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Huntington Beach Energy Se Report + 1 Preserving Surface Access to Underground Oil Reserves in Developed Areas kD a, Elh M TD 195 T4 P74 1981 no. 1 CA City of Huntington Beach Department of Development Services Planning Division February, 1981 CITY OF HUNTINGTON BEACH CITY COUNCIL Ruth S. Bailey, Mayor Ruth Finley, Mayor Pro-Tem Jack Kelly Don MacAllister Bob Mandic Ron Pattinson John Thomas PLANNING COMMISSION Mark Porter, Chairman Grace H. Winchell, Vice-Chairman Wesley Bannister Ralph H. Bauer Bruce Greer Beverly J. Kenefick Jean Schumacher Frank B. Arguello Acting City Administrator HUNTINGTON BEACH ENERGY SERIES REPORT #1 --jr PRESERVING SURFACE ACCESS TO UNDERGROUND Ln OIL RESERVES IN DEVELOPED AREY CITY OF HUNTINGTON BEACH DEPARTMENT OF DEVELOPMENT SERVICES JAMES W. PALIN, DIRECTOR FEBRUARY, 1981 Table of Contents PAGE FORWARD 1 DEFINITIONS 2 1.0 INTRODUCTION 4 2.0 COASTAL ZONE MANAGEMENT AND ACCESS TO OIL RESERVES 7 3.0 UNITIZATION, WATERFLOODS, AND THE ACCESS PROBLEM 9 3.1 Primary, Secondary and Enhanced Oil Recovery Technology 10 3.2 Difficulties in Achieving Unit Operations 11 3.3 Voluntary Unitization: Difficulties in Assigning Costs and Benefits 12 3.4 Compulsory Unitization 14 3.5 Advantage of Unitization 15 4.0 ROLES FOR CITY GOVERNMENTS IN PROTECTING ACCESS 17 TO UNDERGROUND OIL POOLS 5.0 TOWNLOT/DOWNTOWN ANALYSIS 19 5.1 Brief History 19 5.2 Remaining, Recoverable Oil 22 5.3 The Possibility of a Unitization and Enhanced Recovery Project 27 5.4 Surface Area Requirements 30 6.0 POLICY OPTIONS FOR THE CITY 36 6.1 Existing Land Use Regulations 37 6.2 Strategies to Help Preserve Existing Drill Sites 37 6.3 Strategies to Help Preserve Other Oil Operation Sites 39 6.4 Permitting New Wells in the Townlot Area 39 6.5 New Oil Sites 40 6.6 Other Possible Actions 42 7.0 CONCLUSION 43 8.0 NOTES 44 APPENDICES 45 Appendix A: Questionnaire and Cover Letter 45 Appendix B: Bibliography 48 Foreword This is the first in a series of discussion papers on energy-related issues prepared by the Planning Division of the City of Huntington Beach. Huntington Beach is a center for many energy-related activities including onshore and offshore oil production, an electric ity-generating power plant, and increasingly, solar and conservation technologies. The purpose of these reports is to help the City to accommodate the continued production of so vital a resource as energy while at the same time mitigating as much as possible any adverse impacts on the community that such activities might incur. Other reports in this series include the following: #2 Fiscal Impacts of Oil Operations in Huntington Beach #3 Oil Spill Contingency Planning in Huntington Beach #4 Enhanced Oil Recovery Technology #5 Solar and Conservation Policies at the Local Level This publication was prepared with financial assistance from the U.S. Office of Coastal Zone Management, National Oceanic and Atmospheric Administration, Linder the provisions of the Federal Coastal Zone Management Act of 1972, as amended, and from the California Coastal Commission under the provisions of the Coastal Act of 1976. Definftions This report necessarily discusses some technical aspects of the oil industry. Consequently, some terms are used which may not be familiar to the reader. The following definitions section was prepared to help clarify the meaning of some of these terms. To ease reference, all words defined in this section are italicized the first time they appear in the report's text. Consolidation: The practice of concentrating oil facilities into relatively small, intensively-used surrace areas. Economies of scale Lower average costs or greater average profits resulting from a larger business entity rather than a smaller one undertaking a particular function. Enhanced recovery technology In its broadest sense, any method which is used to recover more oil from a petroleum reservoir than would be obtained by primary methods; sometimes used to mean tertiary recovery only. Free-rider problem: Situation in which one party gains from the efforts of another party, without contributing to those efforts. Injectors Wells through which pressurized water, steam or other fluids are driven or "injected' into an oil reservoir. Joint organization: A cooperative group formed by several oil operators working a common reservoir for the purpose of investigating the feasibility of forming a unit. Participation formula: An agreement among oil operators who have formed a unit regarding the proportion of expenses and profits of the unit each operator will be allocated. Primary production: Oil driven up through wells by natural pressure in the formation or by pumping units, without injecting water or other fluids to help force the oil to the surface. Producers: Wells used to pump out oil from a reservoir. Recycling In this context, refers to the redevelopment of the surface area of an oil field for uses such as housing or commerce. Secondary production: Oil extracted after primary production usually by injecting gas or water into the reservoir. Technical committee: A committee established by a joint organization of oil operators prior to the formation of a unit which is responsible for investigating variables such as the geology of the oil reservoir, characteristics of the oil and the best potential recovery techniques. Tertiary methods: Oil recovery methods applied after secondary production which usually involve the injection of chemicals with water into the reservoir to help push out more oil than water alone can. In some cases, these methods are applied after primary production. 2 Unit: The entity formed by several different oil companies which work a common oil pool in order to share equipment and mineral interests to produce the reservoir as a single party. When the interests in a pool are fragmented, units are essential for the use of most enhanced oil recovery methods which can only be applied on a coordinated, pool-wide basis. Unitization: The process of forming a unit. Waterflood: A secondary recovery program through which pressurized water is injected into a reservoir in order to push more oil from the pores in the rock. Water injection: Another term for "waterflood.11 Well-bore: The hole drilled f rom the surf ace into the underground oil pool f or the purpose of-I-njecting materials into the pool and/or extracting materials out of it. Zones: The underground rock strata which contain oil. 3 1.0 Introduction The City of Huntington Beach overlies an production rates. Thus, many parts of the old and very productive oil field which, field are recycling to new uses, especially to since its discovery in 1920, has produced housing. almost a billion barrels of oil. Although the field passed its productive peak decades In most cases, however, the recoverable oil ago, it still produced enough oil during 1979 in the underground reservoir has riot been to rank seventh among all California oil exhausted when the surface area is fields in annual output. Over 1,000 wells developed. For example, primary are still active in the field and production, simply pumping as much oil as approximately 472 acres of the City are possible without injecting water or other used for oil operations. substances to help force it out, typically extracts only 15 to 20 percent of the oil in For several years, however, the amount of place. Consequently, when an oil field in land devoted to oil extraction in Huntington which only primary production techniques Beach has declined. The reasons for this are have been utilized recycles to new uses, the clear. In those parts of the oil field where great majority of the oil usually remains in ivabar irijection or other enhanced recovery the ground. technologies have not been applied, ')r0-;Uc1J0[1 levels have dropped Existing and I well-known secondary Significa-Itly. At the same titne, the value production techniques, such as water of the surface area for new uses -- injection, can recover an additional 10 to 30 especially for housing here in coastal, percent of the oil. In addition, several new suburban Southern California -- has risen technologies, tertiary methods, are being dramatically. Building on the oil field developed and tested to extract the oil surface has become more profitable than remaining after secondary produc tion. continued oil extraction at very low 4 tertiary methods as well. Figure 1.1 When the interests in an oil pool are highly fragmented, however, the numerous parties must act as a unit before these advanced Secondary technologies can be applied. The operators encounter several difficulties in forming a coordinated "unit," and often cannot act together to apply these more efficient production methods. Prima These difficulties are discussed later in this report. How-ver, if these problems are overcome, unitization can be achieved and Remaining Oil-- enhanced recovery ineth.-AS 3ppliod to Recovery by Future provide large amounts of oil. Technology? �IN, Oil may riot I,-) erecovered (even if unitization becomes economically feasible) i@1111 V1, .:02, if there are no surface areas from which "N extraction Can be accomplished. It is precisely those areas where secondary Percentage of Oil in the Ground methods are not currently used that Which is Usually Recovered by production has declined so much that Different Extraction Methods. abandonment of the field for redevelopment is more profitable than continued oil extraction. Thus, the parts of the field Source: Petroleum Engineer, which are most likely to be developed for January,1976 residential or commercial uses and to lose future access from the surface are also the ones where secondary methods have not been tried and where their application could potentially produce large amounts of oil in Several of these methods are being tried in the future. parts of the Huntington Beach field. Domestic oil supplies are an increasingly Secondary and most tertiary techniques scarce and valuable resource. Their value cannot be applied on an individual well derives not only from their economic worth basis. Fluids, such as water or water but from other, less-tangible, benefits treated with chernicals, are forced through related to the decreased reliance on foreign several wells (injectors), sweeping the oil sources. These benefits reach beyond residual Oil out of the pore spaces and then the local community and have 2 regional and to several other wells (producers) which even a national importance. The pump the oil to the surface. The injectors greater-than -local importance of domestic and producers are typically arranged in oil would argue that the preservation of patterns so that the injected fluids can significant oil production opportunities efficiently sweep through an oil pool. Thus, should be the concern of the State or the entire oil pools must be treated as a whole federal government, and not primarily of or a unit and these methods must be applied the City. in a coordinated way. Local governments, however, traditionally When the entire pool is owned by a single have control over land use. It is the City company, use of these methods is relatively which must control surface activities if land easy. In fact, the major operators in for future oil extraction needs to be Huntington Beach -- Afflinoil, USA and protected. The local government also Chevron, USA -- have been waterflooding shares the responsibility of protecting the their parts of the field for over two interests of the present and future decades, and both companies are testing community surrounding oil operations. 