Summary

Overview

E&B Natural Resources Management, Corp., a California-based oil and natural gas development company, is proposing to construct and operate an onshore oil resource recovery facility to access known and already developed oil reserves both onshore and offshore from a single location in Hermosa Beach. E&B is an experienced operator within urban oil fields, including here in the Los Angeles area.

The Hermosa Beach Resource Recovery Project will utilize environmentally responsible directional drilling technology in order to safely recover oil resources, protecting both the coast and surrounding neighborhoods, while providing an important, new revenue stream to the Hermosa Beach Community.

The Hermosa Beach Resource Recovery Project also will utilize a closed loop system for all its recovery and processing operations, and be fully contained within a single site, protecting the neighborhood and surrounding community from the risk of spill or accident.

Revenues from both tidelands and uplands oil resources recovered will flow to the Hermosa Beach Communit -- potentially cumulating to several hundred million dollars over the 30 year life of the proposed project.

Project Location:

Instead of locating numerous drilling and pumping facilities throughout Hermosa Beach as historically has been the process for oil recovery in populated areas, the Hermosa Beach Resource Recovery Project will concentrate all resource recovery upon a single 1.3-acre site that in the past was utilized as the City’s landfill, and which also housed earlier oil recovery operations.

The resource recovery and processing facility will be located within a light industrial, mixed use area at the City’s property on Valley Drive at 6th Street -- approximately seven blocks east of the beach and the Pacific Ocean. The property currently is being utilized by the City as a maintenance yard.

Phases

Project Construction and Operations:

The project will include drilling and resource recovery and processing at the City maintenance yard site, utilizing directional drilling techniques to access crude oil and associated natural gas reserves in the tidelands granted by the State of California to the City and in an onshore area known as the uplands.

Today’s latest proven technologies developed for the sensitive offshore environment will be incorporated into this onshore project for maximum safety and environmental protection. Additionally, automation and redundancy will significantly minimize project risk. The project will involve drilling and operating up to 30 independent oil production wells, 4 water re-injection wells, and construction and operation of a permanent processing facility and a set of related pipelines.

There will be four phases involved in the resource recovery project, including a design and preliminary construction phase, a test phase that entails drilling of test wells, a final construction phase, and then the final drilling and production phase that entails completion of wells contained within an underground cellar, and the full resource recovery and processing facilities, in a closed loop system, capable of handling up to a maximum estimated 8,000 barrels of oil and 2.5 million cubic feet of associated natural gas per day.

Project-related activities outside the site include the utility infrastructure needed to operate the facility, the pipelines needed to deliver the resources to market, and any necessary test phase and construction-related trucking. Normal operations will result in less traffic than the current use, and normal production operations will be quietly maintained behind an attractively landscaped 16-foot split-block wall, with a 10 foot setback from the main road. The project will include street and streetscape improvements, intersection improvements and new landscaping, and will demonstrate compliance with all the existing requirements of the City’s existing Conditional Use Permit for the site, as well as the existing oil and gas lease with the City.

Important details on test, construction and operational phases, the undergrounding of utilities and pipelines, identified trucking routes, and full site design, parking, landscaping, sound walls and visual simulations are available from the city of Hermosa Beach (and can be accessed by visiting www.hermosabch.org).

Phase 1 - Site Preparation

The purpose of Phase 1 would be to prepare the project site for drilling and testing as well as the subsequent phases of the proposed project. Activities include:

Relocation of the City Maintenance Yard activities to another property selected by the City.
Clearance of the project site including removal and/or demolition of onsite buildings, retention of the four existing mature trees along Valley Drive to help screen construction activities.
Construction of retaining walls along the entire length of the western property boundary and a small length along 6^th Avenue.
Conduct minimal rough elevation grading, with no import or export of material, to allow for construction and for a change in grade to contain any spill or rainfall.
Construction of the well cellar for the three test oil wells and one water injection well and the installation of temporary production equipment.
Installation of underground conduit in Valley Drive from 8^th Street to the northeast corner of the project site to allow for the provision of required electrical service by Southern California Edison
and installation of the necessary electrical equipment on the project site for the drilling and testing of the wells.
Coverage of the ground with crushed aggregate based material to inhibit dust.
Installation of a six-foot temporary perimeter chain link construction fence with green fabric material and installation of temporary landscaping along Valley Drive and 6^th Street.
At the completion of Phase 1, installation of a temporary 32-foot high sound attenuation wall erected inside of the chain link construction fence.
Access provided to the project site at a gated entrance on Valley Drive and exit provided via a gated exit on 6^th Street. Parking provided on property located adjacent to the southwest corner of the project site.
Truck hauling routes proposed include an inbound route along Artesia to PCH to Pier to Valley and an outbound route to PCH to Anita to 190^thSt.

Weekday work ONLY, excluding holidays, between 7:00am and 6:00pm. Earth moving and other heavy construction activities limited to 8:00am and 6:00pm. Deliveries of material and equipment between 9:00am and 3:00pm.

