Power Run Oil Company in Torrance Has a Dismal History of Compliance, Noise & Oil Spill

Map of Power Run Oil Company Wells in Torrance

Slide Presentation from Neighbors Appealing to City Council to Enforce Rules

These wells are still active less than 1 mile from Hermosa Beach and just another example of why you don't want an oil company as your neighbor.  Keep in mind these wells have been in operation since 1978 so the people moving here chose to live near these areas.  

Power Run Oil had a spill in 2002 that took 3 years to mitigate the odor.  See the full presentation from the Torrance, Granicus.  I find it also interesting that if you look on Zillow the homes near the oil sites worth 20% less than others in the neighborhood.  How much is the City of Torrance and the schools benefiting from this oil operation?  

Don't Re-Elect Kit Bobko For Hermosa Beach City Council

"The idea that oil drilling is some inherently unsafe activity — I question that" 

- Kit Bobko

Here Are List of Reasons Not To Re-Elect Kit Bobko . . .

1)  Lead Negotiator of Illegal Oil Settlement
2)  Disruptive Behavior & Promotion of Personal Political Agendas

3)  Kit Bobko's Horrendous Public Voting Record

4)  Multiple Brown Act Violations

5)  Kit Bobko is Hiding Oil Related Expenses

6)  Kit Bobko Thinks Hermosa Beach Wastes Money Yet Wants $ By Oil Drilling?

7)  Kit Bobko Bulldozed His Colleagues Into Signing Oil Settlement & Silenced Them

8)  E&B Was Illegally Drilling Under Kit Bobko's Watch

9)  Kit Bobko's Hypocrisy About Transparency

10) Kit Bobko's Long History of Wasting Tax Payer Dollars

11) 15 Ways Kit Bobko's Leadership Is Not Impartial To Oil Drilling

Read these letters to the Easy Reader Editor 

Out with Bobko

Hermosa Beach city councilman Kit Bobko’s affection for the limelight has clouded his judgment over and over. His recent press release to the newspapers about the selection of Police chief was wrong. His judgment and his critical thinking process are way out of whack. He seems to be more interested in his name being published in the paper and heard on radio or TV than performing the duties of his city council post. His ego caused the city to retain a public relations firm to the tune of $10,000 a month and the city council has spent over $200,000 on this public relations firm over the last 20 months. Bobko wastes money further by going outside this highly paid public relations group and issues his own personal press release, touting his Mayors position for his pick for new Police Chief.

In doing so he went against city policy, a code of ethics and the established procedure for this city hire. He misleads the public as though his title of mayor was voted upon, which it was not. His need for media attention superseded all common sense. Worse yet, he does not understand that his actions actually cost his favored selection the job. The city manager would have appeared to be a stooge of Bobko’s had he gone with Bobko’s press release candidate for police chief. The reason the city council does not get involved in the selection of department heads is that it would lead to a poor selection process. Bobko knows this. He is currently serving as ceremonial mayor at the pleasure of his four other council colleagues. In addition to a resolution of censure, he should be voted to be removed by his other councilmembers as the ceremonial mayor as soon as possible.

Hermosa Beach has no use for such self-promotion and abuse of the ceremonial title of mayor. In November, the electorate can elect some less publicity oriented persons onto the dais.

Michael Keegan

Pure poppycock 

Hermosa Beach Councilmember Kit Bobko’s self promotional letter about how he was instrumental in ensuring “that our City was not overrun on the 4th of July” is pure poppycock. First of all, he alone cannot authorize spending hundreds of thousands of dollars for 50-LA County Sheriff’s Deputies, a “35 foot ‘jail bus,’ and mounted horse patrol.” Secondly, the real reason such significant resources are required is because Bobko and his council colleagues have tolerated a party atmosphere with rampant drunkenness and out of control people for years. Moreover, when the city allows July Fourth to begin with the “Iron Man” event that violates Hermosa Beach’s prohibition of alcohol on the beach, it sets the “agenda” for a day of out of control partying and drunkenness. Residents should ask themselves if a more reasonable solution would be to close all our alcohol serving establishments at 6:00 PM on July Fourth and also cancel the illegal “Iron Man.” That would probably stop the city from being “overrun” on July and cost a whole lot less than the city is currently spending on public safety for July Fourth

Fred Huebscher

Here are the people endorsing Kit From His Web Site  . . . 

