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Long Beach’s Hidden Treasure

April 16, 2007

By Kristopher Hanson, Press-Telegram, Long Beach, Calif.

Apr. 16–LONG BEACH — Deep below the city’s surface, through 10 million years of sand, rock and sediment, lies a literal treasure trove of oil tucked into isolated pockets of earth.

Every day, the city and a consortium of private partners drill more than 40,000 barrels out of the ground, about 75 percent of that production originating on four heavily landscaped islands in the Long Beach harbor.

The artificial islands, constructed more than 40 years ago to resemble tiny tropical resorts, hide some 1,100 directional wells reaching as far inland as Alamitos Avenue and Anaheim Street.

Operated by THUMS Long Beach Company, the island wells — and several dozen more on Pier J in the port — have proven extremely lucrative through the decades, extracting nearly 1 billion barrels since 1965.

And there’s still proven reserves of at least 160 million barrels — but only if the company abides by a city mandate requiring harbor drilling go virtually unnoticed by the public.

“There’s still a lot of oil under there, but we can only get at it if we continue to operate in a way that doesn’t disturb the community or environment,” said Bill McFarland, THUMS vice president of human resources, during a recent tour of Island White.

Operating under some of the strictest environmental and aesthetic guidelines in the world, THUMS is required by the city to make their drilling as nondescript as possible, said Curtis Henderson of Long Beach Gas and Oil.

The islands, designed by a Long Beach landscape architect who also worked on the original design of Disneyland, camouflage a 24-7 operation that extracted some 11.7 million barrels of oil in 2006 alone.

The four islands combined encompass about 42 acres of land and are named after four NASA pioneers who died in the early days of space exploration: Roger Chaffee, Edward White, Virgil “Gus” Grissom and Theodore Freeman.

Unique in the industry, the company uses electricity to power all island drills and stationary equipment. This more environmentally friendly and quiet approach isn’t cheap.

The company spent $70 million on electric bills last year.

Because the city requires THUMS operations not be visible to nearby residents and visitors, the company also uses heavy landscaping, decorative sculptures and rock formations to hide activity.

Mobile facades resembling residential high-rise towers are used to disguise 178-foot drill towers that roll around each of the four islands on a track situated above the wells.

The towers are designed to resemble the city’s Mid-Century Modern oceanfront structures, buildings like the Galaxy Tower on Ocean Boulevard, which faces Island White.

One of the most recognizable features of the islands is the illuminated waterfall on Island White.

The waterfall comes to life when water pumped from the ocean is sent gently cascading over a 25-foot concrete wall facing Bluff Park.

At night, the falls are illuminated by green, red and yellow lights.

To mitigate noise, THUMS is required to sound-proof its operations, which it does with the waterfall, special enclosures, underground pumps and electric motors.

According to elected officials representing shore-front homeowners and businesses, noise complaints about island activities are virtually nil.

“During my campaign or time in office, I can’t remember it ever being brought up in conversation,” said City Councilwoman Suja Lowenthal, whose 2nd District is closest to islands White and Grissom. “People complain about the cigarette boats or construction on land, but the islands don’t seem to be much of a noise issue.” Complaints through Councilman Gary DeLong’s 3rd District office are also non-existent, according to an aide.

“We try and be accommodating,” McFarland said. “And if people want us to turn on the waterfall or lights past the time it usually is turned off, we’ll accommodate them.” Profit sharing While everyday island operations are conducted by THUMS, the city of Long Beach employs a team of petroleum geologists, engineers, accountants and others to oversee production and distribution.

Profits are shared by THUMS, the city, state and about 3,000 Long Beach property owners under whose land oil is being drilled.

Property owners receive about 9.5 percent of THUMS annual net income distributed proportionately based on mineral rights agreements, said Henderson of Long Beach Gas and Oil.

The city uses its share of profits for waterfront development, administrative overhead and public events like the annual fireworks show.

In 2004, Long Beach took in nearly $12 million from THUMS. In 2006, when prices averaged more than $55 per barrel, the city received in excess of $21 million.

