Decades-Old Oil Field Dies as Fairfax Area Mall Takes Shape

You could spot Phil Esparza for an oilman anywhere, with his white Texaco hard hat, rubber boots and dusty blue work pants. He talks oil. He enthuses about oil.

“There’s nothing better than a good hydrocarbon smell,” he says. “I love it.”

At the moment, Esparza is killing the thing he loves.

The smell of petroleum is in the air as Esparza works in the midday sun on the property of the Los Angeles Farmers Market, at Fairfax Avenue and 3rd Street. The regulars, sharing coffee and talk beneath green umbrellas, can’t see Esparza, who is behind cinder-block walls in a dusty one-acre enclosure at the rear of the property. Nor can they see the 39 oil wells beneath him.

This is a working oil field--or was until recently. Now Esparza is the foreman of a crew that is tearing it down. A spindly, 10-story oil rig is lifting sections of pipe out of the wells, some of which have been pumping oil for more than 40 years.

A few feet away, construction crews are building the kind of project that is slowly driving oil drilling out of Los Angeles: the parking lot of a shopping mall being built next to Farmers Market.

“It sure is too bad,” said Rick Sevin, a La Canada lawyer whose mother is a royalty holder in the Farmers Market wells. “With everything we’re going through in California, with our purported energy crisis . . . [this] is no time to be shutting down a site that still has oil and gas in it.”

In other words, why drill in the Arctic National Wildlife Refuge when you can drill on Fairfax Avenue? The answer is simple economics: If oil is black gold, an acre of open land in west-central Los Angeles is--what? Brown platinum?

Los Angeles has been an oil town for a long time. As early as the 1850s, oil from the San Fernando Valley was being sold commercially. The real oil boom began in 1892, when Edward L. Doheny discovered it downtown, about a block from where Belmont High School now stands.

This could hardly have been a surprise. There were places in the city--most notably the La Brea tar pits--where the stuff came bubbling up out of the ground unbidden, like the upwelling of some infernal spring.

Sometime in the 1890s, a dairy farmer named Arthur F. Gilmore struck oil on land he owned not far from the tar pits, in what was dubbed the Salt Lake Field, an underground pool of oil that stretched from about San Vicente Boulevard on the west to a little east of Highland Avenue, and from about Wilshire Boulevard on the south to just north of Beverly Boulevard.

By 1916, Gilmore and others had drilled nearly 500 wells in the field; some spots around Beverly and La Brea boulevards were perforated like punch cards.

It was a short-lived boom. By the mid-1920s, having tapped the limits of their technology, the wildcatters had largely packed it in. Wells gave way to homes and more urbanized forms of commerce. Gilmore and his descendants, in the form of the A.F. Gilmore Co., went into the gasoline business, built the Farmers Market and a sports stadium, and prospected for oil outside Los Angeles.

But by 1960, technological developments in the oil industry allowed wells to go deeper and to travel at a slant, renewing interest in Mid-City drilling. Dozens of wells could be dug at one site, reaching down and out like so many fishing lines dangling from a charter boat. Gilmore Co. leased a portion of its land to Buttram Oil Co., which began plumbing far-flung oil pools with slant drilling.

By the late 1990s, through a dizzying string of buyouts, sales and other transactions, the oil lease had come to be held by Texaco. And there it would end.

In the intervening decades, the oil industry throughout Southern California had been buffeted by urban change. Tanker trucks found the region’s traffic ever more difficult to navigate. Environmental sensitivity changed the way people looked at oil wells as neighbors. But mostly, costs rose--and investors found the land could be more profitably used for other purposes.

‘Who Wants to Go to Alaska?’

“Probably 40% of the properties we sell are ex-oil fields,” said Craig Atkins, a founder and principal at O’Donnell/Atkins Co., a large land brokerage firm in Costa Mesa. “Signal Hill, Brea, Newport Beach, Laguna Beach . . . you’d be amazed at how many of the properties [are] capped oil fields.”

Many oil-drilling sites remain, including one behind the Beverly Center mall that also drills into the Salt Lake Field. But many more have been abandoned by major oil companies that have found that the profits don’t justify the headaches of drilling in an urban area.

