Seal Beach Municipal Code Ch. 5.55 Oil and Gas Production

Nothing in this chapter shall be deemed to conflict with state laws concerning drilling for oil on state-owned tide and submerged lands. Nor shall the provisions of this chapter apply to drilling and production of oil where wells are located and bottomed on state-owned tide and submerged lands.

(Ord. 1515)

For the purpose of this chapter, the following words and phrases shall mean:

Controlled Drill Site:

A surface location in the city upon which surface operations incident to oil well drilling or deepening and the production of oil and gas and other hydrocarbon substances from beneath the surface of the real property, within or outside the city, is permitted under the terms and conditions of this chapter and an oil/gas production permit. Controlled drill site boundaries shall be set by city council resolution.

Controlled Drill Site No. 1:

The real property in the city described as follows:

Developed Area:

That subsurface area under real property in the city in or under which there are proven oil and gas reserves and on which and from which real property there is a currently producing well being operated by virtue of an oil and gas lease executed and delivered prior to January 20, 1969, in which subsurface area the drilling for and production of oil and gas is permitted as provided in this chapter. Such area shall contain not less than one acre.

Directional Drilling:

The whipstocking or slant drilling of an oil and gas well more than 5º off vertical.

Drilling Equipment:

All temporary structures, tanks, equipment and facilities necessary or convenient for the drilling of a well or well hole. "Drilling equipment" includes without limitation: wood or steel derricks; portable masts; engines; pumps; temporary fuel and water tanks; and other like facilities ordinarily used in connection with the drilling of an oil and gas well.

Exploratory Area:

A city council designated area in which drilling and production for oil and gas is permitted pursuant to this chapter. Such area shall contain not less than 40 acres, the boundaries of which shall follow property lines, public streets, highways or alleys so far as practicable.

Mine:

All mineral bearing properties of whatever kind or character, whether underground, quarry, pit, well, spring, or other source from which any mineral substance is or may be obtained.

Mineral:

All mineral products, both metallic and nonmetallic, solid, liquid, or gaseous, and mineral waters of whatever kind or character.

Oil Well:

Any well or hole already drilled, being drilled, or to be drilled from the surface into the earth, which well or hole is used or intended to be used in connection with the drilling for, prospecting for, or production of oil, natural gas, or other hydrocarbon substances. "Oil well" shall also include a well or hole used for the subsurface injection into the earth of oil field waste, gases, water, or liquid substances, including any well or hole that has not been abandoned and is now in existence.

(Ord. 1515)

A. In-City Production. Every person who engages in the business of producing crude oil, gas, petroleum, or other hydrocarbon substances from any well located in the city shall pay an annual license tax computed as follows:

1. $150 per producing well ("the base tax"); plus

2. $30 per producing well ("the annual oil permit well fee"); plus

3. 20.5¢ per barrel of oil produced and shipped from the well during each fiscal quarter of the fiscal year ("the per-barrel tax"). Such amount shall be adjusted annually on July 1st of each year in accordance with the change in the producer price index during the previous fiscal year, but in no event shall the per barrel tax be adjusted to a rate below 12.5¢ per barrel of oil produced. Such adjustment shall be determined by the director of administrative services. For purposes of this section, "producer price index" means the producer price index for crude petroleum (domestic production), as prepared by the Bureau of Labor Statistics of the United States Department of Labor, or if such agency shall cease to prepare such an index, then any comparable index covering the Los Angeles and Orange County areas prepared by any federal or state agency, which is approved by the city council.

4. The base tax and the annual oil permit well fee shall be paid by September 30th for each fiscal year. The base tax and the annual oil permit well fee shall be paid for each new well commencing production after such payment dates within 30 days after the commencement of production for such well.

5. The director of finance shall notify each person required to pay the per-barrel tax of the rate to be used for each fiscal year. Such payment shall be made during each quarter of every fiscal year in the manner provided herein, on or before each succeeding September 30th, December 31st, March 31st and June 30th, respectively. Production during the months of June, July and August shall constitute the measurement of the amount due on or before September 30th for the first quarter of a fiscal year; production during the months of September, October and November shall constitute the measurement of the amount due on or before December 31st; production during the months of December, January and February shall constitute the measurement of the amount due on or before March 31st; production during the months of March, April and May shall constitute the measurement of the amount due on or before June 30th.

