Abandoning the city’s oil production will be an expensive and long process that could include years of decommissioning wells and then continued work to ensure Long Beach’s surface elevations are not affected after it halts oil production, something that’s expected to happen in 2035.
Long Beach has a projected $133 million in costs to seal up wells that currently sit idle or still produce oil. Abandoning the wells could take between three and five years, and that could be followed by as many as 15 years of continuing to inject water into the ground under the city to ensure it remains stable.
The city plans to end oil production in 2035 and has about $59 million set aside for its share of abandonment costs, a fund that could grow this year with the sustained high price of crude oil.
There are over $1.2 billion in estimated costs to abandon the wells in the Wilmington Oil Field, but those costs are split by multiple parties like the state and individual mineral rights owners. The state is responsible for $967 million while individual owners could be on the hook for about $10,000 each when well abandonment starts.
“I’m afraid this is going to hit some people out of the blue,” said Marianne Buchannan, who urged the city to reach out to mineral rights owners who may not know they have a looming oil abandonment cost ahead of them.
Kevin Tougas, the city’s oil operations bureau manager, told the City’s Council’s Climate Action and Environmental Committee Friday that Long Beach’s oil islands that sit off the coast are not part of that projected cost. Those islands will serve as injection support sites until they’re no longer needed and would then be repurposed, Tougas said.
Injecting water into the ground as oil is extracted is an ongoing practice to prevent subsidence, which is the city’s surface sinking due to displacement.
Tougas said there are some risks to the city’s plan to phase out oil production in 2035 including the fluctuating cost of oil, inflation and potential changes to legislation that could make abandoning wells more expensive.
“Right now, the price [of a barrel of oil] is over $100,” Tougas said. “But an oil price collapse could risk our abandonment reserve because we still need to provide city services.”
Oil is still a big part of the city’s budget and is projected to provide $45 million to the city’s General Fund and Tidelands Fund, which helps to pay for public safety services in the coastal area and is expected to be the largest source of funding for the rebuild of the Belmont Pool replacement project.
The historically high oil prices seen over the past few months have allowed the city to put away more money toward its abandonment costs and Tougas said that the total could be as high as $8.75 million by the end of the year. It’s also allowing proactive abandonment of wells.
The update on the city’s efforts to abandon oil wells was given to the committee Friday afternoon. The committee’s chair, Councilmember Cindy Allen, said she thought the city needed to go further in its efforts to phase out oil production.
Allen recommended that the full council hear an item later this year that would spell out options for the city to possibly stop oil production sooner as well as advocate for the state to fully fund its nearly $1 billion share of abandonment costs.
The request also asked that the city works with labor organizations to ensure that the roughly 1,000 workers that are currently employed through oil production in the city can get help in transitioning to equally good jobs once operations in the city end.
While the city’s goal of ending production by 2035 is 10 years sooner than a statewide goal of doing the same by 2045, it has been mocked by environmental groups, who’ve said the city is merely waiting until it’s not economically feasible to continue extracting oil from the ground.
Long Beach-operated wells currently produce about 22,000 barrels of oil per day. In 2035, that total is expected to drop to about 10,000 barrels per day.
Earlier this year, the Sustainable City Commission drafted a letter to the City Council urging it to stop issuing new oil drilling permits and to speed up its move to a net-zero emissions economy.
The memo was voted on weeks before Russia’s invasion of Ukraine which spiked global oil prices and has led to renewed interest in drilling new wells in Long Beach. Under the city’s plan, it will have to continue to produce oil to afford to phase out oil production.
City commission urges Long Beach to end oil drilling, declare a climate emergency
Long Beach faces substantial oil abandonment costs in next decade