City Releases Oil Drilling Settlement – Significant Progress, Significant Concerns

On Thursday, Dec. 7, 2023, the City of Culver released information in regard to the long-awaited settlement agreement with Sentinel Peak Oil, the current lease holder of the 78 acres of the Inglewood Oil Field that lie within the city’s municipal border. While many details have been finalized, the fine print still offers cause for concern. 

The original terms for the settlement agreed to in 2022 called for an end to drilling in 2026 on the 38 oil wells contained in Culver City. The new terms move that date to 2029, with a possibility of extending the deadline to 2032. 

From the city’s statement, “In the intervening period since adoption of the Ordinance, the City and Sentinel have held discussions toward defining and documenting the implementation and enforcement of the Ordinance as applied to Sentinel … By mutual acceptance of the implementation terms, the Settlement releases the City from any potential claims and potential litigation against the City by Sentinel relating to the Ordinance and its related actions.”  

Noting that Sentinel is a Limited Liability Corporation, this could create a sense of municipal urgency on remediation of the field. 

The settlement includes provisions on the scheduling, process and requirements that will be related to the plugging of oil wells, and the overall termination and closure of the field.

Sentinel Peak Oil is the third company to hold the rights to the oil field in the last 15 years. Sentinel purchased the previous lease holders Freeport-McMorRan, which bought the rights from Plains Exploration & Production, known as PXP. All the drilling companies came from out of state; PXP and Freeport McMoRan were based in Texas, Sentinel Peak in Colorado. 

PXP was held under a six month long drilling moratorium by Los Angeles County in 2006 after conditions at the field caused ‘noxious fumes’ to spread through the Culver Crest and adjacent neighborhoods, forcing residents to evacuate. 

From the statement released by the city, “Drilling of new wells and redrilling of existing wells is prohibited, effective from and after the effective date of the Ordinance, November 24, 2021. Sentinel must plug and abandon a minimum of 15 wells by December 31, 2027, at a rate of a minimum of three wells per calendar year over the five-year period between 2023-2027. Sentinel must plug and abandon all remaining wells and complete the overall closure … by December 31, 2029.

“After December 31, 2027, extension may be conditionally authorized under special circumstances, but not to extend beyond December 31, 2032. Termination will include restoration of the well sites and remediation, restoration and revegetation of the areas of the oil uses’ premises affected by the plugging and removal activities to as near a natural state as practicable and in accordance with, and documented per, the California Geologic Management Division (“CalGEM”) requirements.”

CalGEM is the only legal entity in the state that has the authority to legislate what happens under the ground. The City of Culver City can only pass an ordinance that creates agreement with the company. Douglas Ito, the current head of CalGEM was appointed by Governor Gavin Newsom in September of this year, so the Inglewood Oil Field has the potential to become a template for how the state regulates closure and remediation. 

“While we are celebrating this long-awaited agreement, we’ve been waiting far too long for these dangerous wells to be cleaned up. This extended timeline will continue to burden the community even further with health impacts from pollution and climate change-driven extreme weather events,” said Nicole Levin, senior organizer for the Sierra Club Dirty Fuels Campaign. 

From the city, “Until and up to the final Termination date of December 31, 2029, Sentinel may continue with existing oil and gas activities and operations, including routine maintenance that does not involve redrilling or deepening of existing wells. Sentinel must maintain performance bonds through completion of Termination in amounts consistent with the estimated true costs, documented by a Cost Study, for all work required to be performed to complete Termination. Sentinel must maintain insurance coverage, including sufficient coverage for sudden accident and pollution liability, through completion of Termination.
Sentinel must indemnify the City against certain third-party claims.Remedies available to the City include performance bonds, specific performance and liquidated damages. Annual Well Renewal, Annual (Fire) Inspection and Well Abandonment fees must be paid in accordance with Chapter 11.12 and the City’s adopted Fee Schedule.”

“We look forward to the transformation of our hillside area away from oil uses and the future use of this area as an integral part of our Culver City community,” said Mayor Albert Vera.

Both L.A. County and Culver City have faced many legal challenges by oil operators in response to their phaseout ordinances. The city’s statement seems to offer confidence that delaying tactics have come to an end. As the words on the settlement translate to action on the oil field, officials seems to anticipate steady progress and an eventual completion of all oil drilling with the city limits. 

Considering that the Inglewood Oil Field sits on an active geological fault line, closure can’t happen soon enough. 

Judith Martin-Straw

The Actors' Gang