers and a surfwear warehouse. The surrounding neighborhood is densely populated with low-slung beach cottages and apartment complexes.

Thirty of the wells would be drilled downward and then slant west toward the beach. Using sophisticated technology, the drills and the pipes would head out to sea, tapping oil up to two miles away.

Such effort is required because the state bans drilling in most coastal waters from the shoreline to three miles out.

Past that three-mile limit is federal water. And in June, President Clinton announced a 10-year extension of the federal moratorium on new oil and gas drilling off the nation’s East and West coasts, until 2012.

Although slant drilling has been around for years, it has recently undergone significant improvements that greatly expand its range.

Nonetheless, resistance to any new slant-drilling project in California remains high. Two years ago, Mobil Oil abandoned plans to drill for offshore oil from Santa Barbara. The company faced stiff opposition from environmentalists.

Citing the Santa Barbara and Hermosa cases, industry analysts said Friday it’s no wonder there is not much interest in drilling from the state’s shoreline.

“It’s just too tough,” said Thomas Manning, a vice president with Purvin & Gertz, energy industry consultants in Houston and Long Beach. “Getting permission in California is next to impossible.”

Macpherson also had planned to build a 135-foot derrick at its Hermosa site, though the towering structure would remain up for only the first few years of the 25- to 35-year project.

Macpherson executives estimated the wells could produce up to 30 million barrels of oil and generate $12 million in annual revenue over 35 years.

Under the lease, the city would be due royalties worth millions of dollars; estimates of how many millions have fluctuated wildly.

After the city signed the lease with Macpherson, the regulatory gears ground slowly. In 1992, the state Lands Commission approved the project, and the California Coastal Commission gave its OK earlier this year.

In 1995, meanwhile, it was back to the polls in Hermosa. This time, residents approved a ballot measure to ban oil drilling.

Meantime, Hermosa Beach has found new sources of city income. It redeveloped downtown, creating a pedestrian plaza at the pier and attracting bars, restaurants and shops that consistently draw big crowds. No longer was there such a pressing need for cash.

“Priorities do change, and they did in this community,” City Councilwoman Julie Oakes said after the hearing Thursday.

This spring, the City Council--which had yet to issue Macpherson a building permit--hired a consultant to assess the health and safety risks of the project.

Question of Potential Risks

The report, released last month, found that the project was as “safe as any comparable modern operation.” But because of its proximity to homes and apartments, the report said, “it poses risks.”

The key issue Thursday night was, just how much risk?

The project, according to the report, poses less danger than commonplace activities such as driving a car or crossing the street.

To be specific, the report said, over 35 years residents could expect 31 leaks, two “major releases” and one rupture; there was a 4% chance of a “flash fire” in the neighborhood with “potential for casualties.”

In all, according to the report, there was a 1-in-7,000 chance of one or more deaths, 1 in 30,000 of 10 or more deaths and a 1-in-700 chance of one or more “serious injuries.”

“I am one in 700!” read one placard waved high Thursday night. “It’s too risky.”

Questioned by City Councilman Sam Y. Edgerton, the report’s author, Frank Bercha, conceded that the risks, even if in “the gray region,” were “substantial.”

That was enough for Edgerton, who said: “I think people sleeping at home in their beds are entitled pretty much to no risk.”

It also proved enough for Oakes and John Bowler, the two other council members who voted Thursday to direct city staff to “return with appropriate findings to stop this project.”

Two other members of the council, Robert Benz and J.R. Reviczky, did not vote--or take part in Thursday’s hearing--because they own property near the site.

Before he voted, Bowler said, in a nod to the 14 years of political and legal intrigue the project has already produced, “I suspect that this is far from over.”