Phase 2 - Drilling & Testing

The purpose of Phase 2 would be to conduct the drilling and testing of wells in order to determine the potential productivity and economic viability of the proposed project. Phase 2 would include the following activities and improvements:

Installation of a temporary construction trailer on the project site and installation of temporary oil, water, and natural gas handling equipment.
Delivery and set up of the drill rig and its associated equipment. Drill rig would be electric and equipped with noise attenuation material and extend 87 feet in total height, and be in place for a total of 4 months.
Drilling of one water injection well for the reinjection of processed water into the oil producing reservoir. Drilling of three test oil wells utilizing directional drilling technology which enables the wells to be drilled laterally for long distances so that the bottom-hole locations may be located several thousand feet from the surface location of the well head on the project site.
Drilling to occur 24 hours per day, 7 days per week, with certain limitations, until the appropriate depths and bottom-hole locations have been reached (estimated to be 30 days per well).
Testing of the extracted oil from 1^st well to determine whether to proceed with the proposed project and the continued testing of the remaining oil wells and reinjection of the processed water
Remove drilling rig from project site after drilling the fourth well.
Trucking of the crude oil to offsite destination, primarily utilizing the 190^th St. route.
Elimination of the produced natural gas through a gas combustor
Access, parking, work hours and construction trucking routes same as Phase 1.
If production of oil and gas determined not to be economically viable, then remove all equipment and abandon all wells. The project site would be left as a clean, graded site with retaining walls, a perimeter fence, and perimeter landscaping.

Phase 3 - Final Design & Construction

The purpose of Phase 3 would be to utilize the production information from Phase 2 to prepare the final drilling program, procure the equipment, grade the project site, and construct the permanent oil and gas production facilities and other supporting onsite and offsite improvements for the proposed project. Phase 3 would include the following activities and improvements:

Continue oil production activities associated with the three test wells drilled in Phase 2, including the removal of the processed oil from the project site by truck, disposal of the natural gas through the use of a gas combustor, and the re-injection of the processed produced water.
Prior to the construction of the permanent oil and gas production facilities on the project site, the oil production from the three test wells would be discontinued and shut in and the temporary production equipment would be removed from the project site.
- Replacement of the 32-foot sound attenuation wall with a movable 10 to 12-foot sound attenuation wall to reduce the noise generated during construction and removal of the four existing mature trees along Valley Drive.
Address removal of contaminated soil from prior use of property to a qualified waste facility, before the final grading of the project site.
Construction of a permanent 16-foot high split-face block wall around the perimeter of the project site with a 10-foot setback along Valley Drive and 6^th Street to provide an area for landscaping.
Construction of a small office building to house staff and provide facilities for the control and monitoring equipment.
Construction of the extension of the first well cellar and the construction of the second well cellar.
Installation of the permanent oil and gas production equipment, permanent site utilities consisting of telephone, water, and sewer,
Construction of the final site improvements related to the site access and paving of the ground surface area.
Construction of street improvements including new curbs, gutters, and sidewalks and installation of landscaping along Valley Drive and 6^th Street.
Construction of off-site pipelines for the processed oil (One 8” Line, 3.5 miles, 400-700 psig to Plains All American Line 93 Tie in) and natural gas (Two 4” Lines, 0.5 miles, 255 psig to SCGC Tie in)
Work conducted on weekdays from 8:00am to 3:00pm.

Access, parking, and construction trucking routes same as Phase 1and 2.

Phase 4 - Development Drilling & Operations

The purpose of Phase 4 would be to maximize oil and gas resource recovery from the reservoir by drilling additional wells and activating the permanent facility for the ongoing operation of the proposed project. The project is designed for crude oil production up to 8,000 barrels per day at peak production and a maximum of 2.5 million cubic feet per day of associated natural gas. Phase 4 would include the following activities and improvements:

Install temporary 32-foot sound attenuation wall to reduce the noise generated during drilling of the remaining wells.
Delivery and set up of the drill rig and associated equipment to the project site (87’ Total Height).
Drilling of the remaining up to 30 wells (resulting in a maximum of 30 oil and gas wells and 4 water injection wells).
Drilling to occur 24 hours per day, 7 days per week, with certain limitations, until the appropriate depths and bottom-hole locations have been reached (estimated to be 30 days per well).
Removal of the 32-foot sound attenuation wall from the project site after completing of drilling.
Startup of the operation of the permanent oil production equipment.
Restart all well operations and transport of the oil and natural gas by pipeline to their respective destinations.
Conduct well operations maintenance including workover and well re-drill activities (102- foot total height of workover rig, maximum of 90 days/year between 8:00am to 6:00pm on weekdays only).
Entrance provided to the project site from Valley Drive that is equipped with a motor operated gate setback 70 feet from the roadway to allow for a waiting vehicle to be off Valley Drive. Exit provided from the project site to 6^th Street via a motor operated gate.
Parking provided for employees and visitors on the project site. Equipment deliveries between 9:00am and 3:00pm. Facility operated and manned 24 hours day, 7 days a week.

Expected Project Life 30-35 Years

Technical Documentation

Technical analyses are included as part of the Project Application, as Appendices, and address the latest technology and methods to utilize for safest, most efficient resource recovery and operation in order to ensure the safest, most environmentally responsible project for the City of Hermosa Beach, with production efficiency to provide the best royalty revenue opportunity for the City and its schools. Appendices include: