The boom is over. The last remaining oil wells on Venice Beach are capped, the Houston company that operated them is in financial trouble and the city of Los Angeles may get stuck spending $2 million to restore the one-acre patch to beach-goers.
The 10 wells, enclosed by a 14-foot-high fence near the Venice Pavilion, stand sentinel over what was once a black-gold mine for the city. Drilled in 1965, the Venice Oil Field produced 3.6 million barrels of oil. Royalties to the city totaled at least $4.6 million, according to Frank Catania, director of planning and development in the Recreation and Parks Department.
The revenue helped pay for beach improvements such as the bike path, the Cabrillo Marine Museum, lifeguard stations and restrooms.
But by 1989, Damson Oil Corp. was sucking more water than oil out of the wells, and in June this year the company filed for reorganization under federal bankruptcy laws.
Officials with the city and the oil company say they are in negotiations over cleanup costs, since the financially ailing company may not be able to fulfill its contractual agreement to pay those bills.
The negotiations are complicated by the fact that nobody knows what the cleanup will cost. A pipeline that runs under the Marina channel must be abandoned and a 14-foot concrete wall around the site, rigs and storage buildings must be removed.
But the biggest costs would result from removing any hazardous wastes or contamination of the beach left by the oil. Damson's studies have found no contamination, according to chief financial officer Donald Whelley.
City officials say those studies are incomplete, and Los Angeles City Councilwoman Ruth Galanter has asked the council to allocate $30,000 for further studies of the soil.
"With the bankruptcy, we'll need all the information we can get to maximize how much of that work we can get the court to order Damson to pay for," Galanter said.
If there is contamination, cleanup could cost the city $2 million. "That's the worst-case scenario," said David Conetta, an analyst with the Recreation and Parks Department.
Local activists fear that the city won't be able to afford to clean up the site either. Debra Bowen, a member of the Venice Town Council, said oil companies that profited from the site should foot the bill.
"The city's in a budget crunch," she said. "It's not appropriate to send the bill back to taxpayers."
Larry Sullivan, former president of the Town Council, said that the city's position only confirms his longstanding contention that the city has abused its stewardship of the property.
"Because of mismanagement, the people of Los Angeles stand to become liable for millions of dollars," Sullivan said. "This is just the icing on the cake to what has been a very sad episode."