All this frustrates the tar out of Iraj Ershaghi. Ershaghi, director of the Petroleum Engineering Program at USC, is an ebullient advocate of urban oil drilling who doesn’t see why a few wells, tucked here and there, can’t coexist with shopping malls and apartments.

“Who wants to go to Alaska?” he asks, standing in a small library surrounded by a century’s worth of annual reports on oil drilling in California. “Those are not easy conditions to drill. . . . You can do it easier here, in an existing field.”

Ershaghi has some experience with the Gilmore oil field. In the late 1980s, he testified in a lawsuit filed against McFarland Energy, which then held the Gilmore lease, after an explosion at the Ross Dress for Less store on Fairfax. Twenty-one people were injured in the 1985 blast, which occurred when methane gas built up in the store. The owners blamed McFarland, claiming the nearby drilling operation had unleashed the gas.

Ershaghi testified as an expert on McFarland’s behalf. To this day, he is adamant that the drilling couldn’t have triggered the explosion. Methane, he said, just naturally leaks out of the ground in the area.

McFarland, though never admitting responsibility, wound up settling the suit for at least $2.5 million--a figure that may have caught the attention of Texaco executives who had obtained the lease in a larger deal and weren’t looking for trouble.

Texaco isn’t saying much about why it’s abandoning the Gilmore site.

“There’s various factors with relation to this lease that make it uneconomical to operate,” is about all company spokesman Greg Hardy will say.

Hank Hilty, the great-grandson of A.F. Gilmore and the CEO of Gilmore Co., is a bit more forthcoming.

Basically, he said, the story is this: Texaco decided it didn’t want the lease anymore and tried to turn it over to a local oil company. But the landlord, Gilmore, wanted the site reappraised, which hadn’t been done since the 1960s. That guaranteed that the lease price would soar, a deal breaker.

Hilty said he has no idea how much the site is worth. “Certainly more than we paid for it,” he said--a fairly safe bet given that the Gilmore family bought the land in 1880.

Atkins, the real estate broker, said he would estimate that the one-acre parcel is worth about $5 million.

As an oil field, the land was producing about 30 barrels a day, according to state records, down sharply from the 1960s and ‘70s. At $25 a barrel, that works out to oil revenues of about $750 a day.

So you have to wonder: How much could it bring in as, say, a Starbucks?

Hilty said he doesn’t know what he’ll do with the land. “Got any ideas?” he asked.

The abandonment process will take at least another year, at the end of which, Esparza said with a sly smile, “It’ll look like your grandmother’s backyard.”

Neighborhood Is Ambivalent

There’s no indication that anyone in the neighborhood is going to miss the oil field. Then again, there’s no indication that anyone really cares.

“We’re just not interested,” said Diana Plotkin, a community leader who has lived nearby for nearly the entire 40 years that the wells were active. Her attitude about the slant wells: “We’d rather they didn’t go under our house, but maybe they did anyway. Right?”

Rick Sevin is sorry to see the wells go. But then, Sevin’s family was among the larger of the 1,000 or so royalty holders who owned property over the Salt Lake Field and got used to monthly checks--in his mother’s case, as much as $2,500 a month at the peak of the field’s production.

“This isn’t huge money to most people, but it’s huge money to my mom,” Sevin said. “Obviously, we expected that this would continue long into the future.”

Hilty takes a different sort of long view. His family ran dairy cattle on this land. They once operated gas stations all over the West and urged patrons to “Give your car a kick in the gas.” That ended.

The Gilmores hosted midget auto racing and the Hollywood Stars baseball team at Gilmore Stadium. That became CBS Television City. Even the Farmers Market, considered sacred ground to many Angelenos, is about to undergo an enormous change with the addition of a mall, the Grove at Farmers Market.

So, Hilty doesn’t have much nostalgia for a bunch of oil wells.

“We don’t run dairy cows here anymore,” he said. “But I may--you never know. There might just be a future in dairy. . . . The future holds different fates.”