5 Consequently, another reason for City continuation of a very valuable revenue involvement in this issue is to ensure that source in the community. The purpose of any adverse impacts on nearby uses from this report is to discuss the protection of future oil operations are reduced to access to oil resources as an important reasonable levels. One other consideration consideration for local land use policies. It that the City must weigh in assessing the discusses the numerous variables on which access issue is that oil production generates access preservation can be based, suggests a substantial tax revenues to the local range of protection strategies, and analyzes government. Protecting access and the specific areas in Huntington Beach where option to apply future extraction they could be applied. technologies m ay be crucial f or the 6 41.0 Coastal Zone Management and Access to Oil Reserves The California Coastal Act of 1976 calls for Among the considerations relevant to the the protection of the natural resources of long-term utilization of these Coastal California's coastal zone. Among the goals resources is the need to protect surface of the Act is to: access to the oil reserves. The area of the City where the most significant deposits "Assure orderly, balanced utilization and still in primary production are found, and conservation of coastal z one resources where future access is most jeopardized, is taking into account the social and economic the Town lot/Downtown area, wh ich is needs of the people of the state."i partially in the coastal zone. (See Figure 2.1). The City recognized this issue in the Certainly the most significant natural Land Use Plan of its LCP, which includes resources in and near the Huntington Beach policies to amend the municipal code, if coastal zone include the long-productive necessary, to help ensure that such surface deposits of oil. In accordance with the access is reserved, if it is essential to the intent of the Coastal Act, the City is future development of significant oil concerned with the orderly utilization of resources. This report is intended to help these deposits. The City's Local Coastal the City analyze these issues, as a step Plan (LCP) policies are intended to toward refining its policies and ordinances accommodate the legitimate needs of the aimed at ensuring the efficient, long-term oil industry while also protecting other use of these important coastal resources. important coastal resources such as the recreational and visual amenities of the shoreline. 7 00 Coastal Zone Boundary A ------------ I mED '-DD 0M 0 ED @Dj zflD ED M ED ED uM EE M ED ED M M ED ED PD Ed DD M ED M ED ED ED ff, M ED ED ED M @7 ED ED ED ED ED ED M ED Dj ED EDI T ED ED M ED ED M ED ED M ED ED M ED ED T M ED Ul 'D@ 6 z V 'i X2 2 UD' LI-11 11-LI 17,1710 [111 Ell] 1111111111 11 1111 1:1 F1 1:11 F1 F1 L11 El El El El EJ E-1 = = = -AN A- -A. Xft Figure 2.1 Townlot/Downtown, Huntington Beach. Source: Huntington Beach Planning Division. huntington beach planning division 3.0 Unitization, Enhanced Recovery and the Access Problem Providing future access to underdeveloped apply secondary or tertiary produc tion oil reserves is usually a concern only where technologies. Consequently, a diSCLJSSiOr- nf many operators work a common reservoir how unitization is related to these rneth,),i and they have not been able to tinitizc and and why unitization is sometimes diffii,,"' Figure 3.1 Pressurized Water Oil IQ Injection Pump Producing Injection Well Well Oil Pushed by Pressurized Water Injected Water Enters oil Zone Side View of a Waterflood Section. Source: Chevron, USA. 9 to achieve is very important to an analysis Much more of the oil can often be recovered of the access issue. if pressurized water is injected into the oil pool. The water helps to move the oil 3.1 Primary, Secondary and "Enhanced" through the pores in the rock. In this Oil Recovery Technology technique, the pressurized water is forced into the reservoir through "injector" wells. The simplest and most common method of The water moves out in all directions from extracting oil is to drill a well into the these wells, sweeping oil in front of it. (See oil-laden rock (usually sandstone in this Figure 3.1.) area) and pump as much of the oil as possible. However, oil is a sticky, thick Other we 11s, called "produc ing," are substance which does not flow very easily arranged around the injectors to pump out through the pores between the grains of the oil and water. (See Figure 3.2.) sand in the rock. Often, more than 80 percent of the original oil in place remains To efficiently use the pressurized water, in the reservoir after th is "primary" producing and injector wells are arranged in technique is accomplished. patterns which allow most of the oil pushed by the water to be pumped out. (See Figure 3.3.) Figure 3.2 ..,-5 Figure 3.3 X X X X X 0 0 0 0 X X X X X 0 0 0 0 X X X X X water X injection well 0 production well ......... . Example of Well Pattern in Waterflood Program. Source: Oil Well Drilling Technology, McCray and ressu ized water from the Cole, 1973. injection well () forces oil toward tne producing wells 0 Top View of Waterflood. These patterns are not always reflected in the surface locations of the wells because Source: Huntington Beach Planning wells can be drilled I'directionally," that is, at an angle, and it is the location of the Division. bottoms of the wells in the oil pool itself which is so important to the application of these techniques. An advantage of directional drilling is that a few, centralized surface parcels can sometimes wwe el The practice of concentrating facilities accommodate many directionally-drilled into small, intensively-used surface areas, is wells through which much larger 10 called consolidatio?l. underground areas can be tapped.* Clearly, this method which is called "water program. In fact, an important reason why injection" or "waterflood," cannot be applied unitization is not tried in many cases is that through a single well. Rather, many wells there is no large company with enough of an are involved which must be worked in a interest in the reservoir to warrant the coordinated way; the location and depth of costs and risks of trying to form a unit. the wells, the timing of the injecting and Small oil companies usually do not have the producing phases, the pressure applied at technical or financial resources tb instigate different times and locations, and many a unit. other variables must be planned together to get the best use of the technique. The However, even when a large corporation has entire pool must be treated as a whole, or as an interest in the pool, it must overcorne a flunit" -- otherwise a significant part of several barriers before unitization can be the investment in drilling the well and achieved. injecting water under pressure may be lost because much of the oil may be pushed First of all, there is a significant incentive al)out but not collected. for any individual operator not to participate in a unit while hoping that his When a single company works an entire oil more numerous neighbors instigate the pool, this type of production method is project anyway. In this situation, the other easily accomplished. When several operators in the field incur the cost of operators are pumping from the same pool, developing the secondary recovery program, they must agree to work together as a unit. while at the same time, if his wells are This, however, is often very difficult. These favorably located, the hold-out is able to difficulties will be discussed more fully in recover some of the oil swept by the unit's the next section. injection pattern. The hold-out does not share in the costs of implementing the Even after secondary recovery, more than program, but he shares in the increased 50 percent of the oil remains in the ground. production. Often, so many operators New methods are being developed to refuse to join a unit for this reason, that the recover some of this oil. Many of these program cannot be undertaken. This involve injecting substances into the oil predicament is often referred to as the zones along with water; these substances free-rider problem. help push out more oil than water can alone. Again, however, these techniques are Federal price controls on oil have often most efficiently applied on a pool-wide been cited as inhibiting unitization. The basis.* These technologies are often federal government has recently taken steps called "tertiary production" when they to deregulate the price of all domestic follow an earlier water injection program, production, so price controls are no longer However, in a reservoir where water an important consideration in analyzing a injection has not occured, these techniques unit's potential profits. might be applied simultaneously with or instead of a simple waterflood, to increase Some parties may not be interested in the efficiency of production. joining a unit because the oil operations are, in fact, owned by firms whose principal 3.2 Difficulties In Achieving Unit interest is in redeveloping the very valuable Operations surface land at a time when it is most profitable. Such firms do not want to A large oil company which holds a commit the ir surface holdings to a substantial fraction of an oil pool will be the long-term un it agreement for oil party most likely to try a unitization production. Th is problem could be overcome if these operators are willing to join on the basis of mineral rights, but not However, not all such technologies are so surface area or equipment -- provided applied. See Report 4 in this series, enough surface land still rernains to produce "Enhanced Oil Recovery," for a fuller the field economically. discussion of these methods. Another potential problem involves the that could be recovered and the suitability liability of a unit for production decline of the reservoir to secondary among non-participants. if enough production--and hence the potential profits operators are willing to participate that a that could be realized from a unitization un it waterflood is undertaken, the prograrn--leads some of the parties holding operations could result in a non-partic ip ant's an interest in the reservoir to pursue a production declining (although often it voluntary unit agreement. increases as explained above).* The unit may then be liable for the loss in Usually, a major operator holding a production. Court cases in Texas and substantial fraction of the interest in the Kansas have absolved units of such liability; reservoir contacts other ownership interests however, some companies have cited the and invites them to a meeting to explain risk that the unit might be held liable as a why a unit operation and a field-wide reason for not participating. recovery project may be desirable. Often, many operators are not interested because Thus, for all these reasons, it is difficult to they have no first-hand unitization get all the parties that hold an interest in an experience, or they do not have the oil pool to join a unit voluntarily. In light of technical background to assess the potential this, and the fact that unitization and value of the project. Many operators are enhanced recovery is the most efficient simply suspicious of the true intentions of a method of extracting a very valuable major company, doubting that small firms resource, most states have established will get fair treatment in the joint compulsory unitization laws. These require arrangement. Other reasons why individual hold-outs to join a unit if a certain operators might not express even a percentage of the total interest in a field is tentative interest in the project were willing to participate. This percentage discussed above. varies from 60 percent to 85 percent. (See Table 3.1.) In some cases, however, several of the parties are tentatively interested in a The compulsory unitization laws in common operation and they begin to work California, however, are limited in their on a unitization agreement. This is usually application and may not be relevant to a very long, difficult and costly process. Huntington Beach. Voluntary and The first step is the initiation of a joint compulsory unitization are the topics of the organization. next sections. The joint organization usually establishes 3.3 Voluntary Unitization: Difficulties in several committees to research information Assigning Costs and Benefits necessary for developing the unit. The most important of these is probably the technical Despite the risks and costs of trying to put committee whose task is to determine the together a unit, sometimes the amount of oil geology of the reservoir and to recommend the best recovery technique to be applied. This committee analyzes such factors as the *This could occur if the hold-out's well were areal extent of the oil zones, their depth so close to the unit's injectors that the oil in and thickness, faulting patterns, existing the zone near his well is swept away by the well-bore distribution, and surface areas pressurized water. The result would be a available for new wells and equipment. The large increase in the amount of water committee then evaluates possible recovery pumped from his well, but not in the amount methods. Historically, most units were put of oil. together to apply simple water 12 Percent of Working Percent of Working Percent of working Interest Required Interest Required Interest Required State For Compulsory Unit State For Compulsory Unit State For Compulsory Unit Alabama 75 Louisiana 75 Ohio 65 Alaska 62.5 Maine 85 oklabpma 63 Arizona 63 Michigan 75 Oregon 75 Arkansas 75 Missouri 75 South Dakota 75 California 75 Montana 80 Tennessee 50 Colorado 80 Nebraska 75 Utah 80 Florida 75 Nevada 62.5 West Virginia 75 Illinois 75 New Mexico 75 Wyoming 80 Kansas 75 