Hermosa knows this drill

Mike Collins was raised in oil country but dreamed of living at the beach. As a young boy in Bakersfield, he accompanied his father to dusty fields dotted with derricks where he repaired the motors on oil rigs.

On his bedroom wall hung a poster of a house perched atop a cliff, overlooking the ocean waves. “Justification for higher education,” his mother called it.

Now a psychologist, Collins bought his dream house four blocks from the seashore in tiny Hermosa Beach nearly five years ago. He surfs or paddleboards daily and often rides his bicycle to work.

Now, he’s worried oil will follow him here.

“I know what oil smells like, I know what it looks like, what it sounds like,” says Collins, whose house is 100 yards from the spot where an oil company wants to drill. “I don’t want that in my backyard.”

Like many in this wealthy South Bay beach town, Collins is bracing for the possibility that Hermosa Beach could be opened to oil drilling for the first time in more than 80 years. A citywide election to decide the matter, still almost a year away, is driving residents to opposite corners as they take stock of what kind of place they want their self-proclaimed “best little beach city” to be.

Hermosa Beach has faced this choice before; the oil question has been voted on four times in the town’s 106-year history.

But with a multimillion-dollar legal settlement looming, the stakes in this debate are higher than ever, pitting residents who see a potential windfall for the city and its schools against those who fear long-term environmental and health consequences.

Black gold

In the waning days of the Los Angeles oil boom, prospectors struck black gold below Torrance and Long Beach, touching off a renewed oil fever in the South Bay.

Beachgoers sunned themselves in the shadow of drilling rigs, and nearby Signal Hill became known as “Porcupine Hill” for its spiny forest of derricks.

But Hermosa Beach remained a 1.5-square-mile oasis, thanks to a 1932 vote that banned new drilling within the city.

More than 50 years later, Santa Monica-based Macpherson Oil dangled the prospect of tens of millions of dollars in royalties, and voters in then-cash-strapped Hermosa voted to lift the ban.

But Macpherson never saw that oil.

Backlash from anti-oil activists changed voters’ minds in 1995 and the city halted the project, deeming it unsafe.

In turn, the company sued the city for breach of contract, claiming as much as $750 million in damages. The legal case dragged on for 14 years, leaving city leaders fearing it might bankrupt the town.

“We were locked in the embrace of death with Macpherson,” says Hermosa Beach Mayor Kit Bobko.

In March, one month before a jury trial was scheduled to begin, the city announced it had settled the suit. As part of the deal, E&B; Natural Resources, a Bakersfield-based oil company, would buy Macpherson’s stake in the deal for $30 million and limit the city’s liability to $17.5 million. But there was one major caveat: E&B; could again ask Hermosa voters to overturn the drilling ban. The election, which will be paid for by E&B;, could happen as early as next spring.

Collins and his allies have formed a coalition called Stop Hermosa Beach Oil, many of them angry about revisiting an issue they thought had long been settled. The city, Collins says, would have had more success taking the case to trial.

Bobko, who helped broker the deal, rejects that idea, saying mock juries polled by city lawyers overwhelmingly came back against Hermosa. “People think it would have been a big oil company against this cute little town. That’s not how it works.”

Regardless, battle lines have been drawn.

Anti-oil activists have attended environmental law seminars, spoken out at City Council meetings and printed hats and banners with a plea to “Keep Hermosa Hermosa.”

E&B;, the oil company, has leased prime real estate on the city’s main drag and hired locals to staff a sunny office complete with a “community room” for use by local groups.

Slant drilling

E&B; wants to drill as many as 30 wells from a city maintenance site blocks from the beach using a technique called directional (or slant) drilling, which would allow it to dip into oil and gas deposits both inland and beneath the ocean. Experts say that is less risky than drilling through the sea floor from a platform in the water. Oil, gas and water would be separated on-site and sent through pipelines to refineries nearby.

The most significant safety distinction, the company says, is a state-of-the-art automated system that can quickly shut off wells in case of a blowout or spill. The company insists that it will not employ controversial “fracking” methods, and that a sleek facade and noise-containment walls will help it be a good neighbor.

“We are proposing a project that has the potential to deliver an extraordinary financial benefit to the community,” said Steve Layton, president of E&B; Natural Resources. “We understand that we must not only demonstrate that we can operate ... in a safe and environmentally responsible manner, but we must also establish trust.”

The company estimates as much as 45 million barrels of oil -- worth an estimated $5.6 billion -- can be recovered. The city stands to gain as much as $500 million over 30 years, and the city’s school district could see an additional $11.7 million.

Because much of the oil E&B; hopes to recover is in state-granted tidelands, about half of the city’s take would have to be placed in a special fund for coastal improvement projects. The other half could be transferred to the city’s general fund.

After years of budget cuts and costly legal battles, approving the oil project could mean shoring up the police force and resuming delayed public works projects. If voters reject E&B;’s offer, Hermosa Beach will be on the hook for $17.5 million -- the terms of the deal the city struck with the company.

Opponents, though, say that the risks of toxic chemicals and oil leaks are too great, and that the traffic and noise from construction could be overwhelming to those who live or travel along the city’s narrow streets.

A major oil spill -- something that could dramatically affect the city’s best asset, its beachfront -- is the biggest fear.

At coffee shops, parks and even the city’s small community center, residents are discussing the merits of getting back into the oil business. An environmental review of the project begins Wednesday, and the city will conduct its own studies on health and economic impacts. A number of state agencies, including the Coastal Commission, will also need to give their approval.

Those considering voting for the project say they know better than to publicize their thoughts; City Council members have stayed adamantly neutral as well, angering some residents. The debate, many say, has already polarized the town and pitted neighbors and friends against one another.

Kathleen Knoll, who owns a wine shop with her boyfriend, learned this the hard way after she agreed to provide a venue for an E&B; meet-and-greet. When word got out, she received a dozen angry calls and emails from customers assuming she was pro-oil -- and vowing never to shop there again.

The event was moved to a restaurant down the street.

The reaction took Knoll, who says she and her business partners are neutral on the matter, by surprise.

“We got a glimpse of how passionate people already are and how upset they’ve become about even the possibility of having oil,” she said. “This has gone on for decades, and I think it’s going to be very divisive.”

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christine.maiduc@latimes.com