Long Beach isn't waiting for Congress and the presidential candidates to do something about reducing America's dependence on imported foreign oil.
On the last day of the regular 2008 legislative session, Mayor Bob Foster got a bill passed by the Legislature to allow the state and the city to negotiate a contract with Occidental Petroleum Corp. to revive part of the 76-year-old Wilmington oil field -- once thought to be nearly tapped out.
Many Long Beach and South Bay residents might be surprised to know they live atop the third-largest oil field in the contiguous 48 states. It has produced 2.5 billion barrels of crude since 1932. In recent years, geologists have estimated that it might not be profitable to pump what's left of the oil.
But with prices above $100 a barrel, experts hope to generate a total of about $1 billion in new revenue for the city, the Port of Long Beach, the state and the oil company over the next decade. By using the latest exploration and drilling techniques, output could increase by as much as 63%, they say.
A potential deal could be a "win-win for everyone" by pumping new life into the fabled but depleted Wilmington field, Foster said. Gov. Arnold Schwarzenegger has yet to sign the bill.
But not everyone likes the way the deal is coming together. Environmental and community groups are outraged that the Long Beach oil bill -- sponsored by outgoing Assemblywoman Betty Karnette (D-Long Beach) -- popped up for the first time only three weeks ago, months after deadlines passed for introducing legislation.
"What's the rush?" said Bill Magavern, a lobbyist for the Sierra Club. "I can't see any reason, other than the obvious one of political expediency by coming in under the radar at the end of session."
The Wilmington oil field was the biggest oil discovery in Southern California, but not the first. The earliest producing well was dug in 1892 by pioneering oilman Edward L. Doheny in what's now the Echo Park section of Los Angeles.
Forty years later, General Petroleum, an ancestor of Exxon Mobil Corp., drilled the first of more than 6,000 wells in the 39-square-mile Wilmington field, which stretches from San Pedro to offshore Seal Beach.
The field has been in continuous operation since 1932 and has created millionaires, fueled real estate booms and helped transform Southern California from a collection of sunny, sleepy towns to a world-class metropolis.
Now, a combination of high crude prices and sophisticated technology, such as directional drilling that can be guided right to oil pockets with 3-D seismic imaging, could keep the old Wilmington field producing long after geologists predicted it would run dry, experts said.
Long Beach city analysts estimate that current reserves of 35 million barrels in the West Wilmington unit, the area where the new drilling is planned and which the city controls, could swell by an additional 22 million barrels if a new deal is inked with Occidental.
Long Beach and state officials said they would have liked it if lawmakers and the public had more time to study the Karnette bill. But they argued that they needed to negotiate with Occidental and couldn't wait a year or more to run another measure through the Legislature in 2009.
"The longer you wait, the longer it is going to take," said city of Long Beach spokesman Tom Modica. "Time is money in this business."
The terms of the proposed Occidental deal are not unlike a 1992 agreement that helped hike production in another part of the Wilmington field, he said.
But Jesse Marquez, a local critic of the rush to pass the Karnette bill, questioned what he said was vague wording in the bill that could allow the contract to supersede city laws and charter as well as state environmental regulations.
"We see this as a blatant attack by an industry trying to circumvent local cities by passing a state law that trumps the existing charter and which doesn't allow for a full public process," said Marquez, executive director of the Coalition for a Safe Environment in Wilmington.
Marquez shouldn't be concerned, state and local officials said. The public would have plenty of opportunity to vet any contract with Occidental before it comes up for a vote at the State Lands Commission and the Long Beach City Council, they said.
Westwood-based Occidental needs a new contract with more financial incentives to make the Wilmington deal worth its while, company spokesman Richard Kline said. The current agreement gives 95% of revenue to the state and 5% to the oil company, too little to allow Occidental to economically recover its investment. Occidental is expected to invest more than $200 million to ramp up production by injecting water, carbon dioxide or other material into some of an estimated 700 existing wells. The company would also drill as many as 200 new wells, Kline said.
"Oxy would not be going into this, be willing to put the amount of money it is putting up, if it did not feel comfortable it could get a good return," said James Hemphill, the mineral resources engineering manager for the State Lands Commission office in Long Beach. The aging field still has plenty of "sweet spots," he said, especially deep underground.
Every barrel of oil in excess of the current production of 7,200 barrels a day could replace crude that is now imported from overseas, and could be quickly sent through an existing network of pipelines to giant refineries in Wilmington and Torrance as well as smaller facilities, said Tupper Hull, a spokesman for the Western States Petroleum Assn., a trade group of companies that produce, transport, refine and market petroleum in California and five other states.
The Wilmington oil is "right here," Foster said. "All we're doing is being more efficient about extracting an existing U.S. resource."