New York 60 Kentucky 75 North Dakota 80 AMEX Table 3.1 Percent of Working Interest Required for Compulsory Unitization Statutes. Source: EOR Potential in U.S., OTA, 1976 huntington beach planning division injection. However, future units may use Surface areas are likewise unequally valued enhanced recovery technology with the -- some locations are more critical than waterflood to recover more oil quicker, others. Different operators will also rather than waiting to apply such contribute more wells, more mineral rights, technologies after a simple injection more storage or processing equipment or project. The collection of data and the more surface area than others. Pride in evaluation may take years, depending on the property ownership or in control over complexity of the geology and whether the individual operations is another less tangible field is well-known or not. The committee's factor affecting the value an individual may recommendations must be brought before place on his interests in the reservoir. the full joint organization for approval. Clearly, assigning costs and benefits in a A legal committee researches land and way that is considered fair by all parties is a interest titles and royalty agreements and very difficult process involving long-term tries to determine if there are any legal negotiations. Usually, the greater the restrictions or problems related to property number of parties, the more difficult it is to rights which could jeopardize the unit reach an acceptable agreement project. This committee is also responsible for working with the Division of Oil and Once a participation formula is arrived at, Gas, the State regulatory agency, to ensure unit agreements are drawn up for the that the proposed un it satisfies any operators and the royalty owners. statutory and administrative requirements related to multi-company oil operations. The time fro m initiation, through negotiations, to agreement can take up to A land committee identifies all the parties four or more years. The length of time and holding surface and mineral rights and concurrent expense of these negotiations, as informs them of the possible unit agreement. well as the risk that the negotiations may reach an impasse and the project may be An accounting committee records the precluded, contribute to the reluctance of expenses of the joint organization during many operators to tr y to initiate or this planning process. This committee will participate in such a program. work with the technical committee in determining the most profitable technique 3.4 Compulsory Unitization to be applied (considering tax and depreciation regulations, etc.). Many states, recognizing that unitization increases the efficiency of production as Probably the most difficult part of the well as the total amount of oil ultimately voluntary unit agreement is to determine recovered, have enacted compulsory the participation formula -- the share of the unitization statutes. These laws require all costs each participant must pay and the interest-holding parties in an oil pool to join amount each will later receive from the in a unit, if a certain majority percentage of unit's profits. The input of the technical the parties agree to unitize. committee is very important in this determination. The value to the unit of California actually has two compulsory certain mineral rights, for example, will unitization laws. The f irst requires depend on how much of the oil reservoir is unitization in order to waterflood and thus included and where it is located in the to repressurize an oil field if subsidence is oil-laden formation. The same is true for injuring or imperiling buildings, harbors and the valuation of existing wells -- the other improvements or may be interferring location, depth, age and condition of a well with commerce, navigation or fishery, or will affect how important it is to a unit. where sub si dence -induced inundation could 14 endanger life, health, safety, public peace, There are numerous related advantages that welfare or property. result from this. This law is inapplicable to Huntington Beach First, by all measures, this is a more at this time because there are presently no efficient production technique: the total serious threats from subsidence in the City. volume of oil recovered increases; the time it takes to produce that oil is reduced; the The second statute is sometimes referred to amount of capital invested (equipment, as the Townsite Law. If 75 percent of the well-bores) per volume of oil is reduced. working interest of an oil pool agree to a unit operation, this law enables the State to Second, consolidation of surface area require the remaining interests to join the usually accompanies unitization. By state unit as well. The Townsite law, however, law, a unit agreement can only be approved applies only to fields which were discovered if it provides: before 1934 and which are at least 75 percent within an incorporated city. It is "To the full extent practical, for the not clear that this law could be applied in organization and consolidation of surface Huntington Beach because large parts of facilities, including oil production, storage, this field extend offshore and into the Bolsa treatment and transportation facilities, in Chica which is unincorporated county land. such a manner as will eliminate wasteful and excessive use of land surface areas, The rationale behind the law is "that the freeing suc@ areas for other productive use management, development and operation of and develop .ment ... vv3 lands as a unit for the production of oil and gas aids in preventing waste, increases the For example, the many small tank systems ultimate recovery of oil and gas, and associated with small groups of wells can be facilitates increased concurrent use of eliminated and a larger, centralized surface lands for other beneficial separation and treatment plant utilized. purposes."2 New wells and redrills can often be consolidated into walled and landscaped Under the law, non-joiners may sell their islands. Existing wells which are not interest in the pool at a fair-market value. important to the injection pattern may be This value is determined by an assessment plugged and abandoned. of the "primary tract value" based on the projected future primary production if no A workshop on urban oil development held in secondary were undertaken, plus the the Southern California area recognized 11secondary tract value" based on estimates these kinds of advantages to unitization, of secondary recovery. The members of the conc lud ing: unit must purchase these interests if they are offered for sale. If the buyer and seller to. . . unitization was a beneficial tool to be disagree on a fair selling price, 2n used in older fields for improving oil arbitration procedure has been established recovery, aesthetically improving oil field to determine a fair valuation. operations and eliminating deserted, idle or unneeded wells.',4 3.5 Advantages of Unitization The benefits of unitization extend to the It is clear that unitization is important for fiscal status of the City as well. In another the application of waterflooding and other study, the Huntington Beach Planning enhanced recovery techniques. Division has analyzed the fiscal impact of oil operations on the City. The findings indicate that consolidated facilities, employing waterflood and other enhanced 15 recovery technologies are significant plant may require the laying of new net-revenue generators.* For example, pipelines in public right-of-way, causing Aminoil and Chevron, with highly temporary disruption of the street system. consolidated operations, use about 60 Increased waterflooding may increase percent of the wells in the City to produce de mand on public sewerage and water about 85 percent of the oil and 85 percent disposal systems. Nonetheless, from a fiscal of the oil-related revenues. The reasons for perspec tive, the revenues generated by this are that costs tend to decrease as the unitization usually greatly outweigh the few facilities are consolidated and less acreage costly effects. is used and that revenues increase as production increases. The operations also tend to improve because the oil pool is now worked by a larger The cost of police patroling, for example, is company or unit with a wider financial base more sensitive to the number of oil sites than many of the individual operators. This than to the number of oil wells. Thus, in a tends to make financing of mitigations for unitization and consolidation project if the adverse aesthetic and environmental number of wells stay the same or even impacts associated with oil production increase, but less sites are used, police costs easier. The un it can typically provide attributable to oil can decline. For another better fencing and landscaping example, the costs of the City for sound-proofing and odor emission controls recordkeeping, inspection, taxation and than individual operators. The higher billing all tend to decline when the City can production experienced with a unit and deal with a large, single entity rather than waterflood allows the larger companies or scores of individual oil companies. units to expend monies for better equipment and maintenance so that the newer Revenues to the City are tied especially to operations are usually quieter, cleaner and the property tax on the mineral rights and less polluting than older facilities. Larger to severance or "p er barrel" tax on companies or units also experience production. Interestingly, mineral rights economiesof scale -- it is less expensive to assessment is tied to past productivity; thus, landscape or soundproof a few intensively if productivity rises, mineral rights used islands than hundreds of individual well valuation rises, too. (Although there are and tank sites; the one larger unit can deal important limits to how quickly valuation with these problems more efficiently than can rise as a result of Proposition 13.) Also, dozens of individual operators. as productivity increases, revenues from the severance tax which is simply a production In summary, unitization and consolidation of tax must increase, too. urban oil operations can be desirable for the following reasons: Of course, there are some negative impacts. Use of a centralized treatment - Oil production increases. - Less land is used and unnecessary or inefficient tanks and wells are removed. See Report #2 in this series, "The Fiscal The appearance of the operations Impacts of Oil Operations in Huntington improves; better mitigation of other Beach," Huntington Beach Planning adverse impacts is usually achieved. Division, March, 1981. Costs to the City tend to decline but revenues tend to increase. 16 4.0 Roles for City Governments in Protecting Access to Oil Pools The value of the increased domestic oil De-regulatibn and the rapidly escalating production that may be afforded by price of oil should help to improve the enhanced recovery technologies, as well as profitability of potential units in the the advantages of unitization and future. Another pricing problem is that the consolidation discussed above, argue that value of domestic oil to the society may not protecting surface access to underground oil be fully reflected in its (even de-regulated) pools and encouraging the formation of unit price because domestic production provides operations to work those pools may be other, less tangible, benefits to the country desirable policy objectives. This section related to the reduction of our reliance on discusses the kinds of roles which might be foreign sources for oil. This situation might appropriate for local governments in argue for federal incentives for increased promoting these objectives. domestic production. First of all, it should be noted that two of All these considerations, however, are the principal problems which have inhibited national in scope and lie within the unitization and the subsequent application jurisdiction of the federal government, not of secondary and tertiary recovery methods the municipality. are clearly outside the purview of the local jurisdiction. Another important problem related to unitization is the cost of forming a unit, Many oil companies have cited low oil espec ially the cost of getting enough prices, compounded by price controls, as an operators to join. The existing State important reason why many potential units compulsory unitization laws are examples of would not have been profitable in the past. ways to reduce these costs. 