El Segundo Municipal Code Ch. 14 Oil and Gas Wells

A. Permit Required: It is unlawful for any person, whether as principal, agent or otherwise, to drill, bore or otherwise sink or dig, or operate or maintain any oil or gas well or to commence, carry on or prosecute the erection of any derrick or other structures for use in connection with any such well, or to maintain the same in any portion of the City without a valid, current and subsisting permit from the City Council so to do first had and obtained.

B. Application For Permit; Contents And Information:

1. Application for the permit required by subsection A of this Section to drill, bore or otherwise sink or bore any oil or gas well and to erect and maintain the usual and necessary structures in connection therewith, shall be made to the City Council, in writing, by the applicant for the permit, stating the name of the applicant, the definite location of the proposed well and appurtenant structures, the purpose for which the same is to be drilled, bored or otherwise sunk or dug, and a statement that if the permit is granted, the well will be drilled, bored or otherwise sunk or dug at the location shown in the application and that the permit for the same contemplated hereunder, if granted by the City Council, may contain a provision as a condition thereof that the well will be located at the place so designated and that otherwise the permit shall lapse and become and remain void.

2. Each application for the permit required by subsection A of this Section shall be accompanied by two (2) duplicate maps or plats correctly showing the exterior boundaries of the property covered by the lease under or pursuant to which the well applied for is to be drilled, together with the name and address of the lessor and the description of the property owned by each respective lessor; and, also the area covered by any adjoining leases owned or drilled by the applicant, or in which the applicant is interested, as the City Council deems that the public peace, health, safety, interest and convenience of the City requires that the City Council be fully advised with reference to such matters when considering the application. The respective areas shall be designated either by colored boundary lines or by shading so as to accurately indicate the extent thereof respectively.

C. Filing Of Application: On and after the effective date hereof, all applications for permits to construct derricks and prospect and drill for oil within the City shall be filed on application forms to be furnished by the City and the City Council reserves the right to refuse to consider any application not so filed. (Ord. 211, 11-24-1937)

D. Issuance; Signing Of Permit: When the City Council has authorized the issuance of any permit in accordance with the provisions of this Chapter, the same shall be signed by the Director of Building Safety. (Ord. 855, 7-16-1974)

E. Misrepresentation Of Facts In Application: Any permit issued upon an application filed in accordance with subsection B of this Section may contain a provision as a condition thereof, that any misrepresentation of fact contained in the application shall be grounds for the revocation of the permit and all rights of the permittee therein named shall cease and terminate. (Ord. 211, 11-24-1937)

F. Permit Fee: Until the further order of the City Council, no fee shall be charged for the permit required by subsection A of this Section. (Ord. 226, 12-6-1939)

A. Bond Required; Conditions:

1. Every permittee shall, either before or at the time of securing his permit, and a permittee now operating under a permit heretofore granted, deliver to the City Clerk a bond approved by the City Attorney as to form and by the Mayor as to surety, for the principal sum of two thousand dollars ($2,000.00) payable to the City, indemnifying the City against any loss which may be suffered by the City or any public property therein located, or by any public street, avenue, alley, way or place within the City, by reason of the drilling or redrilling or existence or operation, abandonment or conduct of the well referred to in his permit, or the violation of the terms and conditions of his permit, or any of them, or the failure of the permittee to remove the derrick or its appurtenances, or any act, whether of commission or omission on the part of the permittee, or any agent or contractor employed in connection with the well referred to in the respective permit, or any agent or contractor acting under the direction of the permittee.

2. Any permittee now engaged or who shall hereafter engage in the drilling or redrilling or existence or operation, abandonment or conduct of five (5) or more wells at any one or the same time, may file with the City Clerk one bond approved by the City Attorney as to form and by the Mayor as to surety, for the principal sum of ten thousand dollars ($10,000.00) to cover all operations of the permittee, indemnifying the City against any loss which may be suffered by the City, or any public property therein located, or by any public street, avenue, alley, or place within the City, by reason of drilling or redrilling or existence or operation, abandonment or conduct of the wells, or the violation of the terms and conditions of any permit issued to the permittee, or the failure of the permittee to remove any derrick or its appurtenances, or any act, whether of commission or omission on the part of the permittee, or any agent or contractor employed in connection with any well for which a permit has been granted to the permittee, or any agent or contractor acting under the direction of the permittee, in lieu of a two thousand dollar ($2,000.00) bond for each well for which a permit has been granted.

3. Should the permittee who has filed a ten thousand dollar ($10,000.00) bond, properly abandon, in accordance with the terms of his permit, any well covered by the bond, such bond may, with the consent of the City Council, if all of the obligations thereunder as to the permits have been satisfied, be terminated and cancelled and the surety thereon be relieved of all obligations thereunder, upon the filing by the permittee of a two thousand dollar ($2,000.00) bond as hereinabove provided, for each well on which the permittee is still obligated by reason of the permits issued to him.

B. Keeping Bond In Effect: A good and sufficient bond as hereinabove provided shall at all times be kept in full force and effect by the permittee covering each and every well for which the permittee has been granted a permit, until he has been released from the obligation by completion of the terms of the permit issued to him, and a consent to the release has been granted by the City Council. Unless the permittee keeps the bond in full force and effect, as hereinabove provided, then and in that event the City Council may declare the permit forfeited, and all rights of the permittee therein named thereunder shall cease and terminate. (Ord. 266, 12-23-1942)

A. Amount:

1. Each person holding a permit issued under the provisions of this Chapter shall pay for each derrick, well or operations referred to in or authorized by any permit, a license fee of one hundred fifty dollars ($150.00) per year, plus two cents ($0.02) per barrel. The fee shall be payable annually in advance and shall be based on an estimate of the number of barrels anticipated to be produced during the license period. Upon renewal of the license, the estimate of the number of barrels upon which the previous license fee was calculated shall be adjusted to reflect the actual number of barrels produced; and a new estimate for the renewal license period shall be submitted, but in no case shall the estimate be less than the fee paid for the preceding tax period. If the actual number of barrels exceeds the estimate, the licensee shall pay to the City the difference; if the actual number of barrels is less than the estimate, no refund shall be made but a credit shall be allowed on the following year's license fee.

2. Only the first annual charge shall be prorated. No such license fee or operating charge, or any part thereof, shall be refunded. The license fee or operating charge must continue to be paid for each well as long as drilling operations, drilling, mining, pumping or other operations in or about the same continue, including the production therefrom of oil, gas or other hydrocarbon substance from a flowing well, and as long as the derrick remains standing, and until the well referred to in the permit has been fully, completely and satisfactorily abandoned in accordance with the rules and regulations of the Division of Oil and Gas of the Department of Natural Resources of the State and of the City, relating to the abandonment of the wells, and until the premises relating to the well have been cleaned up and restored as nearly as reasonably possible to the same condition as that in which they existed at the time of the granting of the permit. (Ord. 1054, 8-16-1983)

B. Payment Date: The first license fee or operating charge established by subsection A of this Section shall become due and payable on the effective date hereof as to all wells, permits for which were issued prior to the effective date, and for all wells, permits for which are hereafter issued, shall become due and payable on the date of the granting of the respective permits by the City Council. The annual fees or charges prescribed in this Chapter shall thereafter become due and payable to the Chief Financial Officer on the first day of each and every calendar year. If any license fee or operating charge prescribed is not paid within fifteen (15) days after the same becomes due and payable, a penalty shall accrue upon the same, in the sum of twenty five dollars ($25.00). Unless the license fee and the penalty thereon are paid within fifteen (15) days after the date upon which the same become delinquent, then and in that event the City Council may declare the permits forfeited, and all rights of the permittee therein named thereunder shall cease and terminate. (Ord. 855, 7-16-1974; amd. Ord. 1620, 11-17-2020)

