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SoCal Coastal Enclave Split by Proposed Oil Drilling Measure

A small Southern California coastal town known mostly for surfing and professional beach volleyball tournaments, Hermosa Beach, CA, is at the center of a March 3 local ballot measure on whether to lift a decades-long ban on oil drilling in the quiet seaside suburb of nearly 20,000 residents, many torn between the lure of added local revenues and environmental concerns.

Bakersfield, CA-based E&B Natural Resources, a privately held independent exploration and production (E&P) firm, is campaigning hard to pass Measure O, and it enjoys organized citizen support. But environmental groups like Santa Monica-based Heal the Bay warn that proposed horizontal drilling under Santa Monica Bay would be a bad precedent for the region. Others question whether the potential revenue benefits to the city are still valid.

E&B proposes to lease a 1.3-acre city-owned site a half mile from the shore from which to operate four-phase direction drilling during a 35-year period to develop 30 production wells and four water injection wells. Estimated total production is about 35 million bbls, a company spokesperson told NGI's Shale Daily on Monday. E&B won't say how much its intends to spend on the project.

Measure O involves five actions by the city to make the project possible, although it would still have to gain separate state and local approvals to eventually proceed. It would:

?       Amend the city's coastal land use plan, which is part of Hermosa Beach's general city plan;

?       Amend its municipal code to exempt E&B's project from a citywide ban on oil drilling;

?       Approve a development agreement between E&B and the city that would guarantee some financial benefits from E&B and impose various conditions on the E&P company;

?       Approve a pipeline franchise allowing E&B to build and operate pipelines for carrying oil and natural gas from the project; and

?       Adopt a statement that the project's potential financial benefits outweigh its "identified, unavoidable environmental impacts."

Opponents argue that it is a bad deal for the city. "Hermosa Beach is financially sound," they contend in a ballot measure statement opposing passage of the measure. "We can afford to reject E&B's bad deal and continue to fully fund city services without raising taxes."

The brouhaha at the beach is just one of a series of urban drilling projects around the Los Angeles Basin, a vast mid-20th Century oil/gas reservoir, with the advent of advanced drilling techniques and $100/bbl oil prices (see Shale Daily, Oct. 31, 2013).

Officials in E&B's Hermosa office said the company is locked in a political campaign, seeking to persuade a majority of local citizens that horizontal drilling into the nearby ocean floor can be a good thing for the city.

A consultant to the city has completed an environmental impact report, identifying and outlining the project's "significant and unavoidable impacts after mitigation." Consultants also completed a cost-benefit analysis and a health impact assessment. All three of the reports are available on the city's website.

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