17 Note that the State regulates mineral rights solutions to these problems lie outside the and the unitization of oil pools; thus, the City's purview. However, the City can help State, and not the City, is the appropriate to implement any future corrective jurisdiction f or instigating policies and measures by the State or federal statutes aimed at reducing the costs governments by not excessively restricting currently associated with forming a unit. future oil operations from the surface of the field and by developing ordinances and In both of these cases, the appropriate role policies aimed at keeping enough surface of the local government could be to adopt area open in the face of encroaching ordinances and policies which would not urbanization to accomodate future preclude future ameliorative actions by the unitization and enhanced recovery programs. federal or State governments. The principal tools for achieving this are the Traditionally, control over land use has been City's General Plan and its zoning the domain of the local government ordinances. Options for Huntington Beach (although legally, States have pre-emptive regarding its land use policies are discussed control over land use.) The City should in Section 6.0. Before reviewing policy recognize the two problems noted above: options, however, it is important to discuss inappropriate pricing and the sometimes the particular situation in Huntington Beach excessive costs of forming a unit. The City where these issues are especially relevant. should also understand that the appropriate That is the topic of the next section. 18 5.0 Townlot/Downtown Analysis As mentioned in Section 2.0, the over 35 oil companies operate only 98 "Townlot/Downtown" part of Huntington active wells. Chevron has the largest single Beach appears to be the most likely interest in this part of the field, but it candidate for a unitization and secondary accounts for less than 20 percent of the recovery project. It is also an area where total interest. Aminoil, the other major oil rapid redevelopment of oil parcels and company in the City, has virtually no vacant land is probable. Therefore, this holdings in this part of the oil field; area was analyzed specifically with regard (Aminoil does own some surface areas there to the importance of preserving access to from which wells have been directionally remaining oil reserves. drilled to offshore pools). The area studied is located between Pacific Thus, unitization has been difficult not only Coast Highway and Palm Avenueq from because there are so many operators, but Goldenwest to Lake Street. Also, a also because neither of the large companies relatively large oil lease near Lake Street which have the resources to instigate a and Atlanta Avenue was included. A large unitization program has a particularly large portion of this area lies within the coastal stake in this part of the field. zone. (See Figure 2-1). Of the approximately 350 acres, only about 14 are 5.1 A Brief History still being used for oil production. Oil was first discovered in Huntington Beach This part of the field has never been in 1920, at a site near the present waterflooded, largely because ownership of intersection of Goldenwest Street and Clay the f ield is highly f rag mented and Avenue. During the next several years, oil unitization has not been achieved. was discovered throughout Huntington 19 Beach but the City prohibited oil drilling in Since that time, production has declined to the Townlot and Downtown areas. However, a relative trickle. In 1979-80, 138,983 the continued success of oil operations north barrels were recovered, an average of only of 23rd Street (Goldenwest Street) in a 380 barrels per day for the entire area and barley field (which is now the "Seacliff" golf only about four barrels per day per well.8 course and residential development) prompted the City to lift these restrictions In other parts of the City, notably the leases in 1926 and to allow drilling between 23rd north of Goldenwest, the two major and 17th Streets. Two very important oil companies, Chevron and Aminoil, run highly zoneq, the "Jones" and the "Main," were consolidated operations which tap very large quickly discovered. The State Division of underground areas. These companies began Oil and Gas noted that: applying water injection in the late 1,950's and now have extensive water and steam "Intensive drilling activity followed flood projects as well as several tertiary these two discoveries, resulting in the recovery pilot programs. These companies fastest development and closest spacing have employed these technologies to work experienced in California to that date. these areas much more completely and Some wells were drilled on 25-foot efficiently than other areas in the field lots.,,5 where fragmented ownership has precluded unitization. The Townlot is one of those Another important zone, the "Tar" or areas which has not yet been waterflooded "Bolsa," was found later in 1926. In because the large number of operators there November of that year, the City opened the have not formed a unit. rest of the Townlot and Downtown to drilling, except for a "fire zone" between In recent years, the increasing value of land 5th and 3rd Streets which was excluded in near the coast for new uses (especially for order to protect the City's principal housing) along with declining production commercial district - - a short strip along have prompted many oil operators in the Main Street. On December 24, 1926 Townlot to abandon their wells and to production peaked at 63,400 barrels from 78 redevelop their sites. Also, after the Local wells. Production dropped quickly from this Coastal Plan is completed, development early peak and then gradually declined until pressures on the many oil sites in the the late 19401s.6 coastal zone will likely intensify. In light of these effects, it appears very possible that During the early years of the field, so many of the oil sites in the Townlot area development of the Tar zone was inhibited will be redeveloped that there will not be because the oil in these pools is very thick. enough active we 11 holes nor enough The viscous ooze carried large amounts of available surface area for a future sand in it which often clogged the wells and secondary recovery project. complicated later processing. The growth in automobile use after World War 11 spurred This possibility raises several questions. such a high demand for oil that even thick First, how much oil could be recovered if an crude became profitable to extract and enhanced recovery program were process. This prompted a second drilling undertaken? Second, even if there is a large campaign in the Townlot area as operators amount of remaining oil, how likely is began to exploit the previously neglected unitization and a future secondary recovery Tar zones. program? Third, should the City take steps to help preserve access to these oil reserves In 1954 oil pools were located farther south and, if so, what should those steps be? The in the field, near the Downtown. Intensive remainder of this report tries to give drilling in this "southeast extension" of the tentative answers to each of these questions. Townlot resulted in another production peak in the mid-1950's.7 20 5.2 Remaining, Recoverable Oil Figure 5.1 The most important variable for deciding PCH Palm Ave whether the City should take steps to protect surface areas for future access to oil pools is the amount of oil that would be lost if the surface is completely developed. Using data from the State Division of Oil and Gas (DOG) and from the major oil -1000 companies in Huntington Beach, the City Planning Division estimated the remaining, recoverable oil in the Townlot area. The purpose of these studies is not to establish an exact numerical figure for the remaining I le bolsa oil, but to indicate whether there is enough -2000 oil to make an enhanced recovery program possible and, thus, if protecting surface 10 r bo areas and access for such a program is important. stray The first technique used to estimate the -3000 remaining reserves is the "volumetric method," which uses data about the physical parameters of the field to estimate the volume of the original oil in place (OOIP). iones Then, certain recovery factors" estimates of the percentage of the oil that -4 000 can be recovered by different extraction technologies -- are applied to the OOIP main estimate. In this way, one can determine ............. how much oil could be recovered by an enchanced recovery program. Th is method requires much geologic information. First, one must know what oil zones underlie this part of the field. Example of Cross-Section Underlying Townlot. Figure 5.1 illustrates a typical cross-section under the Townlot area, and Figures 5.2 and Source: Division of Oil and Gas. 5.3 show their areal extent. The important oil-bearing strata include the Middle Bolsa, Lower Bolsa, Stray or AC, Upper Jones and Main zones. However, because of the lack of course, are not liquid pools, 'but are rocks of reliable data, the Stray and Main zones which contain oil in small pores i_)etween were not included in the volumetric grains of solid material. Thus, the total estimates. Thus, the results should be on volume in acre-feet must be multiplied by a the conservative side. "porosity factor" -- the percentage of the rock which is not solid, but is actually By multiplying the area of a zone in acres spaces or pores between the solid materials, by its net thickness in feet, the total volume and can hold the fluids. However, not all of of the zone can be determined. The zones, that space is filled with oil. Water is also 21 ........... ............ ............ ........... ............ ............ ............ ........... ........... ........... ........... ............ ........... ............ ........... ........... ..... ........... ..... ............ ..... ........... ... .... ................. ..................................................... ....................................... ............ ........... @X X :-X X. .. ...... .... ............... .... .......... ...................... H 1. U.. ........ .. MUD NEN, Ra ....... .... . ....................... ....... ........ ... . ... .................... ............ ... ... ....... .......... ::E ....... ... ... ................. ..... .. ... .. . ... .. ..... ... . .. . ... ..... .. . - NEN. ..... ....... . ............ ...X . ............. ................................ . ... ........ ................................ .... ..... ....... .. ...... ... .. ...... .. .. ..... .. .. .... M ME 00 OU . .......... ......... ....... .. L :::[E:.M:::H ....... ... . .. ...... .......... ......... .. ...... ... . . ............ .. . ... ............... .. ....... ............ ............... ............ ............. ........... . .. ............ ....... .............. .. .............. ........ .............. OENMMM N ou .... M.0 N,:: RM ..... ......... ........................ ...... ........ ................................... .. ....... .... .. ..... . ........................... ....... ........... ....... .... ... ..... ... ......... ..................................... ............................ .................. ... .. ......................... . ......................... ... .. .......................... ... . ...... . . ............... ...... ... .. ............................ .. @@ Bii@ 00 ............................ .................. ............... DE m 3-HOU E M .. ....... ........... ............... .................... .......... . ... ............ .............. .. ........ .......... ................. :::MT7 MIAMP9 .... ......... . ........ ...... . ... ....... 0 . . ....... ME .......................... ................... ..............X........ .. L@I: ..................................... .......... ........ ....... ............................. ............. . ........ ... ................. . ........................ ....I.......................................................... ................................. ........... .................... ....I............... ....... ..... ......................... ................ .................. ........ ........... .......... ...................... ...... ... ................................................. .................... .................... . .......... ............. ............ ALAM& Figure 5.2 Areal Extent of Bolsa Zone. Source: Division of Oil and Gas. huntington beach planning division found in the pores between the solid Table 5.2 summarizes the data and materials. Thus, the total volume must be calcuations for OOIP in the Townlot. The further reduced by a "water saturation" OOIP is estimated at 112.1 million barrels. factor. By multiplying area by: 1) thickness, 2) porosity percentage, and 3) a The next step is to determine how much of water saturation factor, the number of the OOIP can still be recovered by "acre-feet" of oil is determined. There are secondary and tertiary technologies. After 7,758 barrels of oil in an acre-foot and one discussing the performance of different can estimate barrels by using this factor. extraction techniques in Huntington Beach Finally, another variable called an "oil and other nearby fields with engineers from formation volume factor" mu st be the DOG, Aminoil and Chevron, the considered. This simply adjusts for any following recovery factors were established difference between the volume of the oil for the Town lot/Downtown area: primary, underground and its volume at the surface. .30; secondary, .12; and tertiary, .07 of OOIP. Usually, the primary rate is lower and Table 5.1 summarizes these variables and secondary rate higher; however, the the formula used to determine OOIP. engineers suggested that the very long term and unusually intensive production has Table 5.1 probably accounted for a higher primary rate and thus a lower potential secondary one in the Townlot area. VOLUMETRIC METHOD These data and these recovery factors suggest that over 20 million barrels of oil A area in acres may still be recovered in the Townlot area P porosity if secondary and tertiary technologies can H net thickness in feet be applied. Sw water saturation B oil formation factor To help confirm the reasonableness of this 7,758 bbls/acre-foot estimate, the Planning Division calculated OOIP original oil in place recoverable reserves using another method, the "decline curve technique." This method uses the past performance of the field for A x h x P x (1-Sw) x 7,758 = OOIP estimating future production. B Formula for Volumetric Method. The estimate would be most accurate if the annual production records of every well ever Source: "Valuation of Oil Producing drilled in the Town lot /Downtown since 1926 Properties", State Board of were located, reviewed and totaled. This Equalization, 1972. kind of research is very difficult and time-consuming. Instead, the Planning Reliable data for these variables wer@ Division researched the production difficult to obtain. Net thicknesses of the summaries for this part of the field found in zones in the Townlot area were unavailable, several DOG Annual Summary of Operations and were estimated from cross-sections and and the recent production records of active f rom discussions in several DOG reports. wells. A reasonable decline curve was then Areal extent was estimated from contour interpolated between the few known data maps of the zones in DOG reports. The points. Cummulative production was then other variables were obtained from DOG estimated from this decline curve. See and industry estimates. As mentioned Figure 5.4. The total production for the above, the Stray and Main zones were Town lot /Downtown is approximately 43 excluded due to lack of data; thus the million barrels. estimates are probably low. 23 .......... ........... ............ .............. .............. . ............... ....................... .............. ................. . ........... I....... .......................... ............... ................ .......................... .......... ..................... .............. ............ .............. .... ... ........ ... .......... ........... ............ .......... ....... 1,UUT-LD L ................. ..... .. ... ....... .. ... :UL ............................. .............. 4 ..................... .............. ....... . ............. ..... ... at. HUD ....... ......... .......... ....... ............. .......... 0.0 .... ..... .. .. ... ... ........... .. ................. ...... BEDE 2 .. .............. X ................... ....... .......... . . ...... . .. .... . .... ................ .......... ................... ....... f7.1 ................. ............ ............. ............................. .......... ................. ........ ............ ............. .... IE "00. . ........ . ....... ........ . .... ......................... ..................... ................................ . ......... ................ .. ........... ................. . ........... ............ ........................ .......... @@i Eli . ......... EH IMERM, Es ... E9 P9 . . ......... : I.. ........... ....... ........ ........... 1:@@ : m . .......... ............. ............ ... ........ ........... ... ........... ....... ..... ........... .......... ...... ...................................................................... ....... . . . .......... ................ ................... .... ................. ............ ............... .......... ............................................. ............................................................. .......... ............................... .... .......... ............ ................. ...... ........... ....... ...... 'ACIFIC "'Mc Figure 5.3 Areal Extent of Jones Zone. Source: Division of Oil and Gas. huntington beach planning division @ I 1 11 1 1 . I I--- I I I ". 10 Average blil/day 90,000 - Townlot 80,000 - Discovery Total for Townlot: 40-50 million bhI 70,000 - 60,000 - Field-wide onshore production 50,000 - 5-Points Bolsa Chica 2nd Townlot Waterflood 40,000 - Dis very Discovery (Tar) Begins 30,000 - Known data points 20,000 6 .4--" average Townlot Production 10,000 % % - - - - - - - - - --r 1920 1930 1940 1950 1960 1970 Figure 5.4 Decline Curve for Townlot/Downtown. Source: Huntington Beach Planning Division and DOG. IQ huntington beach planning division U1 Table 5.2 ZONE Al H2 p3 SW4 B5 Middle Bolsa 350 80 .28 .30 1.07 Lower Bolsa 350 100 .28 .30 1.07 Upper Jones 150 100 .32 .35 1.07 1 DOG "Summary of Operations", 1958, contour maps 2 Estimated from various DOG reports 3 DOG and industry estimates 4 DOG estimates 5 DOG estimates OOIP = A h P (1-Sw) 7,758 -.' 1.07 Middle Bolsa 350 x 80 x .28 (1 - .30) (7,758) -' 1.07 39.8 million barrels Lower Bolsa 350 x 100 x N (1 - .30) (7,758) 1.07 = 49.7 million barrels Upper Jones 150 x 100 x .32 (1 - .35) (7,758) 1.07 = 22.6 million barrels TOTAL 112.1 million barrels Recovery factors Primary 30 percent 33.6 million Secondary 12 percent 13.5 million Tertiary 7 percent 7.8 million Remaining recoverable oil Secondary and Tertiary = 21.3 million barrels Calculation of OOIP and Remaining Recoverable Oil Using Volumetric Method. Source: Huntington Beach Planning Division. 26 The curve clearly indicates that production barrels could still be extracted if unitization in th is area using current extraction and the application of enhanced methods is approaching its limit. Thus, technologies were successful. cumulative production should approximate all of primary production, which is (using These calculations were reviewed by the same recovery factor as in the engineers at the DOG, Aminoil and volumetric method) .30 of OOIP. If 43 Chevron. They concurred with City staff million barrels is .30 of OOIP, then OOIP that the methods used were sound, but that must be 143 million barrels. Using the same the available data may not be completely recovery factors as the volumetric method accurate. Thus, the value of the analysis is for secondary (.12) and tertiary (.07) not so much in the exact numbers as in recovery, the staff estimates that about 17 providing an indication that considerable oil million barrels could be extracted by reserves probably remain beneath this part secondary and an additional 10 million by of the City. tertiary. Remaining recoverable oil would be about 27 million barrels. See Table 5.3. 5.3 The Possibility of a Unitization and Enhanced Recovery Project. The decline curve method suggests somewhat larger reserves than the The analysis above suggests that there is volumetric, which is not surprising because probably enough oil remaining in the certain known producing zones were Town lot /Downtown area to make an excluded from the volumetric study due to enhanced recovery project profitable if lack of data. Thus, the two methods give unitization could be achieved. The next surprisingly similar estimates of recoverable step, then, is to try to determine what the reserves, indicating that perhaps 25 million obstacles to unitization are and if they are likely to be overcome in the future. Table 5.3 Primary Production .30 OOIP = 43 million OOIP = 43 million W.30) 143 million Secondary Production .12 DOW = .12 (143 million) = 17 million bbl Tertiary Production .07 OOIP = .07 (143 million) = 10 million bbl Total remaining, recoverable oil 27 million bb1s. Calculations of Remaining Recoverable Oil Using Decline Curve Method. Source: Huntington Beach Planning Division. 27 In order to do this, the City Planning The operators were also asked to indicate Division sent a questionnaire to all the oil the reasons why unitization has never been operators in the Town I ot/Downtown area. achieved here. Most felt that too many of The questionnaire and cover letter are the operators were unwilling to join a unit includpd in Appendix A. and that past price controls on oil rendered such an undertaking unprofitable. Several The results of the questionnaire are respondents felt that City zoning summarized in Table 5.4. Note that these restrictions related to drilling new wells had results can be measured in two ways: the contributed to the problem. Other reasons firs" is simply by the number of operators given included the difficulty in securing who gave different responses. A problem approval from land owners to encumber with this is that all companies are weighted their property for many years. Another equally, although a few own 10 or more respondent suggested that the lack of wells while many have only one. The second reliable engineering data would hinder any method is to calculate the percentage of the unitization attempts. total interest in the field held by the operators who gave a particular response. The City staff also noted this lack of readily Th is is a somewhat more meaningful available data. measure because the response of the relatively large operations will be more When asked if these difficulties could be important to a unitization project than the overcome in the future and unitization made very small companies. This method weighs possible, the companies were equivocal. each operator's response in proportion to the Seven operators, accounting for 21 percent percentage of the field he owns. Interest in of the interest in the field, answered " yesit the field was considered to correspond to six operators, accounting for 41 percent of mineral rights valuations made for this area the field, said, "maybe"; and five companies, by the Orange County Assessor's office for accounting for 12 percent of the interest in property tax purposes. the field, responded "no." Questionnaires were sent to the 36 Finally, when asked if the company would be operators in the Town I ot /Downtown area; 21 interested in joining a voluntary unit, seven responded. This response is indicative of said "yes"; five, "maybe" and nine, "no." one of the principal problems facing a Yet those responding "yes" and "maybe" unitization prograrn: getting enough account for 61 percent of the total interest operators to consider even the possibility of in the field, while those answering "no" forming a unit. However, most of the larger account for 19 percent of the total operators did fill out the questionnaire; the interest. Interestingly, some operators who 21 respondents account for about 80 pecent felt there was likely to be enough oil to of the total interest in the Townlot field. make a unitization project profitable, and some who felt such a project might be The oil companies generally concur with the feasible in the future, were also definitely analysis in Section 5.2 that there may be not interested in joining a unit -- at least at significant oil reserves remaining in this this time. area. Only three respondents felt that it was "very unlikely" that there is enough oil The results of this survey indicate that a to make a waterflood economically voluntary unitization project in the Townlot profitable, and only one cited the lack of oil area is not imminent. Although a majority as a reason preventing a waterflood at this of the working interest in the field appears time. Thirteen of the respondents, to be interested in such a project, a accounting for about 62 percent of the significant minority is opposed to it. In working interest in the field, answered "very addition, many of the operators (who hold likely" or "perhaps" when asked if there was about 20 percent of the interest in the field) enough oil to make a waterflood profitable. did not respond to the questionnaire at all. 28 Do you think there is enough recoverable oil in the Townlot/ Downtown part of the Huntington Beach Field so that a water- flood would be economically profitable (if unitization could be achieved? % Working Interest No. of Respondents in Townlot Field very likely 9 36% perhaps 4 26% very unlikely 3 5% don't know 5 13% 2. If you think there is enough oil to make unitization and water- flooding in the Townlot area profitable, do you think other obstacles can be overcome so that such a project is possible in the future? % Working Interest No. of Respondents in Townlot Field yes 7 21% Maybe 6 41% no 6 12% don't know 3 6% 3. Which of the following reasons do you think have prevented a waterflood program from happening in the Townlot area? No. of Respondents not enough oil 1 not enough operators 12 willing to join price controls on oil 11 zoning restrictions 6 7her: answer included: lack of data, difficulty in getting approval of land owners to encumber surface properties. 