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LBBJ: Focus On Signal Hill
July 17, 2017The Long Beach Business Journal published their annual Focus on Signal Hill edition stating that “With Numerous Projects Underway And A Balanced Budget, City Officials Optimistic About The Future […] Smack-dab in the middle of Long Beach sits the 2.2-square-mile City of Signal Hill. Considering its size, the old oil town is undergoing massive amounts of development, with three residential projects underway and one more in the works, as well as plans for two parks and a new 12,000-square-foot public library. On top of booming development, the city is well positioned financially.” For entire article continuing reading below.
Focus on Signal Hill
July 17, 2017 Brandon Richardson, Senior Writer
With Numerous Projects Underway And A Balanced Budget, City Officials Optimistic About The Future
Volatile Oil Prices Keep Well Drilling On Hold
Even though it’s not covered in oil derricks as it was in years long passed, Signal Hill still produces its fair share of oil through Signal Hill Petroleum (SHP). However, continuously low oil prices have put a stop to the company’s drilling activities.
“Our oil production is stable, but based on where current oil prices are, we are delaying our plans for more significant reinvestment,” David Slater, SHP chief operating officer and executive vice president, said. “We do have projects planned. We’d just like to see a little bit better margin before we make that capital commitment.”
Slater said the industry saw a sag in prices recently, down to around $44 per barrel from $50 per barrel a short time ago, according to the West Texas Intermediate benchmark. He explained that the current market is very volatile, with price swings between $10 and $12.
David Slater, chief operating officer and executive vice president of Signal Hill Petroleum, said discretionary spending is at a minimum due to low and volatile oil prices, which means all drilling operations are on hold. He said he is optimistic that drilling activity can resume in the next six months or so. (Photograph by the Business Journal’s Larry Duncan)
Despite market volatility, Signal Hill Petroleum’s more than 400 wells continue to produce approximately 1 million barrels of oil per year, which comes out to more than 2,700 barrels per day.
During times of moderate gas prices, Slater said when discretionary spending is low and the company’s two drilling rigs are mothballed, SPH focuses on its infrastructure to ensure it continues to operate in a neighborhood-friendly manner. As a member of a small community, Slater said this is important for the company’s relationship with residents living near active wells.
The company is continuously working to maintain pipelines, tanks, pumps and all other infrastructure to ensure their capability when drilling activities resume. Signal Hill Petroleum is also a prominent landowner and developer in Signal Hill, which helps offset low oil prices.
The City of Signal Hill taxes each barrel of oil produced in the city, which generated $1.1 million in tax revenue during the 2015-2016 fiscal year. However, with the drop in oil prices and halting of drilling operations, tax revenue has been cut by almost half.
Despite the freeze on drilling operations, Slater noted that the Long Beach Oil Field – a super giant, meaning it has produced over 1 billion barrels of oil – still has plenty of oil for the urban oil company to tap into, hopefully in the near future.
“But we’re optimistic that we’re going to be reinvesting and having drilling activity in the next six months or so,” Slater said. “There’s a lot of oil and gas opportunity. The life of the oil and gas field has got a long, long way to go. And there’s still a lot of oil to be produced and a lot of wells still to be drilled.”