• South Bay Chapter of the LA County Lincoln Clubs
• Former Congressman Steve Kuykendall
• Don Knabe, Los County Supervisor
• Michael DiVirgilio, Hermosa Beach Mayor Pro Tempore
• Jack Burns, Hermosa Beach School District Board Member
• George Barks, Former City Council Board Member
• Richard Montgomery, Former Manhattan Beach Mayor
• Bob Holmes, Former Manhattan Beach City Council Member
• Art Yoon, Former Hermosa Beach City Council Member
• Greg Breen, Former Board Member, Hermosa Beach School District
• Bill Sigler, Former Parks and Recreation Commission 
• Steve and Susan Blaco
• Danay DiVirgilio
• Doug Gneiser
• Bruce Greenspon
• Dorothy Harley
• Ken Hartley
• Manny Serrano
• Corinne Ybarra

There Is No Way An Oil Drilling Vote Will Ever Pass in Hermosa Beach

Lou Morris of Hermosa Beach says, ""There is no way an oil drilling vote will ever pass in Hermosa Beach.
"So many people have commented on the stupidity of our City Government. Parents give lots of money to the schools each year and there is no way they will sacrifice the safety for oil drilling. Newspapers write at an 8th grade level and we are making this way too complicated."  

Who Owns Present & Future Oil & Gas Mineral Rights?

Howard Longacre Letter to City Council May 20, 2013

1)  Request for clarification regard the present and future ownership of the oil and gas mineral rights that were own by the City prior to the original agreement(s) with Macpherson.    

1-a)  Who owns / controls the City's original oil and gas mineral rights at the present time? 

1-b)  Who will  own/control the subject mineral rights if oil drilling IS NOT APPROVED by the voters, and for how long?  

1-c)  Who will own/control the subject mineral rights if oil drilling is approved by the voters and for how long? 

2)  Request for clarification regard the Oil Lease expiration data. 

2-a)  How many years remain on that oil lease? 

2-b)  Is the clock presently ticketing on that oil lease or has it been suspended due to the prior oil litigation, and if so is it still suspended and to when? 

2-c)  If oil drilling is NOT APPROVED by the voters what happens to the oil lease, ie. does it expire immediately, will it ever expire, will the clock continue to tick? 

2-d)  If oil drilling is approved by the voters what happens to the oil lease, ie. when does it expire, will it ever expire and if so when? 

Mira Costa High School Plugged Oil Wells at Risk of an Explosion

Maps from California Doggr Database

Capped or plugged oil wells can blowout and be a real danger in the South Bay if oil drilling is permitted in Hermosa Beach. Pat Aust of the Redondo Beach City Councilman and former firefighter knows first hand of the dangers of dealing with capped wells. Hermosa Beach, Manhattan Beach and Redondo beach have hundreds several capped wells that could be at risk of a blowout or explosion.  Below is an explanation to help you understand the potential threat to our community if slant hydraulic pressurized oil drilling is permitted underground and an adjacent well is pressurized.

Oil drilling blowout preventers (BOPs) can be used on the drilling site itself on the surface to mitigate risk. However, blowout preventers CANNOT be used on capped wells when the adjacent reservoir becomes pressurized.  If an adjacent capped oil well were to blowout you could easily have a methane explosion and you wouldn't know about it until its too late.

Most capped wells are buried 30 feet below the surface and were completed usually 30 to 40 years ago.  A hole still exists to a reservoir underneath the ground several thousand feet.  We don't know the condition of these capped wells or reservoirs because there are very limited records and these wells have been capped and buried for several decades.  That does not mean that these wells aren't building pressure underneath the surface.  E&B proposes slant oil drilling and it has no control over pressurizing adjacent wells.  Huge, huge risk of health and safety.   

$2 Out of Every $3 From Oil Money is Wasted or Stolen

$2 out of every $3 earmarked for development from oil money is wasted or stolen. 

How is this similar to what could happen in Hermosa Beach?  Storm drains, schools and City infrastructure are all being used as "leverage" to try and convince people that we need the oil money.  However, the State of California has a tide lands trust which restricts oil money.  Are we supposed to trust the accounting of  E&B Natural Resources based on the history of their management and founders?  

Hermosa Beach School District Oil Information Sharing Meeting

George Schmeltzer's Speech to Hermosa Beach City Council
"This is the more important thing that will hit Hermosa Beach in the last 50 years."


Ray Waters, Hermosa Beach School Board
"The Costs Overwhelm Any Benefits To City or Schools"

This Is How We Raise Money For Hermosa Schools 
Thanks to the Ed Foundation Donors

No Oil Money For Hermosa Beach Schools

Barbara Guild Speaking About Oil Drilling Underground In Ocean Benefits State of California (Tidelands Trust)

- No General Use of Oil $ From Ocean

- Schools Only Have Tiny Mineral Rights Royalty

- .20 Cents Per Barrel of Oil Extracted Under School

- No $ Use East of Strand

- No Police or Fire $
- No Road or Sewers $
- No New Building $
- No School $
- No Parks Money

State Tidelands Doctrine

The United States Supreme Court issued its landmark opinion on the nature of a state’s title to its tide and submerged lands nearly 110 years ago, and although courts have reviewed tidelands trust issues many times since then, the basic premise of the trust remains fundamentally unchanged. The Court said then that a state’s title to its tide and submerged lands is different from that to the lands it holds for sale. “It is a title held in trust for the people of the State that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing” free from obstruction or interference from private parties. All uses, including those specifically authorized by the Legislature, must take into account the overarching principle of the public trust doctrine that trust lands belong to the public and are to be used to promote public rather than exclusively private purposes.

Evidence of Money Use in Newport Beach

Oil and gas revenue is deposited into the Tidelands Fund because the source of the oil is in the tidelands area which the City holds in trust for the people of California. The Tidelands Fund may be used only for eligible expenditures that support and maintain the tidelands, such as improvements to tidelands property including dredging Lower Newport Bay, lifeguards, beach cleaning, etc. 

The productivity of the oil wells continues to decline due to the age of the wells. New oil extraction techniques are required if the City continues to use the wells. The new techniques may include: reconditioning of existing oil wells, converting existing oil wells to water injection wells, drilling new water injection wells or drilling new oil wells. The City Charter restricted the redrilling of wells until January of 2011.

This is how we raise money for Hermosa Beach Schools through the Ed Foundation.

More Questions That Need Answers

Continued from Questions That Need Answers:

Below is an ongoing list of questions I am compiling from Hb residents on this issue.  Email me if you would like to add something.

8)  Many former City officials including former councilmen Sam Edgerton questioned in 2008 whether the city’s lawyers have ignored a line of attack that he believes could turn the legal tide back in Hermosa’s favor. Why was this never done and why are many of these officials furious of the current settlement? Why are current City Officials telling residents they will not take a position for or against oil drilling in the current settlement? Are they working for HB residents or their own interest? Read Easy Reader Article from 2008

9)  Do the deal leads Jenkins, Bobko & Divirgilo have any ‘skin in the game’? Do they have property value to protect or do they just simply rent temporarily in Hermopsa?  They have demonstrated that they are interested in higher levels of public service (above the City). Do they anticipate receiving future financial support from the Oil Companies to assist them in achieving their political ambitions? Kit Bobko, ran for Congress in 2011 to fill Jane Harman’s seat in a special election and finished in 7th place with 3.6% of the vote.  Michael Divirgilio was a Congressional Staffer for Rep. Jane Harman.  

10)  Why is Hermosa Beach spending money on a PR Firm,  Fiona Hutton & Associates  and how much is the city spending on this new endeavor? Don't we have elected officials on the City Council who do PR as a profession? Why aren't all Council members speaking for themselves, rather than just "going with the flow"? Why did the CIty hire a PR agency? What is their exact role? What is the cost of the PR agency? 

11) Why did you settle at $17.5 million & $3 million? What was the magic number and why?

12) Did you have a plan in place to pay the $17.5 million or 3 million? At what price did you have a plan in place to pay the settlement?

13) With the 6th street Yard being used for oil drilling it would be lost to the city for use.  What would the city do without this lot for city use?

14)  What is the City Yard lot worth? Could we sell it to help cover the 17.5 million?

15) What is it going to cost for extra emergency services personnel, equipment, and training? - Who is paying for it? Do we have to raise salaries for specific certifications of emergency services?

16) The tower is going to be over 135 feet tall. It is going to be in the line offsite of many residents. This devalues homes. Can the city be sued for the devaluation of their home?
The oil wells will cause issues with:

• The beautiful views from homes
• Air Quality (So much for the No Smoking signs along the strand) 
• Noise pollution 

17) The 2008 Chatsworth train crash happened when the conductor was texting while managing the train. 25 people were killed, 135 were injured with 46 being critical! My friends mother was in this accident. She was seriously injured. There is a cap on the amount of payout for the lawsuit at $200 million. She cannot even get her medical bills paid. With that said you are saying we would have had to pay $750 million no matter what while a train wreck that killed 25 people and injured 135 others cannot get more than 200 million!

18) What happens if there is an oil leak in the bay?  Is the City of Hermosa Beach on the hook for anything? How would this devalue not only Hermosa Beach homes but all of the homes in the bay?  Could there be a civil suit?

19) There is talk of "revenue share" from the oil wells.  Can we not pay the money and have the money go towards the $3 million first then take the revenue sharing?  What are the projections of the revenue sharing?  This should have been done long before any settlement happened! The biggest question is what can the money legally be able to be used for! There have been many statements that the money cannot actually go towards the school systems. This is something your lawyers should have advised you of before any settlement happened. The lawsuit has been going on long enough someone should have known and or have an answer.

20) Who is auditing the revenue coming in from the oil?  Do we now have to pay people to manage this and at what cost?

21) What happens if there is a disaster and or someone is killed?  Is the contract null and void immediately?

22) How safe is this type of oil drilling in case of an earthquake or tsunami? At what size of earthquake or tsunami do we run into an additional disaster?

23) The homes they drill under do they get revenue from the drilling and who has mineral rights? What happens if their foundation and or other issues appear in years to come from the earth under them moving?

24) Is the oil company using funds to get the votes to drill in Hermosa? If so did you know they would put money into the City of Hermosa to promote oil drilling?  What businesses in the city stand to benefit from oil drilling?

25) Kit Bobko and Michael Divirgilio are not home owners in Hermosa Beach. You do not directly pay taxes for the homes in Hermosa Beach. If you owned a home nest to 6th street before the settlement how would you feel? Would you sell your home? Why haven't you bought a home in Hermosa Beach?

26) If we vote no to the oil drilling your letter states: "$17.5 million equates to a liability of $2,500 per parcel." Are you going to bill the citizens this amount if the drilling is not approved? What if I moved into the area after the lawsuit and was not notified about the lawsuit? Do I still have to pay? The bigger question is as renters are YOU personally going to pay $2500 towards the liability you have committed to the citizens of Hermosa Beach?

27) What are the solutions to pay $17.5 million? How much money do we have in the bank? What assets does Hermosa Beach own? Can we get a bond from the state of California? What research have you done to figure out how to pay back any amount let alone the $17.5 million?

28) Now that you have settled the lawsuit what side are you on? I feel that you have drawn a line in the sand and now you should state whether you are for drilling or against drilling. This is only fair to the citizens of the city. What are the pro's and con's from each of your perspectives?

29) How late can drilling take place? Is it 24/7/365? How noisy is it? I can hear the Redondo Power Plant at 4am release steam that practically shakes my windows. Will we have any noise at all and if so how loud and at what times?

Email me if you would like to add or change something to this list. 

Settlement Agreement Comments

Below is a draft of our settlement agreement comments we are compiling from residents.  We welcome your comments so please email us with your comment structured similar to below.  If you want to read the full 45 page agreement you can download it on the HermosaBCH.org or at Google Docs.