4. Would your company be interested in joining a voluntary unit for the purpose of waterflooding? % Working Interest No. of Respondents of Townlot Field definitely inter- 7 24% L- & t P- d maybe interested 5 37% definitely not 9 19% interested Table 5.4 Questionnaire Results. Source: Huntington Beach Planning Division. 29 Th is lack o f response underlines the Figure 5.5 illustrates the areas in and near difficulty in achieving unitization at this the Townlot area where oil well drilling is time. The companies are also equivocal on currently allowed. These are limited to the whether unitization can be achieved in the leases operated by Chevron and Aminoil future. The principal reason holding up northwest of Goldenwest (sites #1 and #2), unitization, now that price decontrols are an island operated by Chevron at 17th effected, will be the inability to get enough Street and Palm Avenue (site #3), a operators interested. The many reasons why relatively large area operated by Chevron operators may not join a unit have been near Lake Street and Atlantas Avenue (site discussed above. #4) and a small island owned by Aminoil between 18th and 19th Streets along Pacific A unitization project in the future is still Coast Highway (site #5). This last site is possible, especially if either of the following intensively used for wells directionally "scenarios" develops. First, as the value of drilled under the ocean and it is unclear the land increases many of the operators whether this area would be available for will choose to sell their sites. The smaller wells tapping the Townlot area, at least in companies with few we Ils and low the near term. All of the other sites would productivity will tend to recycle their land very likely be able to accomodate wells and first. Increasingly, the working interests in other facilities in a Townlot unitization and the field will be held by companies secondary recovery project. Figure 5.5 interested in continued oil production. shows all the existing oil sites in the Townlot area. City ordinances currently Second, in the face of domestic oil allow existing wells and redrilling on most shortages, the State or federal government of these parcels, but prohibit new wells. may enact a strict compulsory unitization law so that secondary and tertiary The surface area needed for an enhanced extraction technologies can be applied to recovery project depends largely on the domestic oil fields. These laws would number of wells needed to produce the require agreement among a smaller majority pool. As discussed in Section 3.0 above, percentage of the operators before enacting injection and production wells are usually compulsory unitization. For example, some arranged in patterns to facilitate the States require as little as 60 percent of the efficient sweeping and subsequent collection interest of the field to agree to a unit of oil in the zone. Consequently, rough b e fore forcing the remainder to jo in. estimates of the number of wells needed in Currently, companies holding more than 60 an enhanced recovery project can be made percent of the Townlot working interest by calculating the spacing of wells in a may be already, at least tentatively, pattern and dividing that factor into the interested in a unit project. total number of acres in the zone to be worked. For example, engineers at the 5.4 Surface Area Requirements Division of Oil and Gas estimated that the spacing for a waterflood project in the As the City considers the issue of helping to Jones zone would be approximately one well preserve surface areas for future oil per 10 acres; and that only about 25 wells operations in the Townlot, two key questions would be necessary for this kind of project arise: 1) how much area is needed to there. accomodate a waterflood or enhanced recovery project? and 2) where must these The characteristics of the zone will affect sites be located? Much of the information the kind of recovery method used, which used in answering these questions was could in turn affect the spacing and the supplied by the DOG and by Eastman number of wells needed. The Bolsa zone, Whipstock, Incorporated, a company for example, holds a very viscous oil; thus, involved in directional drilling projects. steam, rather than water, would likely be 30 Drill Sites (zoned Ol or 02) Other Oil Sites--No New Wells Allowed (zoned 0) C) ------------ o)d [10 Uj MOM, I I P] @D ED PD M PD m m PD I LD @D M IJ E m 171 M ED M ED ED M ED 11 01INGE L@ lit 91 9P M M EH ED M @J 27 M M M M ED DD' , .......... ...... .... J7 7 F Ej A JM MW 6D W@_i IM II[I [I] Fl@i ................ L@] III LIJ [1119 El El L-1 0 V oc", ocEII Figure 5.5 Drill Sites and Other Oil Operation Sites in TownI ot/Down town. VIP Source: Huntington Beach Planning Division. 3.111, M huntington beach planning division injected into the formation because the hot Thus, the surface area currently afforded by steam helps the thick oil to flow more the drill sites (#1-5 in Figure 5.5) in and freely. Because the oil must be kept warm near the Town lot /Downtown could probably for this technique to work, and because the accomodate the wells needed in a secondary Steam and oil tends to cool as it moves or tertiary recovery project, even in a through a formation, the spacing of the closely spaced stearnflood. wells must usually be much closer in a steam program than in 2 waterflood. Another important consideration, though, is Engineers at the DOG estimated that one the location of these surface areas relative well per 5 acres or even one well per 2.5 to the underground oil pools. As mentioned acres might be needed to effect this kind of in Section 1.0, wells can be directionally program. Thus, from 64 to as many as 128 drilled so that a few centralized surface wells might be needed in a stearnflood of areas can accomodate wells that produce a the Townlot BoIS2 zones. much larger subsurface area. The most important constraint on how far a well can Considering the usual setbacks from public extend from a surface site is the -depth of right-of-way and from nearby uses, the the zone the well is tapping. The shallower surface area needed for well drilling and zones are more difficult to reach because maintenance, 25 wells or more could be the angle of the well must be more acute. easily accomodated on an oil operation site Eastman Whipstock calculated the distance roughly the size of a square block in the that a well could be drilled in the Townlot Townlot area. area under usual economic and geologic conditions. Wells tapping the Bolsa zone could reach only about 1,500 feet from the Figure 5.6 surface bore hole; wells into the much deeper Jones zone could extend about 2,400 feet from the bore hole; (see Figures 5.6 and 5.7). Using these estimates, Figures 5.8 and Depth 5.9 illustrate how much of the subsurface Town lot/Downtown field can be reached from the existing drill sites. If part of site -1000 #5 is considered available for this kind of project, then virtually all of the Jones zone can be reached from the presently available drilling sites. Likewise, a very substantial part of the Bolsa zone is also accessible f rom the existing sites, although a 2000 considerable area in the middle of the Townlot may be inaccessible. Engineers from Chevron and Aminoil 3000 indicated that wells could be extended even farther than these estimated limits if necessary, although such wells would be 1000 2000 more difficult to drill and more expensive. Lateral Exten-c A steam project adds a further factor into the analysis. As discussed above, steam tends to lose its heat after it moves away Directional Drilling Pattern for Wells from its source (a boiler). The bottom of the steam injection well cannot be more Reaching the Bolsa Zone. than 1,000 - 1,500 feet from the boiler, otherwise the steam loses so much heat as Source: Eastman Whipstock. it travels through the well that it is ineffective when it reaches the oil pool. :uffiff4wi Portion of the zone not within 2400 feet of an existinn driil site Drill site ...... - -------- 77 F- IQ R] I HIL @4::::: Li F jj ! (L [7 F F-I [77 1 ]i L -1 LJ L-J L EL LILJI L\I L-L--j ................ E-1 171 F-71 1=1 E7 r - 01 E.] ED Ell =1 n L@j 0 F-I LI E] Nam E --------------------- Air Figure 5.8 Approximate Coverage of Jones Zone from Exist W Source: Huntington Beach Planning Division and huntington beach planning division Portion of the zone not witnin 1500 fee' jQ! existinq dr-*Il site of an Drill sitc J J LI U, 1. "A > EO ML ;E @Kg T 11 LE EO o-I i Z EEI MCI] 00 IIEI IIEI EIEI ED E[I M -1 F-I F-I El -7 F- I.v ACE& Figure 5.9 Approximate Coverage of Bolsa Zone from Existing Drill Sites. Source: Huntington Beach Planning Division and DOG. huntington beach planning division Another way of looking at the situation is Figure 5.7 that in order to undertake a comprehensive enhanced recovery program for the Town lot/Downtown, new wells or the Depth redrilling of existing wells may be needed in the area roughly between 6th and 13th Streets. Furthermore, because of the problem of heat loss in a steam project, a -1000 steam generator (boiler) may also need to be located in this area. The current zoning laws affecting the existing oil sites in this area allow the boiler equipment and redrilling, but do not permit new wells. 2000 In summary, a waterflood or other enhanced recovery project for the Jones zone, and presumably for the deeper Main zone, could probably be accomodated from the existing -3000- drilling sites in the Town lot/Down town area. A comprehensive program for the shallower Bolsa zone would probably involve steaming, and might require some new -4000 wells, the redrilling of existing wells and the location of steam producing equipment outside the existing drill sites in an area 1000 2000 between 6th and 13th Streets. Lateral Extent There are currently several oil operation sites in this area which could be utilized in Directional Drilling Pattern for Wells such a project. The zoning an these sites Reaching the Jones Zone. allows the redrilling of wells and the installation of oil recovery equipment, but Source: Eastman Whipstock. does not allow for the drilling of new wells. This fact suggests that a secondary recovery P rogram (steamflood), which utilized only the existing drill sites, might not be able to include a significant part of the Bolsa zone, (roughly between 6th and 13th Streets). 35 6.0 Policy Options for the City' The discussion in Section 5.0 suggests that a urbanization for the facilities necessary for considerable arnount of oil can probably be an enhanced recovery project if unitization recovered from the Town I ot/Downtown area is realized in the future, and 2) ensuring if unitization occured and enhanced that any adverse impacts on nearby uses recovery methods were applied. Although a such as housing and coastal recreation are majority of the oil operators there have mitigated to acceptable levels.* indicated a tentative interest in such a project, unitization does not appear likely in t1he short-term. Analysis by the City Planning staff Section 4.0 argued that the kinds of indicates that potentially adverse government policies which would directly impacts resulting from an enhanced encourage unitization and enhanced recovery project can usually be recovery do not lie within the jurisdiction of mitigated; and, in fact, such projects the local government. Still, there are tend to reduce undesirable effects and important roles for a City government; increase beneficial ones in areas like namely, 1) helping to preserve enough the Town lot /Downtown. A discussion surface area in the face of rapid of potential impac ts and the ir mitigations is included in another report in this series, #4: "Enhanced Oil Recovery Technology". 