No person owning, having possession of or in control of any oil well or any oil well site within the City shall maintain or allow to exist thereon, therein or thereabout any sump or drainage basin, or any moving parts or machinery in use or intended to be used at the oil well or oil well site, unless the sump or drainage basin or machinery or moving parts are securely enclosed by an adequate noncombustible ventilated type fence, screen or housing sufficient to prevent the entry of minors. The fence or screen shall be not less than six feet (6') high, and if equipped with gates, the gates must be not less than six feet (6') high and equipped with adequate locks, lock latches or other securing devices to effectively prevent the entry of minors. A single adequate fence or screen may be used to enclose more than one oil well or oil well site and appurtenances. Fences, screens or housings required by this Section must be approved by the Building Inspector, or his representative. (Ord. 460, 7-22-1955)

ARTICLE A. OIL DRILLING DISTRICTS

SECTION:

A. It is hereby declared that oil drilling and oil production and related processes when conducted in "urbanized areas", as the term is herein defined, may be detrimental to the public health, safety and general welfare; and that the extension of oil drilling into such areas in the City in which drilling has not already been permitted is justified only by reason of recognizing the material and social value of developing natural resources; that oil and other hydrocarbon substances constitute property within the meaning of the constitutional provisions guaranteeing the right of ownership and enjoyment of such property; by recognizing also the similar constitutional guarantees for the enjoyment of the surface use of real property and improvements thereon; and the need for invoking such reasonable controls over both the subsurface and surface use of property as may be necessary to assure maximum enjoyment of each with minimum restrictions to either. It is, therefore, declared to be the object and purpose of this Article to establish reasonable and uniform limitations, safeguards and controls for the future drilling for and production of oil or other hydrocarbon substances in the urbanized areas of the City.

B. More restrictive limitations, safeguards and controls than those which have heretofore been imposed in metropolitan and urbanized areas are deemed necessary in the public interest to effect practices which will not only provide for a more economic recovery of oil, gas and other hydrocarbon substances, but which will also take into consideration the surface uses of land, as such uses are indicated by the value and character of the existing improvements in or near districts where oil drilling or production are hereinafter permitted, the desirability of the area for residential or other uses, or any other factor relating to the public health, comfort, safety and general welfare. It is contemplated that extensive urbanized areas may be explored for oil by directional drilling methods by which surface drilling and production operations are limited to a few small, controlled drilling sites so located and spaced as to cause the least detriment to the community and to the public health, safety, comfort and general welfare. (Ord. 312, 5-7-1947)

The following words and phrases when used in this Article shall, for the purposes of this Article, have the meanings respectively ascribed to them in this Section:

CONTROLLED DRILLING SITE: That particular location upon which surface operations incident to oil well drilling or deepening and the production of oil or gas may be permitted under the terms of this Chapter 15, pursuant to a permit obtained; and by virtue of a variance granted by the Zoning Ordinance.

URBANIZED AREAS: Shall refer to any improved or vacant property in residential, business or light industrial zones, as defined in the Zoning Ordinance of the City, Title 15 of this Code. (Ord. 312, 5-7-1947)

A. Governing Provisions:

1. The provisions of this Article shall apply to the creation of all oil drilling districts in urbanized areas. The provisions of the Zoning Ordinance relating to variances shall govern the procedure relative to the creation of oil drilling districts in urbanized areas. In addition to the procedure set forth in the Zoning Ordinance relating to variances, the City Planning Commission shall, by written resolution, find that the property involved is in an "urbanized area" as herein defined, and the resolution shall contain a statement setting forth the physical improvements, amount of land subdivided, zoning and other pertinent considerations upon which the finding is based.

2. Where uncertainty exists as to whether a particular area shall be considered urbanized, any person contemplating filing a petition for the creation of an oil drilling district may, prior to the filing thereof, request the Planning Commission to determine the status of the area sought to be included in the district. The Planning Commission shall thereafter, by written resolution, determine the status of the area, based upon the considerations mentioned in this Section, and in the resolution shall state the facts upon which the determination is based.