Recitals, Page 1, A
Macpherson also obtained all of the necessary Permits to Construct for the Oil Project from the South Coast Air Quality Management District In November 1995 the residents of the City passed City Measure E an initiative measure that banned oil drilling in the City. 
Comment- South Coast Air Quality Permit ran out or cancelled March 30, 2000. 

Recitals, Page 1, A
In early 1998 and notwithstanding the passage of Measure E the California Coastal Commission authorized issuance of Coastal Development Permit No 29E86 to Macpherson far the Oil Project subject to conditions
Comment - Coastal Developmental Permit No. 29E86 never issued. 

Recitals, Page 2, D
Substantial revenue stream to be generated for City and the Hermosa Beach School District as a result of the payment to City and School District of royalties in association with the production of oil and gas reserves by E&B
Comment - How can School benefit from tidelands trust?

Definitions, Page 3, 2.10
School Lease means the lease between Macpherson and the Hermosa Beach School District
Comment - No lease on School property found. Where is this?

The Closing, Page 4, 3.2
Confidentiality Agreement previously signed on behalf of each of the Parties on February 17 2012
Comment -  Where is a copy of this?

Macpherson's Obligations At Closing: Page 5, 4.1 

1031 exchange as provided in Article X hereof all of Macpherson the School Lease and any other leases releases set forth in paragraph VI
Comments - Like-kind exchange, what's Macpherson doing here?  What other leases are involved in this agreement?

E&B's Obligations At Closing: Page 5, 4.3a 
Said assignment reserves to Macpherson from E B and its successors and assigns an overriding royalty of 1.5% of one hundred 100% of gross hydrocarbon production but otherwise
Comment - Macpherson keeps part of this going here.

E&B's Obligations At Closing: Page 6, 4.3c 

constitutes the E&B Loan of $17,500,000

Comment - Note this loan and how it's to be repaid by the city.

E&B's Obligations At Closing: Page 6, 4.4b 
Upon issuance of the drilling permit or in the event the City cannot issue the drilling permit as the sole result of action or inaction undertaken by and under the control of E&B (including without limitation) the failure of the California Coast Commission to issue a coast development permit. immediately

thereafter forgive $14,000,000 of the E&B Loan

Comment - Failure to meet conditions and most of loan is forgiven?  Where does the fact we are giving E&B a $15M property factor into the cost?  Total costs is more like $18.5M and more cheaper to vote no. 

City's Obligations Following Closing: Page 7, 4.6a 

Place on the ballot at a special municipal election in a manner that comports with all applicable law within six 6 months of a request to do so by E&B
Comment - Within 6 months call election!!!! "....notwithstanding inconsistent change in City's Municipal Code." ????

City's Obligations Following Closing: Page 7, 4.6b 

Vacate and make the City maintenance yard available for the construction of the Project as when and in the manner and subject to the conditions provided for in the Lease and repay Three Million Five Hundred Thousand Dollars of the E&B Loan through a deduction of royalties equal to 1.5% of gross proceeds. 
Comment - Vacate and make the City maintenance yard available? And where in the world is the city going to put it. Steve Burrell could never find another location for it, here or in Redondo Beach. Let's get real. this is an important issue.  This property is worth $15M and we are paying them $3M on top?  Total deal looks like $18.5M to vote yes.  

City's Obligations Following Closing: Page 8, 4.6d 

Grant as reasonably required by E&B all necessary rights of way 
easements franchises and other rights as necessary for subsurface pipelines < and other facilities and appurtenances in order for E&B to drill for produce market transport and sell all oil and gas produced from the subject lease 
Comment - Whoa Ho! Check out this demand. Dig up the streets or the greenbelt? And where will it terminate in Redondo Beach or AES?

City's Obligations Following Closing: Page 9, 5.4 

The parties recognize that Macpherson is materially changing its legal position and rights and property holdings in reliance upon the final and binding effect of this Agreement and any rescission of this Agreement would be a wholly inadequate remedy for Macpherson because rescission cannot possibly return to Macpherson the legal position and rights it held prior to the consummation of this Agreement
Comment - We need an attorney to explain this paragraph. It's legalese is convoluted.