36 This section discusses the policy options greater than three acres. Drill site #1 in available to the City for preserving surface Figure 5.5 is designated 0-2. For purposes areas until a future unitization project is of this discussion, there is no practical instigated or until it is apparent that such a difference between 0-1 and 0-2. The project is so unlikely that restrictive important point is that both permit new land-use policies are unreasonable or unwise. wells, while the 0 suffix does not. 6.1 Existing Land-use Regulations The discussion in Section 5.4 indicated that Affecting Oil Operations in the the five existing drill sites could probably Townlot/Downtown accommodate an enhanced recovery program, except perhaps for a Considering the long history of oil comprehensive stearnflood in the Bolsa operations in Huntington Beach, as well as zone. The stearnflood might require the benefits that oil production contributes additional surface area outside the drill to the community such as employment and sites, somewhere between 13th and 6th revenues, the City's land-use regulations Streets. There are several existing oil have traditionally accommodated oil operation sites in this area which are zoned activities. 0; thus steam equipment and redrilling are permitted, but no new wells. The City currently uses three zoning districts, called "0," '10-1" and "0-2," to Th is indicates that current regulations allow oil operations. More specifically, wou Id allow unitization and enhanced each of these is a zone suffix which is recovery. The relevant question, however, attached to a base zoning designation such is how long will these sites be available for as residential, commercial or industrial. such a project? Both the uses permitted in the base zone, as well as the oil-related activities permitted Because the 0, 0-1 and 0-2 districts are by the suffix zone, can be legally conducted only suf f ixes, other uses are already on the site. permitted on these sites. At any time, the operator may abandon his oil operations, and The "0" is the most restrictive of the oil new development can be constructed on the suf f ixes. It permits wells and other site. The loss of any of the remaining drill oil-related equipment, including those which sites and the loss of the other oil operation might be used in an enhanced recovery sites, particularly in some parts of the project. It allows the redrilling of existing Townlot, could potentially preclude a future wells, but does not allow any new wells to enhanced recovery project. be drilled. The principal purpose of this suffix is to allow existing wells and the Through its land use regulations the City kinds of activities which could be reasonably can go beyond simply accomodating expected in association with these wells. enhanced recovery projects now, and help to This is the designation on most of the oil keep sites available for such use in the operation sites remaining in the future. Strategies for achieving this are Townlot /Downtown area. They are shown in discussed in the following sections. black in Figure 5.5. 6.2 Strategies to Help Preserve Existing The "0-1" designation allows all the uses Drill Sites permitted under the 0 suffix, but also allows new wells to be drilled. Drill sites 2 Any enhanced recovery project will require through 5 in Figure 5.5 are designated 0-1. a significant number of new wells. The "0-2" suffix allows the same uses as The existing drill sites are large enough 0-1, but applies to oil operation sites 37 to accommodate the anticipated number of Permit only new uses which do not wells and are distributed over the oil zones cover the drill site (or parts of the drill in such a way that most of the strata can be site) extensively with permanent reached by directionally drilled wells. Thus, struc tures. These uses might include protection of these existing drill sites is commercial recreation facilities such probably highest priority for keeping open as 11miniature golf ", or other the option of a future enhanced recovery commercial establishments like garden project. The following strategies might help supply outlets, or self -serve gas to protect these sites: stations. Such uses would have to be reasonably feasible considering their Change 0-1 to base designation rather than location and appropriate considering a suffix: If the existing base zone were other nearby uses. removed, and the 0-1 suffix were to become the base zone for the site, then a developer The City might also establish regular review would need to come to the City for a zone periods after which the owner or developer change before new uses could be could request a re-evaluation of the site for constructed on the drill site. Before the an enhanced recovery project. If the City zone change would be permitted, the determined that an enhanced recovery Planning Commission and City Council project was no longer practical or that the would have to approve the zone change and site was no longer important for the success the new use. The City might require one or of such a project, the restrictions on the use all of the following before allowing new uses of the surface could be removed. on the drill site: Change General Plan designation on all drill An analysis by a petroleum engineer sites to "Resource Production": Another showing whether an enhanced recovery important "tool" for regulating land uses project in the Townlot area is besides zoning is the City's General Plan. impractical or not. If such a project is still possible, the analysis should The General Plan indicates, in general indicate whether the drill site in terms, the kinds of uses wh ich are question is necessary for such a appropriate in different parts of the City. project. The analysis should also For example, drill site #1 in Figure 5.5 is indicate if only part of the surface area currently designated "resource production." in the drill site is essential to such a This means that activities related to oil project. extraction are the most appropriate ones in this area during the "planning period" (which Retention of part of the drill site is usually 20 years). Before other uses surface as open space, available for would be permitted there, the developer future oil operations. This open surface would have to obtain a General Plan area should be large enough to not only amendment from the City. Drill site #2 is accommodate the equipment necessary designated "planned development" and drill for the enhanced recovery project, but sites #3-5 are in residential designations. If also any buffers, walls, screens and these sites were also changed to "resource sound-proofing barriers used to protect production" then oil extraction would be the the nearby uses from any adverse principal permitted use, and a General Plan impacts related to the future oil amendment would be necessary before new operations. These open spaces could be uses would be allowed. incorporated into the design of the new development and used for such things as The advantage of requiring a General Plan recreation facilities or gardens, so long amendment rather than a zone change is as there were a clear understanding that the former usually entails a much more that such areas might also be used for extensive review by the City's staff and oil operations at a future date. policy-makers. 38 This might ensure that considerations like A disadvantage to this approach is that it future recovery projects will be more adds, (almost literally), a new layer of City completely analyzed before changes are land use restrictions, in addit 'ion to the permitted. The kinds of restrictions that existing General Plan and zoning might be placed on the site by the City ordinances. New review procedures would before allowing new uses would be the same need to be developed in order to implement as in the zone change case discussed above. this approach. The advantage of the overlay However, the mechanisms for the detailed is that it emphasizes the importance of review which would be required in that case protecting areas for enhanced recovery are already established for General Plan projects and it helps to focus the analysis of amendments, but are not normally exercised new uses on the enhanced recovery issue and currently for zone changes. not other peripheral ones. A disadvantage is that the General Plan 6.3 Preserving Other Oil Operation Sites currently does not usually differentiate land (Zoned 0) in the Town lot /Downtown use categories on areas smaller than 20 acres. The intent of the General Plan is to The City may want to consider applying the indicate general uses for relatively large strategies discussed above to the other oil areas in the City, leaving more detailed operation sites in the Town lot /Downtown restrictions an a site-by-site ba@is to zoning area which are currently zoned 0. Some of ordinances. A significant exception to this these sites could be important to a is the coastal zone, where land use comprehensive enhanced recovery project. designations have been applied to sites much Many of these sites, however, are very small smaller than 20 acres because of the special and very close to other uses. The minimum resources associated with the coast which surface area necessary to accommodate a require more detailed planning, even at the drilling rig recommended by numerous oil General Plan level. Drill sites #1, 2, 4, and companies and well drilling companies is 5 are in the coastal zone, so this kind of approximately 100 by 200 feet.* Sites specificity in the land use designation would which are smaller than this minimum may not be unprecedented. not be appropriate for future re-drilling and, thus, might be excluded from consideration Overlays and conditional-use permits in a future enhanced recovery project. Another method by which the City could help protect surface areas for future oil 6.4 Permitting New Wells in the Townlot operations. would be through an "overlay" and a conditional-use permit. The City Besides protecting the existing drill sites could indicate that the Town lot/Downtown and some of the larger O-zoned sites, the area is a special resource production district City might also consider allowing new wells by a general "overlay" designation. Before in the Townlot, if the new wells were part certain sites in the overlay district could be of a unitization and consolidation program. used for activities other than oil operations, New wells outside an existing drill site may the developer would be required to apply for be important to an enhanced recovery and receive a conditional use permit -- that is, a permit allowing new uses, but only after a City review and analysis, and only if any conditions placed on the new uses by the City are accepted by the developer. These Planning staff contacted the following conditions could include the enhanced companies: Chevron, Aminoil and recovery analysis and reservation of open California Production Services, as well space which were discussed in the zone as the DOG. change option above. 39 project if existing wells cannot be redrilled The aim of this policy is to protect and or if there are simply insufficient existing enhance the visual and recreational wells to complete the injection patterns. amenities afforded by the beach while New wells should only be permitted if they permitting oil activities which must be meet the following criteria: 1) the site is located there. In view of this approach, larger than a minimum size; 2) mitigations reservation of Bolsa Chica Beach for future of any potential adverse impacts are oil facilities appears inappropriate. incorporated into the project; and '3) the However, if new facilities essential to the new well is part of an overall unitizafion or recovery of the oil deposits underneath the consolidation program. Implementing Townlot could not be sited any where else, strategies include developing a new zoning then the City may still permit those ordinance or utilizing an overlay district facilities to be located on the beach if all of with a conditional-use permit requirement, the conditions listed above are met. similar to the strategies discussed in Section However, because this is a State beach, the 6.2. California Department of Parks and Recreation would also have to give its 6.5 Other Possibilities for New Drill Sites permission before new wells could be drilled. Besides the drill sites discussed above, there Offshore Locations: Another possible are other possiblities which should be location for oil facilities needed in an d iscussed. enhanced recovery project is offshore. Bolsa Chica State Beach: Part of Bolsa In this case, preserving surface locations in ica State Beach lies across Pacific Coast the Townlot itself would not be important, Highway along a large section of the although some onshore sites might be Towni ot /Downtown area. Several wells and necessary to tap the more inland related equipment are active in this area extremities of the oil pools. Wells and which is currently zoned 0. Wells related equipment can be located on directionally drilled inland from this strip offshore platforms, man-made islands or could cover a large part of the Townlot and piers extending from the shore. Because could be very useful in a comprehensive these wells would be reaching inland, they enhanced recovery project. A serious would be located as close as possible to the problem with using this area for more shore. Thus, a pier would be the most likely intensive oil operations is the conflict facility used if an offshore location were between those activities and the area's use chosen. as a heavily-visited, public recreation facility. In light of the high priority in the The disadvantages of using a pier for oil Coastal Act given to public recreation along facilities include the following: 1) risk of the shoreline, the City's LCP includes spills which could adversely affect the policies which encourage the "phase-out" of recreation beaches, 2) degradation of visual wells on Bolsa Chica Beach. New wells are resources associated with the shoreline, 3) not prohibited from locating on the beach, conflict between industrial and recreational but can only be sited there if all the uses of the shoreline and 4) conflicts following condition are met: between mobile, portable oil equipment and other traffic. 