B. Authority Of Applicant; District Boundaries: Each application for the creation of an oil drilling district under the provisions of this Article shall contain a statement that the applicant has the proprietary or contractual authority to drill for and produce oil, gas or other hydrocarbon substances under the surface of at least fifty one percent (51%) of the property to be included in the district. The district described in the application shall be not less than twenty (20) acres in area, including all streets, ways and alleys within the boundaries thereof, and shall be substantially compact in area, and the boundaries thereof shall follow public streets, ways or alleys so far as may be practicable. (Ord. 312, 5-7-1947)

All oil drilling districts established under the provisions of this Article shall be subject to the conditions in the following subsections:

A. Minimum Area; Location: Each district shall not be less than twenty (20) acres in area, including all streets, ways and alleys within the boundaries thereof; provided further, that if a proposed district is not adjacent to an existing district, that the area in between shall be of such size as to allow a suitable future district to be formed.

B. Site Number And Area:

1. Not more than one controlled drilling site shall be permitted for each twenty (20) acres in any district and the site shall not be larger than two (2) acres when used to develop a district approximating the minimum size; provided, however, that where the site is to be used for the development of larger oil drilling districts or where the Planning Commission and City Council require that more than one oil drilling district be developed from one controlled drilling site, the site may, at the discretion of the Planning Commission and City Council, be increased by not more than two (2) acres for each twenty (20) acres included in the district.

2. An alternative standard of locating drilling sites may be employed in any part of the urbanized areas where permanent building improvements do not occupy more than one-third (1/3) of the property within a radius of four hundred feet (400') from any proposed drilling site; provided further, that drilling sites for individual wells as provided in this subsection shall be located not closer than four hundred feet (400') to any other well; and, provided further, that individual wells thus drilled shall not exceed one to each five (5) acres comprising any drilling area as defined in this subsection.

C. Well Number: The number of wells which may be drilled from any controlled drilling site shall not exceed one well to each five (5) acres in the district to be exploited from the site.

D. Drilling Variance: Each applicant for a variance to drill for and produce oil, gas or other hydrocarbon substances on a controlled drilling site must have the proprietary or contractual authority to drill for oil under the surface of at least fifty one percent (51%) of the property in the district to be exploited.

E. Property Owner Participation:

1. Concurrently with the filing of an application for the establishment of an oil drilling district, the applicant shall execute and file in favor of each owner of lands within the district for which the application is made and who is not then a party to the oil and gas lease, operating agreement or other contract under which the applicant claims the right to conduct oil development operations, a written offer giving to each owner the right to participate in the proceeds of the production by exercising either of the following options:

a. To join within one year from the date thereof in the execution of the oil and gas lease, operating agreement or other contract under which applicant claims the right to conduct oil drilling operations within the district; or

b. At any time prior to the commencement of drilling operations in connection with the first well to give applicant written notice of owner's election to participate with applicant in the development and operations in the district as a tenant in common and agree to advance his pro rata share of the cost of the drilling and development operations, owner's interest to be computed on the basis that the square foot area of his particular lot or parcel of land bears to the total square foot area of the district.

2. The offer hereby required must remain open for acceptance for a period of one year after the granting of the variance. During the period the offer is in effect, the applicant, or his successor in interest, shall impound all royalties to which the owners or any of them may become entitled in a bank or trust company in the State with proper provisions for payment to the record owners of property in the district who had not signed the lease at the time the variance was granted, but who accept the offer in writing within the one year period. Any such royalties remaining in any bank or trust company at the time the offer expires, which are not due or payable as hereinabove provided, shall be paid pro rata to those owners who, at the time of the expiration, are otherwise entitled to share in the proceeds of the production.

