Newport sold $1.8M in oil last year

Wells are 'kind of a neat thing that we have,' utilities director says.

June 26, 2010|By Mike Reicher,
  • Utilities Operations Manager Ed Burt, left, and Utilities Director George Murdock walk through group of oil wells owned by city of Newport Beach.
Utilities Operations Manager Ed Burt, left, and Utilities… (DON LEACH, Daily…)

As Gulf Coast residents suffer from their loss of beaches and bays, residents of Newport can enjoy their water and sand for exactly the same reason – oil.

For 30 years the city of Newport Beach has been operating its own oil wells on Banning Ranch. All of the revenue from crude and natural gas goes straight to the city's coffers, into a fund for beach and bay maintenance.

And it's not a small amount – in 2009 the city sold $1.8 million worth of black gold. That's a serious chunk at a time when the city was facing a $12 million budget deficit.

"It helps out in this economy. It's kind of a neat thing that we have," said George Murdoch, utilities director for the city.

Murdoch's department operates the 16 wells through an outside contractor, Gardena-based Sampson Oil. Renick Sampson monitors the wells daily to make sure they're pumping smoothly.


That's not always the case, considering they're 60 years old and extend thousands of feet into the ocean floor.

This technique, called slant drilling, is common along the California Coast, where millions of barrels of oil can be tapped from undersea. But unlike Long Beach and other coastal cities, which charge a royalty on oil production, Newport Beach receives all of the revenue.

The city's pumping units sit near hundreds of others on the Banning Ranch property. Those are owned and operated by the West Newport Oil Co. Both oil producers lease their land.

If the landowners move ahead with the proposed Banning Ranch development, the oil operators would have to consolidate into one smaller area.

Interestingly, the city's charter requires that the public approve any re-drilling of oil wells, through a ballot measure.

This was added because, as recently as the 1980s, oil was so abundant it would sometimes gurgle up onto people's property, Murdoch said.

"Kind of like the Beverly Hillbillies, we didn't want people to drill in their backyards," he said.

While designed to prevent unrestricted growth, that provision may impede relocating the existing wells unless it's modified in this year's proposed city charter amendments. Murdoch recently recommended that the City Council add new language to make the Banning relocation possible.

Also, he wants the council to consider an overhaul of the wells. Over time, their metal casings have rusted and sand seeps in, clogging the flow and eventually breaking or stopping the system; last year the city lost one well in this manner.

It's a normal process, Murdoch said.

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