6. For the purpose of determining the license tax in this subsection A:

a. A well is located in the city if the surface location of the well, the surface of the well itself, or if any portion of the well head is located in the city, irrespective of the subsurface location of the well, the producing interval thereof, or where the hold of the well may be bottomed.

b. A barrel of oil shall consist of 42 gallons (United States) of crude petroleum or hydrocarbon substances corrected for temperature variations in accordance with methods generally approved in the petroleum industry. Petroleum or hydrocarbon substances means crude oil remaining after the removal therefrom of water or other impurities by preliminary processing in the vicinity of the well site preparatory to the shipment thereof.

c. If oil produced from multiple wells shall be commingled without the production of the respective wells being separately measured, each well whose production has been so commingled shall be considered as having produced an equal part of the total.

d. Each oil producer in the city shall keep accurate records of any producer prices of such producer for oil produced in the city.

7. The person subject to the payment of the tax shall, before the business tax for each quarter becomes delinquent, file with the city a written statement setting forth the number of wells in operation and the number of barrels of oil produced by such well during the pertinent 3-month period of production upon which the tax due is to be calculated, and such person shall pay at such time the amount of the business tax computed upon the measure of the tax reported in the statement. The written statement shall include a declaration substantially as follows:

"I declare under penalty of making a false declaration that I am authorized to make this statement, and that to the best of my knowledge and belief it is a true, correct, and complete statement made in good faith for the period stated, in compliance with the provisions of the Seal Beach Municipal Code."

Such statements shall not be conclusive against the city as to the information set forth therein, nor shall the filing of a statement preclude the city from collecting by appropriate action any additional tax that is determined to be due and payable.

B. Out-City Production. Every person conducting, managing, carrying on, or engaged in the business or activity of producing crude oil, gas, petroleum, or other hydrocarbon substances or products from any well or wells where such well, or any portion of such well passes through or is bottomed under any real property in the city and where portions of such well are located in one or more other jurisdictions and where such well head is not located in the city, shall pay the sum or sums in the manner and to the extent as hereinafter provided for a business license tax:

1. The sum or sums to be paid on a per fiscal year basis, payable quarterly.

2. For each fiscal year there shall be paid in the manner hereinafter provided, on or before September 30th, December 31st, March 31st, and June 30th, respectively, an amount equal to 01¢ per quarter for each barrel of oil produced by each well in excess of 300 barrels per quarter. Production during the months of June, July, and August shall constitute the measurement of the amount due on or before September 30th for the first quarter of the fiscal year; production during the months of September, October, and November shall constitute the measurement of the amount due on or before December 31st; production during the months of December, January, and February shall constitute the measurement of the amount due on or before March 31st; production during the months of March, April, and May shall constitute the measurement of the amount due on or before June 30th.

3. For the purpose of determining the per license tax in this subsection B:

a. A barrel of oil shall consist of 42 gallons (United States) of crude petroleum or hydrocarbon substances corrected for temperature variations in accordance with methods generally approved in the petroleum industry. Petroleum or hydrocarbon substances mean crude oil remaining after the removal therefrom of water or other impurities by preliminary processing in the vicinity of the well site preparatory to the shipment thereof.

b. If oil produced from multiple wells shall be commingled without the production of the respective wells being separately measured, each well whose production has been so commingled shall be considered as having produced an equal part of the total.

C. Nonproduction. Every person conducting, managing, carrying on or engaged in the business or activity of oil well, injection well or water source well drilling or servicing operations by refining oil or petroleum products and producing the byproducts, or marketing, selling, distributing at wholesale, oil or any petroleum products, or byproducts, or maintaining tankage or warehouse storage facilities where oil is kept for the purpose of whole distribution thereof shall pay the sum of $50.00 per year plus a sum equal to the total of the following respective amounts per year per employee, in excess of 2 for the average number of individuals employed by such person whose principal activities are within the city during the 12 months immediately preceding the 30 days next preceding the due date of the license:

A license issued pursuant to this subsection C shall include and permit the marketing, selling and distributing, at wholesale, of automobile tires, batteries, and accessories. The payment of a license as hereinabove provided in this subsection shall permit the engaging in any of the businesses or activities licensed without payment of an additional license tax; provided, however, that nothing in this subsection C shall be deemed to apply or relate to actual oil production operations or to the operation of automobile filling stations.

(Ord. 1515)

The person subject to the payment of the business license tax shall, before the business tax for each quarter becomes delinquent, file with the city a written statement setting forth the number of wells in operation and the number of barrels of oil produced by each well during the pertinent 3-month period of production upon which the tax due is to be calculated. Such person shall pay at such time the amount of the business tax computed upon the measure of the tax reported in the statement. The written statement shall include a declaration substantially as follows:

"I declare under penalty of making a false declaration that I am authorized to make this statement, and that to the best of my knowledge and belief it is a true, correct, and complete statement made in good faith for the period stated, in compliance with the provisions of the Seal Beach Municipal Code."

Such statements shall not be conclusive against the city as to the information set forth therein, nor shall the filing of a statement preclude the city from collecting by appropriate action any additional tax that is later determined to be due and payable.

(Ord. 1515)

Every person required to have a license under this chapter shall keep accurate records as to the amount of oil produced and shipped or sold from wells located within the city and any other records required to be maintained by this chapter. All such records shall be kept for a minimum period of 3 years, and shall be made available for inspection at all reasonable times upon demand of the city manager, together with any shipping documents or sales invoices pertaining to such oil.

(Ord. 1515)

If any fee herein required to be paid to the city is not paid at the time and in the manner provided, the same shall, 30 days thereafter, automatically be and become delinquent, and a penalty in an amount equal to 25% of such fee shall be added thereto for such delinquency, which penalty shall be and become a part of such fee and shall be enforced and collected as a part of such fee.

(Ord. 1515)

A. Except as provided in subsection B of this section, no person shall open or operate any mine in the city, remove any minerals from any property in the city, or enter the subsurface of the city from any point for the purpose of removing any minerals from any property in the city.

B. A person who complies with the requirements of this chapter may remove oil, gas and other hydrocarbon substances from property within the city.

(Ord. 1515)

The right to maintain and operate oil and gas wells lawfully drilled in or into the surface or the subsurface of the city prior to January 20, 1969, which wells are still being drilled or are producing oil or gas or other hydrocarbon substances as of January 20, 1969, shall not be prohibited; provided, however, any such wells shall be maintained and operated in accordance with law and in full compliance with the terms and conditions of the permits pursuant to which they were drilled. Any such well shall hereafter be referred to as an "existing well." No existing well shall be drilled, re-drilled, or deepened below its present bottom without first complying with all the terms, conditions, and provisions of this chapter including without limitation the payment of fees, the securing of an oil/gas production permit and the approval of the exploratory area.

(Ord. 1515)

A. No person shall drill for or produce oil, gas, or other hydrocarbon substances from any surface location within the city, whether the subsurface operation from such well is within or outside the city, except as permitted by this chapter and this code.

B. No person shall drill or produce oil or gas or other hydrocarbon substances from the subsurface of the city from drill sites located either within or outside the city except as permitted by this chapter.

C. No person shall drill or re-drill or deepen below its present bottom any well for the production of or exploration for oil or gas or other hydrocarbon substances where any portion of the surface operation or the subsurface operation of such well is located within the city except as is authorized by this chapter.

(Ord. 1515)

A. The city council hereby finds and determines that it is unlawful and a public nuisance for any person hereafter to erect any derrick or drilling equipment and hereafter to drill an oil and gas or oil or gas well from surface drill sites or locations within the city except in the manner provided in this chapter and this code.

B. The city council hereby finds and determines that it is unlawful and a public nuisance for any person hereafter to drill or produce an oil and gas well or oil or gas well by directional or slant drilling methods from surface locations or sites outside the city such that the wells pass through or bottom in the subsurface of any property located within the city except in the manner provided in this chapter.

C. The city council hereby finds and determines that it is unlawful and a public nuisance for any person hereafter to erect any derrick or drilling equipment and hereafter to drill an oil and gas or oil or gas well or to produce oil and gas or oil or gas by directional or slant drilling methods from surface locations or drill sites outside the city except in the manner authorized by this chapter and this code.

