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South Bay Digest

Hermosa Beach : Council OKs Oil Drilling

June 12, 1986

The City Council has voted 3 to 2 to initiate oil and gas drilling at the city's maintenance yard on Valley Drive near 6th Street but rejected a proposal for a joint project with the Hermosa Beach School District.

After a driller is chosen, the city will receive a 7% platform fee for each well and an additional 11.66% royalty on all oil and natural gas recovered from city-owned land.

City Atty. James P. Lough estimated that the royalties will total less than $25,000 a year, based on royalties the city gets from a well already at the yard--the only well in the city.

The oil company that submits the winning bid also will be allowed to drill for more lucrative offshore oil once the city gets state approval for a project in the city's tidelands.

The proposal to solicit bids was opposed by Councilmen Jim Rosenberger and John Cioffi, who favor continuing negotiations with the school board for a joint agreement that would have allowed a single bidder to place wells at the city yard and at the adjacent former South School site in return for a 10% platform fee divided evenly by the city and the school district.

Lough warned the council that the city could now be competing with the school board for oil recovery. But Mayor Tony DeBellis opposed further delays.

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