Mutual Releases: Page 9, 6.1 

Effective upon the successful completion of the Closing in accordance with the conditions described in paragraph 3
Comment - What are these conditions in 3.3 

Mutual Releases: Page 10, 6.1 

the City hereby fully and finally waives releases and  permanently discharges Macpherson and its respective partners officers employees agents representatives and attorneys the Releases from any claims arising under the Lease any continuation extension amendment restatement or replacement of the Lease
Comment - Whoa Ho! What's this? What about compensation due the city for the past  Environmental reports, attorneys fees due the city, etc?

Mutual Releases: Page 10, 6.4 

Except as may be provided in this Agreement each of the Parties waives any and all claims for the recovery of any costs expenses or fees including attorney fees associated with the matters and claims released in this Agreement
Comment - Attorneys fees from earlier court cases? Have they been paid?

Defense of Litigation:  Page 11, VII
In the event that one or more lawsuits are filed challenging this Agreement and/or the actions implementing or contemplated by this Agreement the Parties to the extent named as parties defendant in the lawsuit will cooperate in good faith in the defense of the litigation and shall initially bear their respective attorneys fees and costs With the exception of a lawsuit challenging the approval of this Agreement itself should the Ballot Measure described in paragraph 46a pass E&B shall indemnify the City for all attorneys fees and costs incurred by City in the defense of litigation encompassed by this paragraph and also for any attorney fees and costs awarded to a plaintiff against City if any in such litigation
Comment - Does this mean the city can collect attorney fees if sued for this agreement?

Representations & Warranties:  Page 11, 8.1c
They acknowledge that the Stinnett Well has been plugged and abandoned and agree that Csity inability to convey the Stinnett Well to E B shall not constitute a breach of this Agreement or the Lease. 
Comment - Dave Lucero, what was the result of your looking into this well on the City's Yard?

Representations &Warranties:  Page 12, 8.2c

The force majeure provisions in paragraph 30 of the Lease apply and have applied during the pendency of the Action and the CUP remains valid. 

Comment - CUP is for a "Conditional" Use Permit. The  Use Permit itself was never issued, or was it? Wasn't the Fire Code in doubt?  In the CUP it states, "All CUP required studies and reports must be submitted to the City and approved before permit issuance."

Representations &Warranties By All Parties  Page 12, 8.3a
The Parties have received all corporate and other approvals necessary to enter into this Agreement on their behalf and that the persons signing this Agreement on their behalf are fully authorized to commit and bind the Parties to each and all of the commitments terms and conditions hereof and to release the claims described herein and that all documents and instruments relating thereto are or upon execution and delivery will be valid and binding obligations enforceable
Comment - Not so! The California Coastal Commission issued "approval with a long list of conditions" but never issued a "Permit" for Macpherson to drill in Hermosa Beach. So how does this affect this Settlement Agreement? Is Macpherson claiming to have abided by all the requirements of 15 b. of Lease No. 2 (it has with the City), i.e. "The Lessee shall also apply for and obtain all necessary permits from the City of Hermosa Beach...The Lessee shall also be responsible, at its sole expense, for alI necessary permits and approvals to be obtained from the California Coastal Commission...."
Representations &Warranties By All Parties  Page 12, 8.3d
The Parties have prior to the execution of this Agreement obtained the advice of independent legal counsel of their own selection regarding the substance of this Agreement and the claims released herein
Comment - Was the advice "independent"?
Representations &Warranties By All Parties  Page 13, 9.2
This Agreement and the Confidentiality Agreement discussed in Paragraphs 32 and 3 are an integrated contract and sets forth the entire agreement between the Parties hereto with respect to the subject matter contained herein 

Comment - If the Confidentiality Agreement is part of this, please, let's have a look at it.

Representations &Warranties By All Parties  Page 13, 9.5
This Agreement shall be binding upon and inure to the benefit of each of the Parties and their respective representatives partners officers employees agents heirs devisees successors and assigns
Comment - How about to the benefit of the people of Hermosa Beach?