1) The resources are not recoverable from any other onshore location or existing Advantages of using a pier include the platform, 2) the site is improved to become following: 1) valuable surface areas onshore compatible with recreation uses of the could be freed for other uses, and 2) the pier beach, 3) public health, safety and we If are could be designed to accommodate public are not jeopardized, 4) adverse recreation facilities such as fishing areas environmental impacts are mitigated to the and look-outs, and the private sector would maximum extent feasible, 5) the net overall probably be willing to finance the entire impact of oil production facilities on visual proposal. The pier would have to be resources is improved, and 6) safe access to designed to reduce any conflicts between the beach is provided. the oil activities and the public recreation f ac ilities. 40 Park Id House ----- ...... -- - --------- ED ED ED bra Y PID ED T ED ED ED DE M, ED ED ED IJ 11 ED ELLJI L-JLJrLil F71 FIF1 FTI F-117 FF-1 F_1F_1 T Senior Rec. Cen Fj [S7enior Center @j L@Lj I ILJ LJLJ L-i 'Mobile Home Park t r LJLJ LJLJ LJLJ LJLJ L-i I EU, F1D ED EO LO _j I EU ED LTJ LU LH L arkin4' L Ell] ED P@D F Ell] E'1@ [I,], F] Ell] r .....3 DD [110:i Motel se, Commercial -a IL EF1 ED Ell EO ELl [1100 ED ED EEI 110 ED El [70 ED EDEID ED OEv@a@an7 1@_ @1 Vacant 0C." Lease, Commercial Public Beach Pier Figure 6.1 City-owned Properties in Town lot/Downtown. Source: Huntington Beach Planning Division. huntington beach planning division The City's planning and zoning jurisdiction 6.6 Other Possible Actions does not extend beyond the mean high tide line. The State Land Commission regulates There are other kinds of actions related to development in this area. Thus, the City protecting surface areas which the City can only discourage or encourage offshore should consider. First, the City may want development, but cannot regulate such to hire a professional petroleum engineer to development directly. analyze the possibility of unitization and enhanced recovery in the City-owned Property: Another option for Town lot/Downtown more completely before preserving surface areas for future oil enacting zoning ordinances or other land use facilities is for the City to retain properties restrictions. Such a study may establish it owns itself and to restrict uses on the more exactly the likelihood of such a surface or parts of the surface. Figure 6.1 project, as we 11 as its surface area shows the City-owned properties in and near requirements. This in turn could allow for the Town lot/Downtown and indicates the the development of more precise regulations. uses currently located on each. The implementation approach would be to limit Secondly, an analysis of the remainder of structures so that sections of these the City may be helpful to locate other properties are preserved until such time parts of the field where unitization and that an enhanced recovery project is enhanced recovery projects are possible and proposed. The City would then sell or lease where protection strategies similar to those the surface areas to the unit proposing the discussed for the Townlot might be project. The City could still use these appropriate. properties until that time for facilities like parks or parking lots which leave large parts of the surface free of permanent structures. The City would periodically review the properties reserved for potential enhanced recovery projects to determine if such projects are still possible and if particular properties would be important for the projects. 42 7.0 Conclusion For the forseeable future, energy sources The City's principal role in this issue is to and especially oil -- will continue to be control land uses so that enough surface increasingly more expensive. New area is preserved until these technologies technologies will also continue to be can be applied or until it is clear that developed to help increase energy supplies. application of those technologies is In light of this situation, oil remaining in the impractical. More direct actions which ground after primary production which may would encourage unitization and the use of be recovered by new technology is a very enhanced recovery methods are more valuable natural resource. appropriately within the jurisdictions of State and federal governments. The City Th is report shows that the should monitor policy and legislative Townl ot /Downtown area of Huntington developments at these levels of government Beach may overlie such oil resources. It related to unitization and enhanced also discussed strategies for protecting recovery, as well as to developments in the surface areas necessary for access to those oil industry itself, to better determine if resources in the face of encroaching such programs are likely in Huntington development, so that new technologies May Beach. By watching these developments, as someday be applied to recover the we 11 as by periodically evaluating the remaining oil. The City should consider potential for new projects in Huntington evaluating other areas in the Huntington Beach, the City can continue to promote Beach oil field where conditions are similar policies which help to protect and carefully to those in the Townlot; namely, where 1) utilize its important oil resources. significant quantities of oil may still exist in the ground because secondary and other enhanced recovery methods have not been applied, and where 2) new development is rapidly encroaching on the oil field, threatening to cover the surface to such an extent that the necessary extraction equipment can not be accomodated. 43 NOTES 1. California Coastal Act of 1976. 2. California Public Resources Code, Division 3; Chapter 3.5. 3. Ibid. 4. Hill, F. L., Proceedings: Workshop on Urban Oil and Gas Development 1978. 5. Hagenbush, G. C., and Allen D. R., "Huntington Beach Oil Field," Summary of Operations, Vol. 44, 1958. 6. Ibid. 7. Hunter, A. L., Bradford, W. C., and Allen, D. R., "Southeast Extension of the Townlot Area," Summary of Operations Vol. 41, 1955. 8. Huntington Beach Planning Division, "Fiscal Impacts of Oil Operations in Huntington Beach," 1981. 44 APPENDIX A Questionnaire and Cover Letter 45 COMPANY NAME: DEFINITIONS: Waterf load: A method for increasing oi I production by injecting water into oi I zones. Unitization: An agreement among several oil operators to treat a shared oil pool as a 'funit" and to produce the pool together in a coordinated way, as if they were a single company. Unitization is usually required before a waterflood project can be undertaken in all areas where many operators work the same reservoir. 1. Do you think there is enough recoverable oil in the Town I ot-Downtown part of the Huntington Beach Field so that a waterf lood would be economically profitable (if unitizations could be achieved). Very likely Perhaps Very unlikely Don't know 2. If you think there is enough oi I to make unitization and waterf looding in the Townlot area profitable, do you think other obstacles can be overcome so that such a project is possible in the future? Yes Maybe No Don't know 3. Which of the following reasons do you think have prevented a waterflood program from happening in the Townlot area? Not enough oi I Not enough operators willing to join Price controls on oil Zoning restrictions Other 4. Would your company be interested in joining a voluntary unit for the purpose of waterf looding? Definitely interested Maybe interested Definitely not interested 46 CITY OF HUNTINGTON BEACH P.O. BOX 190 DEPARTMENT OF DEVELOPMENT SERVICES CALIFORNIA92648 BUILDING DIVISION (714) 536-5241 PLANNING DIVISION 014) 536-5271 Dear Sir: A problem facing oil producers in urban areas is the pressure for new development on the surface of oil fields. Houses and commercial structures are built near active oil operations; surface areas, from which new wells could be drilled and new technology could be tried, are covered over. This pressure for new development on oil fields is certainly evident in the City of Huntington Beach, and the City is concerned that potentially valuable oil reserves may be lost in the future if oil fields are completely covered by development. The City Planning Division is studying this potential problem. As part of this study, we are trying to determine if a unitization and waterflood project is possible in the Townlot and Downtown parts of the City. (This is the area bounded by Pacific Coast Highway, Palm Avenue, Goldenwest Street and Lake Street.) Our records show that your company operates a well or wells in this part of the City, and we would very much appreciate your answering the questions on the enclosed sheet. You can just check off your answers on the sheet, put it in the enclosed envelope and drop it in a mailbox. If you have other comments or ideas about the possibility of a waterflood program in the Townlot, or if you have any questions about the City's study, please feel free to write the Planning Division or simply call Mike Multari of our staff at 536-5279. Thank you very much for your help. Sincerely, ames W. Pa&@@ Department of Development Services JWP/MM:cw L fe io V " ames W. PC rt @Depament JWP/MM. .cw 47 APPENDIX B Bibliography "Coastal Energy Impact Program for the City of Huntington Beach," Huntington Bech Planning Division, 1980. Enhanced Oil Recovery Potential in the U.S., Office of Technology Assessment, GPO, 1976. "Estimate of Natural Gas Reserves -- Huntington Beach," California Railroad Commission, 1946. "Huntington Beach Oil Field," DOG, Summary of Operations, Vol. 44, 1958. "Huntington Beach Oil Field Old Field Portion," DOG, Summary of Operations, Vol. 28, 1942. "Huntington Beach Oil Field Southeast Extension of Townlot Area," DOG, Summary of Operations, Vol. 41, 1955. Oil Property Valuation, Paul Paine, 1942. Procedings: Workshop on Urban Oil and Gas Development, F. L. Hill (Editor), DOG and Federal Energy Administration, 1978. "Recent Developments in Huntington Beach Oil Field," DOG, Summary of Operations, Vol. 12, 1927. "Recent Developments in the Tar Sands in the Townlot Area, Huntington Beach," Division of Oil and Gas, Summary of Operations, Vol. 35, 1949. "Tar Sands in the Townlot Area of Huntington Beach Oil Field," DOG, Summary of Operations, Vol. 13, 1928. Valuation of Oil Producing Properties, California Board of Equalization, 1972. 48 DEPARTMENT OF DEVELOPMENT SERVICES Planning Division June W. Catalano, Deputy I)irecti,-)r Pro@ject Director and Principal Author Michael Multari, Planner Special Assistance Aminoil, USA Chevron, USA California Division of Oil and Gas Eastman Whipstock, Inc. Word Processing Patti Schwartz, Word Processing Coordinator Sharon Hojo, Word Processing Specialist Deborah Pledger, Word Processing Senior Caren Winant, Word Processing Senior Dehorah Espinoza, Word Processor Graphics Rohert Sigmon, Planning Draftsman Michael Multari, Planner CITY OF HUNTINGTON BEACH ,@4 "iff P.O. BOX 190 DEPARTMENT OF DEVELOPMENT SERVICES CALIFORNIA92648 BUILDING DIVISION (714) 536-5241 PLANNING DIVISION (714) 536-5271 1111101111 36 681 .08