Hermosa Rejects Oil Firm’s Request for Lease Extension

Unhappy with negotiations over oil drilling rights in Hermosa Beach, the City Council this week refused Macpherson Oil Co.’s request for a two-year extension on the lease that allows the firm to drill for oil from the city maintenance yard.

The council said the refusal was intended to pressure the company, which is negotiating an exclusive drilling contract with the city. Instead, Macpherson was granted a 90-day extension of its current lease that covers its use of the yard. If oil drilling does not start within that time, the lease will expire.

Regulatory hurdles have delayed the start of drilling, and drilling is not expected to begin any time soon, said City Manager Kevin Northcraft.

This latest obstacle in the negotiations of the exclusive drilling contract involves the firm’s desire to slant drill into the city’s tidelands, among other things, Northcraft said in a memo to the council.

The shortened lease extension underscores the city’s ongoing ambivalence about oil drilling in Hermosa Beach.

In the 1930s, the city had several wells, but the noise and fumes prompted Hermosa Beach to ban oil drilling in 1932. By 1984, however, the city found itself with a limited tax base and little cash. Voters--hoping to raise money to repair the city’s crumbling streets and sewers--revived the drilling idea, and passed a pair of initiatives permitting drilling from certain city property.

Since then, the project has progressed in fits and starts, with arguments over how much revenue the city will get from drilling, as well as how much noise and pollution will be generated by the project. An environmental impact report was certified by the city, but only after months of study and delay.

City officials would not elaborate on the contract negotiations. Don Macpherson, president of the company, also refused to comment.

The 90-day extension passed by a 3-2 vote. Councilmen Albert Wiemans and Robert Essertier, who have represented the council in the negotiations, were in favor of giving Macpherson the full two years as a show of good faith.

But Councilwoman Kathleen Midstokke said the refusal to give Macpherson more time was intended “to send a message that we want to clear up the remaining negotiating points.”

The city yard is as Valley Drive and 6th Street.