(stay tuned more to come)

Hermosa Beach Slant Oil Drilling Maps

These maps are speculative drawings based in information we have gathered from the Macpherson proposals.  E&B oil has not submitted their drilling proposal yet.  

Map of the proposed Hermosa Beach slant oil drilling site will reach out into the ocean.  What is slant oil drilling?  The drilling will also go underground into Redondo Beach likely.  The California Coastal Commission has full authority of this drilling and has thus tidelands restrictions on where money from oil can be spent.  The oil site will also be less than 100 feet from homes when Colorado requires a 350 foot setback and California recommend 300 feet.

Do we really know what is underground nor want to disturb the environment with oil drilling pipes possibly poking through the ocean floor?  Do want want to risk the dangers of the ocean floor and our beaches sinking (subsiding)?

The proposed drilling site effects more than 50% of residents of Hermosa Beach.  Noise, air pollution, explosions or dangerous gases are all a potential consequence.  Not to mention the drilling site will be within a few hundred yards of your kids playing in the park.  If you run on the greenbelt in Manhattan Beach or Hermosa Beach there could be an oil pipeline to under it to Chevron Refinery in Torrance and/or a natural gas pipeline AES Power Plant in Redondo Beach.

Lets not forget about the fault line that runs across the Santa Monica Bay and the South Bay.  We have had several earthquakes offshore in Hermosa Beach and Santa Moncia bay in the past few years. 

 27 oil wells and 3 water injection wells for Fracking and Natural Gas

Horrible Air Quality

I am told by oil experts in the business that the odor from gases and drilling will be "awful" around the site.  There is no way to contain the odor or poisonous gases that come up our of the ground.  This map depicts 3 different wind scenarios we get in the area.  An onshore, offshore and no wind where the smell and gases get trapped in the valley.

Emissions generated during the drilling/development phase include vehicle emissions; diesel emissions from large construction equipment and generators, storage/dispensing of fuels, and, if installed at this stage, flare stacks; small amounts of carbon monoxide, nitrogen oxides, and particulates from blasting activities; and dust from many sources, such as disturbing and moving soils (clearing, grading, excavating, trenching, backfilling, dumping, and truck and equipment traffic), mixing concrete, and drilling. During windless conditions (especially in areas of thermal inversion), project-related odors may be detectable at more than a mile from the source.  Excess increases in dust could decrease forage palatability for wildlife and livestock and increase the potential for dust pneumonia.  See source.

250 Yard Heavy Impact Zone from Noise, Odor, Dangerous Gases and Explosions.   There are two parks, hundreds of homes and a jogging trail in the vicinity which I think is disgraceful.   There are probably 10+ kids under the age of 10 years old that live in the red boxed area.  Its just sad that no one thought through the ramifications.  

Projected Ripple Affect of Real Estate Losses

This is a Scenario of What Could Happen

comments powered by Disqus

$1B+ Destruction of Real Estate Wealth

This picture above precisely why homes are so much cheaper in Huntington Beach, CA.  A $1,000,000 home in Hermosa Beach would likely be 25% less if it were based in Huntington Beach.  Most speculate its because of the widespread drilling amongst the homes.  Do you want our in Hermosa Beach to drop by 25%?  

The 1.3 acre City Yard lot was worth an estimated $57,000 back in 1958 according to old news articles.  At this time oil was trading at $2 per barrel.  This was when the last Shell oil drilling vote was being contested by long timer Hermosa resident and hero Barbara Guild.   What is this City Yard lot worth now? 

Most speculate it might be worth as much as $10M for commercial zoning and possibly as high as $15M if it was rezoned for residential?  That is 175X the value.  Oil is now $100 per barrel only 20X more.  So you have to ask yourself the question which is more valuable today? Real estate or oil?   Are we just giving E&B Oil a $15M piece of property for nothing?  Its not factored into the proposed cost of voting for Yes oil drilling. 