F. Bond: Each applicant to whom a variance is granted under this Article shall post with the City Planning Commission a satisfactory corporate surety bond in the sum of five thousand dollars ($5,000.00) in favor of the City, conditioned upon the performance by the applicant of each and all of the conditions, provisions, restrictions and requirements of this Article, and all additional conditions, restrictions or requirements that are imposed by the Planning Commission and City Council. No extension of time that may be granted by the Planning Commission and City Council, or any change of specifications or requirements that may be approved or required by them or by any other officer or department of the City or any other alteration, modification or waiver affecting any of the obligations of the grantee made by any City authority or by any other power or authority whatsoever shall be deemed to exonerate either the grantee or the surety on any bond posted pursuant to this Article. (Ord. 312, 5-7-1947)

Applications for variances to create controlled drilling sites and to permit the drilling for and production of oil, gas or other hydrocarbon substances thereon shall be filed in accordance with the provisions of the Zoning Ordinance relating to variances. (Ord. 312, 5-7-1947)

In granting a variance to drill for oil in any district created under this Article, the City Planning Commission and the City Council shall include in the variance all conditions and limitations designated in or required by the ordinance enacted by the City Council in creating the district, and in addition thereto, the City Planning Commission and the City Council may include any other conditions or limitations not in conflict therewith which they may deem appropriate in order to give proper effect to the stated purposes of this Article. (Ord. 312, 5-7-1947)

For the guidance and convenience of the Planning Commission and the City Council, certain optional conditions, most likely to be required, are enumerated:

A. Drilling Commencement And Completion: Drilling operations shall be commenced within ninety (90) days from the effective date of the variance or within such additional period as the City Planning Commission and the City Council may, for good cause, allow, and thereafter shall be prosecuted diligently to completion, or else abandoned strictly as required by law and the premises restored to their original condition as nearly as practicable so to do. If a producing well is not secured within twelve (12) months, the well shall be abandoned and the premises restored to its original condition as nearly as practicable so to do. The City Planning Commission and the City Council shall, for good cause, allow additional time for the completion of the well.

B. Equipment; Mufflers: An internal combustion engine or steam- driven equipment may be used in the drilling of the well and, if an internal combustion engine or steam-driven equipment is used, mufflers shall be installed on the mud pumps and engines.

C. Electrical Power: Pumping and other power operations (other than drilling) shall at all times be carried on only by electrical power and such power shall not be generated on the controlled drilling site or in the district.

D. Multiple Well Drilling: Drilling operations shall be carried on or conducted in connection with only one well at a time in any one such district, and the well shall be brought in or abandoned before operations for the drilling of another well are commenced; provided, however, that the City Planning Commission and the City Council may permit the drilling of more than one well at a time after the discovery well has been brought in.

E. Reduction Of Annoying Factors: All oil drilling and production operations shall be conducted in such a manner as to eliminate, as far as practicable, dust, noise, vibration or noxious odors and shall be in accordance with the best accepted practices incident to drilling for and the production of oil, gas and other hydrocarbon substances. Proven technological improvements in drilling and production methods shall be adopted as they may become, from time to time, available, if capable of reducing factors of nuisance and annoyance.

F. Screening: All tools, pipe and other equipment used in connection with any production operations, when conducted under the provisions of subsection 13-14A-4B1 of this Article, shall be screened from view.

G. Time For Moving Materials Or Equipment: No materials, equipment, tools or pipe used for either drilling or production operations shall be delivered to or removed from the controlled drilling site, except between the hours of eight o'clock (8:00) A.M. and six o'clock (6:00) P.M. on any day, except in case of emergency incident to unforeseen drilling or production operations.

H. Fire Extinguishers: Fire extinguishers as approved by the Fire Department, and of sufficient number as required by the Fire Department, shall be maintained on the premises at all times during the drilling and production operations.

I. Removal Of Equipment After Completion Of Well: Within sixty (60) days after the drilling of each well has been completed, and the well placed on production, the derrick, all boilers and all other drilling equipment shall be entirely removed from the premises, unless such derrick and appurtenant equipment is to be used within a reasonable time limit determined by the City Planning Commission and the City Council for the drilling of another well on the same controlled drilling site.

