E&B Natural Resources Management, a California-based oil company, is proposing to develop a 1.3 acre site as an onshore drilling and production site in Hermosa Beach, California. The project proposes to use directional drilling of 30 wells to access oil and gas reserves in the tidelands and within an onshore area known as the uplands. The project, known as the Hermosa Beach Resource Recovery project, will access known and already developed oil reserves both onshore and offshore from a single location, stated the company.
“We are proposing a project that has the potential to deliver an extraordinary financial benefit to the community,” Steve Layton, president of E&B Natural Resources, told Rigzone. “We can 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 life expectancy of the project is 35 years and can be developed in four phases with the first three phases taking less than two years to complete. The 1.3 acre site is owned and occupied by the City’s Public Works Maintenance Yard.
“Changes to the project design and operations will likely be required to reduce impacts and address other issues identified through the environmental impact report and other city processes,” stated the company in a press release. “The project will also utilize a closed loop system for all its recovery and processing operations, and be fully contained within a single site, protecting the neighborhood and surrounding community from the risk of spill or accident.”
The company estimates that around 45 million barrels of oil can be recovered, with the city standing to gain as much as $500 million over 30 years – a 15.33 percent of the project’s gross revenue as royalties.
Next year, Hermosa residents will vote whether to lift the current drilling ban or not. The events leading up to this vote date back decades and have been voted on four times in the town’s 106-year history.
In 1929, Attorney Gus O’Connor instigated a ban on oil drilling in Hermosa Beach. The No-Drilling Ordinance within the city limits was put into effect 1932.
Fifty-two years later, Macpherson Oil obtained subsurface oil and gas leases from private property owners in Hermosa Beach. Voters approved limited oil drilling and two years later, the city council awarded a lease to the oil company for a slant-drilling project on the city-owned maintenance yard. Backlash from skewed dealings and environmental activists changed voters’ minds and in 1995, the city halted the project.
Macpherson appealed the decision and sued the city for breach of contract, claiming as much as $750 million in damages. For 14 years, this case went back and forth until 2012, when the city settled the suit. As part of the deal, E&B bought Macpherson’s stake in the deal for $30 million and limited the city’s liability to $17.5 million with the intention of asking Hermosa voters, again, to vote on the drilling ban.
The upcoming election will be paid for by E&B. If voters reject the drilling offer, Hermosa Beach is responsible to pay the $17.5 million liability. If the drilling ban is lifted, the city only owes the company $3.5 million, which will be paid from oil revenues from the project.
Furthermore, E&B will not use fracking methods on any of the wells and plans to use an automated system that can quickly shut off wells in case of a blowout or spill, according to the company. The company, which plans to tap in to the Torrance oil field, will not use pump jacks or visible wellheads, and the last known blowout to occur on Torrance was in the 80s.
“The oil recovery project will safely produce … from existing resources, not develop new ones – effectively maximizing efficient oil recovery,” stated the company.
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