There are 7,000 parcels in Hermosa Beach. Every 1% decrease or increase in home prices in Hermosa represents a $57M increase or decrease in aggregate wealth. A 15% drop would flush $1B of wealth and and huge property tax base down the drain.  The is assuming median home prices are $820,000. This oil drilling deal gambles with $5.7 billion in aggregate real estate wealth based on 7,000 parcels.  This is a zero sum game if you if you factor in the amount of property taxes that will be lost as a result with a 15% drop in real estate values.  You could also make the argument that real estate in Hermosa has been suppressed because of the ongoing oil and bankruptcy issue.  Pay of the $17.5M and real estate may rise by $1 billion in the area and increase the property tax base.

The City "might" make $1M in estimated revenue if they are lucky for a 4% increase on a budget of $25M annual budget? .20 cents per barrel for the schools is going to amount to nothing. Plus they can't spend the money because of the Tidal Lands act which restricts usage of the funds generated from oil.

Property values have risen up 2X since the deal was struck with Macpherson in the 1990's.  Median home prices were around $400,000.  Property values are up a 100X+ since the 1950's when the last oil crises was upon us with Shell.  

Reasons Why E&B Oil is a Bad Deal

Based on my discussion I think the deal the Hermosa Beach City Council struck is a bad one for several reasons. The only good news is we have an actual $ settlement number and its not going to bankrupt the city. Here are my top 10 talking points to be used with anyone you know.

1. No public forum was held.  Only 1 company (E&B) bid on the deal behind closed doors. 
2. The oil site will be within 100 feet of homes and businesses.  California recommends a 300 foot  setback and Colorado law requires 350 feet setback.  
3. $1B destruction of real estate values for a new police station or new storm drains on the beach? 
4. Santa Monica Bay is a no-drill sanctuary (Hermosa drilling map). 
5. State Lands Commission Staff recommended against this Oil Drilling project because it expected poor results.
6. Hb cannot use any of the money shared "net revenue" NOT gross for anything that is not on the beach or greenbelt.  See Tidelands Act. 
7. City Council “settlement” is a collective punishment for citizens daring to reject their plans for siting an industrial project next to homes. 
8. Schools won’t benefit much if at all from drilling.  The .20 cents per barrel for the school system was a horrible deal struck in 1990's. Oil was trading at $20 per barrel in 1990's and now at $110 per barrel.
9. Experts claim only 2M-9M barrels are possible at this location at best.  That is only $400,000 to $1.8M for schools at .20 cents per barrel over the lifetime of the project.  Over a 20 year period that is nothing per year for the schools, maybe $20K to $40K per year. Can't even hire one person for that $.
10. Once E&B is entrenched in Hermosa Beach, say good-bye to local control. E&B will call the shots, influence local elections, etc. Hermosa Beach will be forced to jump when E&B says ‘jump’.
11. Oil seeping from the ocean naturally will undoubtedly be disturbed by the slant drill. Do you want more oil washing up on the beach similar to Santa Barbara and Huntington Beach? 
12. HB can pay off E&B Oil company and it will not bankrupt the city.
1. Sell the city storage property next to the fire station for $7.5M 
2. Get a $10M "Judgement Bond" from the State of California at 3% and service loan which will cost the city $300,000 per year. (not much in the grand scheme of things). 
13. Do you want to see a 75 foot drilling tower as you look out over the ocean. (See pic)
14. Drilling on this lot will destroy a perfectly fine $5M lot.  
15. Drilling is noisy and you want to smell fumes of oil downwind everyday? 
16. The oil tar sands used "if found" would be low grade oil and only used for ships and heavily machinery. It takes more energy to refine the crap than regular oil. 
17. Lethal gases and possible explosions?  
18. Additional ground settling and possible earthquakes. 
19. Not a green Hermosa sustainability initiative if that is what the city wants. 
20. Its low grade oil, used by crappy machinery and will have an unknown impact on the sea and surrounding environment. 

Please share this with you friends and neighbors who might be helpful spreading the world that the oil settlement should be a no vote. It may not be on the ballot for a long time but it is never too early to start campaigning against something this stupid. Please let me know if you have any thoughts or concerns. If you have any neighbors that should be on the list please copy them and lets start building the campaign now.