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Roughnecks Drilling Deep to Bring Back Boom Times : Revenue: Crews are working around the clock to sink 300 new oil wells in hopes of increasing production. If the effort succeeds, the state and city will share in the profits.

March 21, 1993|RICK HOLGUIN | TIMES STAFF WRITER

LONG BEACH — The team of roughnecks on the drilling rig worked swiftly, connecting 90-foot lengths of pipe and driving them deep into an oil island off the Long Beach coast.

They are one of the crews drilling new wells around the clock, as the city's declining oil industry digs deep to wring more black gold from the earth.

A subsidiary of Arco, Thums Long Beach Co. has drilled about 60 new wells in the past year. It plans to continue drilling until about 300 new wells are in place, according to a five-year plan submitted to the City Council last week.

Thums, which produces about four of every five barrels of oil pumped in Long Beach, is trying to reverse years of declining oil production. The firm had its heyday in the late 1960s when production peaked at 148,495 barrels a day. Production had fallen to 45,147 barrels a day in 1991, and sank to 44,444 barrels in 1992, said spokesman Stephen J. Marsh.

"Now it's starting to level out and, hopefully, in the next few years, increase," Marsh said.

Thums plans to expand oil production by about 10% in the next five years.

The firm is using computer modeling to identify pockets of oil that were missed. The new wells will be drilled on the four oil islands and on Pier J in the harbor. But some of them snake for miles and tap into oil deposits below city streets and homes.

Some of the new wells will be used to inject water into the soil to push oil toward other wells, which will draw out the deposits.

Officials say residents should not notice any vibration or other ill-effects from the drilling. There also will be no sinking of land over the wells, as there was in the 1960s, when areas of the city dropped as much as 29 feet. The water Thums injects into the ground also offsets the oil that it pumps.

If successful, the project could generate millions of dollars in new revenue during the next 20 years, depending on the oil market.

Under a 1991 agreement, Arco and the state initially will split the profit that comes from the increased production. Arco is investing more than $100 million to take more oil out of the ground. And the state owns virtually all of the rights to the oil.

The agreement also rewards Long Beach for allowing the drilling.

The city will get about 4% of the profits starting in 1996, said Ray Rockoff, a city accounting officer. The city's share will jump to 8.5% four years later.

Last year, Long Beach received about $1.8 million from all oil production operations, Rockoff said. If, as projected, annual profits jump by more than $15 million by 1997, Long Beach's share would increase by about $600,000.

The agreement also gives Long Beach half of the interest generated by a $100-million emergency reserve fund for eight years. Oil producers contributed to the fund over the years to pay for any problems that might result from oil production. The fund has never been tapped.

The city has received $7.2 million in interest from the fund since January, 1992, Rockoff said.

So far, there has been no opposition to the increased drilling. The oil islands are equipped with noise buffers and Pier J is in a heavily industrial area.

"It helps the state and it helps the city," Mayor Ernie Kell said. "There's no impact whatsoever (on residents)."

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