The state also takes a large portion of oil revenues.

But even with all the sharing, THUMS net income grew to $360 million last year, McFarland said.

“It’s a big change from a few years ago, when oil was selling for about $15 or $20-per-barrel,” McFarland said. “Those were lean times.” Wilmington Field The four islands are situated evenly over a 6,500-acre section of a larger oil reserve known as the Wilmington Field. The field, situated on a fault zone stretching from Redondo Beach to offshore Seal Beach, was discovered in 1932.

It has become continental America’s fourth-largest field, having produced more than 3 billion barrels to date.

The area THUMS is permitted to drill in is bounded roughly by Pier J on the west, Pacific Coast Highway at Long Beach Boulevard on the north, Ocean Avenue at San Gabriel River on the east and the breakwater on the south.

From the islands and Pier J, oil is extracted from depths of 2,200 to 5,000 feet and at distances as far as 8,200 feet away.

“Much of the oil comes from sand layers that are very similar to the sand you find on the beaches of Long Beach,” said Henderson, who oversees business operations for Long Beach Gas and Oil. “The lowest sections of the reservoir are much harder rocks, and in the deepest reservoirs the oil comes from the cracks and fractures in the rock.” Because it’s found so deep, extraction requires flushing pockets of earth with water in a method that not only loosens heavy pieces of crude oil caught in crevices but prevents ground sinkage, or subsidence.

Subsidence was a major problem in Long Beach from the 1930s through the 1950s, when oil extraction left giant pockets of underground space that eventually caused the earth to sink.

At one point, subsidence caused the ground to depress nearly 25 feet in the Long Beach harbor, damaging infrastructure and causing serious flooding problems.

To prevent this, the city began pumping water back into the ground through injection wells, which they soon found helped extract more oil.

This innovative recovery method allowed the city and its private oil partners to retrieve hundreds of millions of gallons of additional oil in recent decades.

Today, oil operations across the city, port and harbor produce a steady 40,000 barrels daily, most of it used to make asphalt.

Because the oil is extracted with the use of pressurized water, it must be separated before sale.

Typically, only about 2 or 3 percent of each gallon of water sent through the ground contains oil, so the process requires tremendous amounts of H20 for relatively small amounts of crude.

As a result, THUMS is Long Beach’s largest purchaser of reclaimed water.

Connecting the islands is a series of sub-sea pipelines transferring water, natural gas and oil. A fourth pipeline is left open as backup.

After the oil is separated from water, it’s delivered through these pipelines to Pier J, where instruments meter it. The oil is then sold and shipped to various regional refineries.

To date, the company has never spilled or leaked oil into the harbor or surrounding waterways, according to the State Lands Commission.

THUMS employs about 230 people, and contracts with local construction and engineering firms for another 450 island jobs.

Around-the-clock, 365 days a year, these contractors toil in the trenches and atop rigs, repairing, cleaning and testing equipment while constantly drilling for more black gold.

Contractors work 12-hour days for seven days straight, then take seven days off. Shifts begin at 5 and 6 a.m., with workers ferried to the islands by three THUMS-owned crew boats.

The islands themselves appear fairly comfortable, clean and quiet, without the telltale industrial odors and sounds present in other oil fields.

Built atop quarry rock and sand, they’re designed in a bowl shape so any runoff is collected on the island and not sent into the surrounding waters.

To prevent mechanical breakdown and environmental wear on island structures and water tanks, upkeep is constant. Paint is re-applied frequently to prevent weathering.

“We don’t want this place to turn into Alcatraz,” McFarland.

Occidental Petroleum, which purchased THUMS from Arco in 2000, hopes to prolong the oil field’s life by another 30 or 40 years by continuing innovative recovery methods.

They’re considering using heat to loosen oil and different water extraction methods.

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Copyright (c) 2007, Press-Telegram, Long Beach, Calif.

Distributed by McClatchy-Tribune Business News.

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