After conducting a public hearing on Tuesday, Aug. 10, the Signal Hill City Council agreed to extend Signal Hill Petroleum’s (SHP) oil-drilling conditional use permit (CUP) for two years, through July 30, 2023.
SHP is the city’s primary oil drill-site operator. The CUP—which specifies how the City allows the land to be used—includes all seven of SHP’s drill sites scattered throughout the 2.2-square mile city and covers oil and gas storage, processing and transporting.
“The extension allows the City to develop a comprehensive strategy for Signal Hill Petroleum’s continued legacy oil-field activity and operations throughout the City while making use of underutilized properties for economic development to expand the City’s revenue base,” Community Development Director Colleen Doan stated in a memo to the council.
Signal Hill and SHP collaborate on development
The City considers the SHP CUP a development tool because once SHP’s oil wells dry up, those drill sites can be repurposed for development, Doan told the Signal Tribune.
In addition to being an oil company, SHP is also a developer with experience cleaning up former oil fields of harmful chemicals, she said. Therefore, the City can partner with SHP on any new development, just as it would with any other developer.
“They go in and clean up property for development, not just their own—sometimes they clean and turn over the property to another developer,” Doan said. “So those two conversations [CUP and development] naturally go together with how we see the future.”
Cities like to have long-range master plans for development rather than respond to short-term market-driven demands, Doan explained. Cities also control zoning and land use and work with developers on any zoning changes, such as Signal Hill does with SHP, she added.
The City and SHP are currently partnering on Heritage Square—a planned mixed-use residential and commercial development at Cherry Avenue and Crescent Street—and the redevelopment of Gateway Center North at 3177 California Ave., including a new self-storage building and remodeled Target retail store at 950 E. 33rd St.
SHP is also interested in collaborating with the City on future residential development, Doan said, adding that the City must build—and potentially rezone for—517 new residential units by 2029 to meet the State’s Regional Housing Needs Assessment (RHNA) requirements.
”I’m looking at long-term planning,” Doan said of the City’s relationship with SHP. “How do we repurpose sites with wells?”
City will study environmental impacts of drill sites
During the hearing, Doan said SHP has agreed to the two-year extension of its oil and gas production activities while the City hires a qualified consultant to analyze the environmental impact of the seven drill sites.
The California Environmental Quality Act (CEQA) requires an updated thorough analysis of the drill sites since the previous one was in 1997, Doan told the Signal Tribune.
“The definition of ‘thorough’ back then was quite different than it is today,” she said.
Once the City understands how the sites are impacting the environment, it can let SHP know what mitigation measures it needs to take and how much longer the City wants to extend the CUP after that, Doan said.
During the first year of the CUP extension, the City will find and hire a CEQA consultant, who will determine the scope of analysis required, Doan said at the hearing. The consultant will perform the environmental analysis during the second year and prepare a CEQA document to accompany a longer-term CUP extension for SHP.
SHP contributes approximately $550,000 annually to the City’s general fund in business franchise taxes, annual oil-well permits and oil-barrel taxes, Doan stated in the council memo.
Current CUP extension is eighth since 1998
This is the City’s eighth extension since it first granted a CUP to SHP in 1998, Doan said at the hearing. Most previous extensions averaged one year in length as the City continued to negotiate with the oil company on drilling and development.
SHP began acquiring oil wells from three major oil producers in Signal Hill beginning in 1984 and is now the city’s majority oil operator, Doan said. It is also Signal Hill’s primary landowner.
When the City first developed its 1990 oil code to regulate Signal Hill drill sites, it did not expect oil fields to continue producing after 2015, Doan said. As wells dried up, the City expected to develop those properties.
However, SHP’s seven drill sites are still productive thanks to new drilling technology, though less than at their peak. SHP and the City recently commemorated the 100th anniversary of the Discovery Well at the corner of Temple Avenue and E. Hill Street. The well produced 590 barrels of oil per day in 1921 and now produces five.
Some residents expressed concern about oil drilling in Signal Hill. During the public hearing, Deputy City Manager Scott Charney read aloud three emails sent to the council, two of which argued that the City should devote resources to electric-vehicle (EV) charging and other environmentally sustainable measures rather than support continued oil production.
Burning fossil fuels contributes the most to greenhouse gases like carbon dioxide that heat the planet and contribute to climate change, according to the Environmental Protection Agency.
David Slater, SHP’s chief operating officer, did not address gas emissions during the hearing but said SHP’s drill sites use the “best environmental technologies in the world.”
The company also helps ensure former oil fields are clean prior to developing them and designs new buildings to be environmentally sound, he said.
SHP will also be contributing six new EV chargers outside Mother’s Market at 2475 Cherry Ave., tripling the existing number of charging stations there to nine, Slater added.
“We are looking to find greener options for our community,” he said.