J. Building To House Production Equipment: No oil, gas or other hydrocarbon substance may be produced from any well permitted under the provisions of subsection 13-14A-4B1 of this Article, unless all equipment necessarily incident to the production is completely enclosed within a building, the plans for the building to be approved by the Department of Building. This building shall be of a permanent type, of attractive design and constructed in a manner that will eliminate as far as practicable, dust, noise, noxious odors and vibrations or other conditions which are offensive to the senses, and shall be equipped with such devices as are necessary to eliminate the objectionable features mentioned above. The architectural treatment of the exterior of the building shall also be subject to the approval of the City Planning Commission and the City Council.

K. Screening Equipment: No oil, gas or other hydrocarbon substances may be produced from any well permitted unless all equipment necessarily incident to the production is appropriately screened. A plot plan showing the type and extent of the screening shall be subject to the approval of the City Planning Commission and the City Council.

L. Underground Pipeline: There shall be no tanks or other facilities for the storage of oil erected or maintained on the premises and all oil produced shall be transported from the drilling site by means of an underground pipeline, without venting products to the atmospheric pressure at the production site.

M. Production Tanks: Not more than two (2) production tanks shall be installed for each well being drilled, neither one of which shall have a rated capacity in excess of one thousand (1,000) barrels. The plans for the tanks, including the plot plan showing the location thereof on the property, shall be submitted to and approved in writing by the Planning Commission and the City Council before the tanks and appurtenances are located on the premises, and the tanks and appurtenances shall be kept painted and maintained in good condition at all times.

N. Protection And Screening Of Production Tanks: Any production tank extending above the surface of the ground shall be reasonably screened by appropriate planting, and shall be effectively protected by surrounding dykes having a capacity within the enclosed area not less than the capacity of the tanks surrounded.

O. Refinery, Dehydrating Or Absorption Plant: No refinery, dehydrating or absorption plant of any kind shall be constructed, established or maintained on the premises at any time.

P. Signs: No sign shall be constructed, erected, maintained or placed on the premises or any part thereof, except those required by law or ordinance to be displayed in connection with the drilling or maintenance of the well.

Q. Toilet And Washing Facilities: Suitable and adequate sanitary toilet and washing facilities shall be installed and maintained in a clean and sanitary condition at all times.

R. Landscaping: The controlled drilling site or any part thereof shall be adequately landscaped, except for those portions occupied by any required structure, appurtenance or driveway, and all such landscaping shall be maintained in good condition at all times. Plans showing the type and extent of the landscaping shall first be submitted to and approved by the City Planning Commission and the City Council.

S. Insurance: The holder of the variance, his successors and assigns, must at all times be insured to the extent of one hundred thousand dollars ($100,000.00) against liability in tort arising from the drilling, or production or activities or operations incident thereto, conducted or carried on under the variance or by virtue thereof. The policy of insurance, which may include self-insurance, issued pursuant thereto shall be subject to the approval of the City Attorney, and duplicates shall be furnished to him. Each such policy shall be conditioned or endorsed to cover such agents, lessees or representatives of the variance holder as may actually conduct drilling, production or incidental operations permitted by the variance. (Ord. 312, 5-7-1947)

The City Planning Commission and City Council may deny any application for a zone variance to create a controlled drilling site if they find that there is available and reasonably obtainable in the same district or in an adjacent or nearby district within a reasonable distance, one or more other locations where controlled drilling could be conducted with greater safety and security, with appreciably less harm to other property, or with greater conformity to the zoning plans of the City. (Ord. 312, 5-7-1947)

The provisions of this Article are not applicable to wells existing prior to the effective date hereof. (Ord. 312, 5-7-1947)

The "controlled drilling site" as defined in Section 13-14A-2 of this Article shall not be so located as to include any portion of any dedicated public alley or street, nor shall it be so located as to include any area contained within the limits of any street, alley or any other public area when designated as such in the Master Plan or Official Plan of the City. (Ord. 312, 5-7-1947)

The provisions of this Article are supplemental to the Land Use Plan of the City, as defined in the Zoning Ordinance. (Ord. 312, 5-7-1947)