YOU ARE HERE: LAT HomeCollections

Firm's Oil Royalties Offer Called Bribe

September 28, 1989|TED JOHNSON | Times Staff Writer

Several opponents of a proposal to drill for oil in Hermosa Beach maintain that the company is trying to sway public opinion by offering some city homeowners royalties from the operation, even if they do not own the oil and mineral rights to their property.

Les Barry, who is running for the City Council, called the offer bribery and an attempt to undermine opposition to the project.

Macpherson Oil Co., based in Santa Monica, wants to sink up to 30 wells at the city maintenance yard at Valley Drive and 6th Street and use a portion of the South School site, which is a block away, for storage and processing of the recovered oil.

Earlier this month, Macpherson representatives delivered letters to homeowners offering to lease oil and gas rights to property near the proposed sites. Homeowners who do not own such rights are still being invited to share in the proceeds.

'Good Faith'

"There is a possibility that you may not own the minerals under your unit," the letter stated. "We still are inviting you to join in the proceeds, even though it will result in our paying a double royalty. We feel that this will express our good faith to landowners in your area."

Don Macpherson Jr., the president of Macpherson Oil, said the company has been offering a share of potential proceeds to residents throughout south Hermosa Beach since 1984. About 700 agreements with homeowners and property owners have been signed, he said. Macpherson said he did not know how many residents near the city yard have accepted the offer.

About 70 residents opposed to the drilling attended a recent hearing before the Hermosa Beach Planning Commission, contending that the project would result in a decline in their property values, would create excess noise and pollution and would cause a safety hazard. No residents spoke in favor of the project.

The commission delayed taking action on a draft environmental report for the project until Nov. 8. It also put off until then at the earliest a vote on a conditional-use permit sought by Macpherson for the oil exploration and production facilities.

In an interview, Barry said Macpherson told him during a lunch meeting about two weeks ago that the offer was a "good-will gesture" to area residents.

"I told him my definition of that is bribery," Barry said.

Macpherson said the company has made the offer to homeowners only to give everyone a share in the revenues.

$2,000 to $6,000

The royalties would be determined by the size of their property, he said, adding that studies show that each resident, depending upon varying factors including the lot size, could receive from $2,000 to $6,000 a year.

He said developers will often sell a property but keep the mineral rights. "That's kind of a rotten deal," he said.

The offer by his company is common in the industry, he said. "This is an act of fairness. If it turns out that someone who buys a property did not get the rights, then this gives them the chance to participate."

Macpherson contended that the opposition was politically motivated. "Les Barry is running for City Council," he said. "He lives down in the area, and he's trying to make this a political issue. I think he's misstating the facts."

Barry is a resident of the Pacifica Villas condominiums, which border the South School site. According to a 1969 deed, Consolidated Rock Products Co. retained the mineral and oil rights below 100 feet to the property when they sold the condominiums.

"It's our custom to retain the oil and mineral rights," said Judy Cunningham, a spokeswoman for Cal Mat Co., formerly Consolidated Rock Products. Cunningham said that Cal Mat had not leased its rights to Macpherson's company and has not heard from it regarding the matter since 1985.

Different Policy

In Torrance, Kelt Energy Inc. has sought to lease oil and mineral rights from residents near a 2.2-acre site where it has plans to sink 50 slant drill wells. But it has not invited homeowners who don't have oil and mineral rights to join in the royalties, although it has considered the idea, said Kelt division manager Gregg Martin.

"Lots of companies have lots of different policies," Martin said. "These people should appreciate the opportunity. Rather than negative, it should be looked upon as a very positive situation."

But Helen Mallet, who like Barry lives in the Pacifica Villas condominiums, called the offer "a blood money bribe."

Said Florence Sacks, another condominium owner, "It doesn't seem right."

Los Angeles Times Articles