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Focus on Signal Hill
February 26, 2013Expert from: “Focus on Signal Hill: Economic Uncertainty Painful, But Not Enough to Hold Back Development”
Signal Hill (Long Beach Business Journal) February 26, 2013
Oil:
It’s certainly no secret that Signal Hill is known for its oil. Crude has been flowing steadily out of the hill for 90 years, and the benefit for the city’s residents has been even more apparent in recent years. Projected oil revenue for the City of Signal Hill will likely top $900,000 this year, said City Manager Farfsing, an increase of about $50,000 from 2012. This money goes directly into the general fund to support critical community services.
Signal Hill Petroleum (SHP), meanwhile, has weathered the recession remarkably well. The company has experienced steady growth over the last few years, and “we see 2013 about the same,” said Kevin Laney, vice president of rig operations.
SHP operates about 450 wells across Signal Hill and Long Beach, and another 11 in the Cerritos Wetlands. About 80 percent of its production occurs in Signal Hill, and SHP produces about 3,000 barrels of oil per day
“California has a tremendous amount of reserves and it’s a matter of developing those reserves,” Laney said. “We’re doing our part here in Signal Hill and Long Beach.”
SHP has invested tens of millions of dollars in the last 10 years and more than doubled the size of its employment base. “We’re pouring money into the economy and creating jobs,” said Dave Slater, executive vice president and chief operating officer.
SHP has invested in seismic imaging technology, hoping to identify the location of untapped oil. “We’ve already identified areas of additional and new oil potential,” Slater said. “We’re drilling wells right now.”
But costly California regulations designed to combat climate change have SHP concerned about what taxes might be coming next. The company purchased $300,000 worth of allowances, or offsets, in the first auction related to AB32, the Global Warming Solutions Act. The tax was applied to an electrical turbine generator SHP operates. Slater said the legislation gives preferential treatment to some industries while “particularly penalizing companies like ourselves.” He added that SHP would likely have to purchase more offsets in the future to comply with the law.