D. The city council hereby finds and determines that is unlawful and a public nuisance for any well to be drilled or produced, and for any building or structure to be erected, operated, or maintained, and for property to be used, contrary to the provisions of this chapter or this code.

(Ord. 1515)

A. Subject to the approval of the exploratory area and the issuance of an oil/gas production permit, the drilling of an oil and gas or oil or gas well and the production of oil, gas, and other hydrocarbon substances may be carried on from drill sites located outside the city limits where such oil and gas wells are drilled into the subsurface of real property in the city by directional or slant drilling in accordance with the requirements of this chapter.

B. Subject to the approval of the exploratory area and the issuance of an oil/gas production permit, the drilling of an oil and gas or oil or gas well and the production of oil, gas, and other hydrocarbon substances may be carried on from a controlled drill site. No drilling or production operations for oil and gas may be had on any other sites or surface real property within the city.

C. The use of a controlled drill site need not be exclusive to any single person, firm, or operator and may be used jointly by such applicant or permittee as may be granted an oil/gas production permit.

(Ord. 1515)

A. No oil/gas production permit shall be considered by the city council until the city council has approved the boundaries of a preliminary exploratory area. An application for approval of the boundaries of a proposed preliminary exploratory area shall be required, and in such application the applicant shall set forth and describe the real property in the city that the applicant proposes to explore for oil and gas purposes. A map shall also be attached to the application, which map shall clearly show and outline the proposed preliminary exploratory area. The preliminary exploratory area may include property within and property outside the city.

B. Each application for approval of the boundaries of a preliminary exploratory area shall be accompanied by an application for a permit to drill a well for exploratory purposes and an application fee in an amount set by city council resolution. The application fee shall entitle applicant upon approval of the boundaries of a preliminary exploratory area to drill one exploratory well. Such exploratory well shall not be permitted by applicant to be placed into production except for testing purposes until applicant has applied for and received approval by the city council of the boundaries of the final exploratory area.

C. Each applicant requesting approval of a preliminary exploratory area shall have the contractual or proprietary right and authority to drill for oil and gas under the surface of at least 75% of the area of the real property in the city described and included in any preliminary exploratory area.

(Ord. 1515)

A. No oil/gas production permit shall be considered by the city council until the city council has approved the boundaries of the final exploratory area, hereinafter called exploratory area. An application for approval of the boundaries of the proposed exploratory area shall be required and in such application the applicant shall set forth and describe the real property in and outside the city that the applicant proposes to explore further for oil and gas purposes. A map shall also be attached to the application, which map shall clearly show and outline the exploratory area. Such exploratory area shall not contain less than 40 acres. Each such application shall have attached thereto geological information and the opinion of a geologist or petroleum engineer indicating the anticipated geological structure included within the proposed exploratory area.

B. Any person who has received approval of a preliminary exploratory area and a permit for an exploratory well shall apply for approval of a final exploratory area if the well is capable of producing an average of 5 or more barrels of oil or gas in commercial quantities or oil and gas in commercial quantities after a maximum of a 90 day test period. No further or additional exploratory wells shall be drilled until an application for an exploratory area has been filed with and approved by the city council.

C. Each application for approval of the boundaries of an exploratory area shall be accompanied by an application fee in an amount set by city council resolution. The application fee shall be used to defray the costs to the city of study, investigation, and hearing concerning the proposed exploratory area set forth in the application.

D. Each applicant requesting approval of an exploratory area shall have the contractual or proprietary right and authority to drill for oil and gas under the surface of at least 75% of the area of the real property in the city described and included in any exploratory area.

E. The city council, in consultation with the applicant, shall determine the nature and probable extent of the exploratory area. Having determined the probable extent of the exploratory area, the city council shall delineate and describe the approved exploratory area.

F. The city council, as a condition to granting its approval, may require each applicant or permittee to pool all real property that it controls within the approved exploratory area. The permittee shall immediately form one or more pools within the approved exploratory area, provided, however, that there shall not be more than 3 pools in an approved exploratory area. After such pool is created, the property included therein shall thereafter be referred to as the "pooled area." The applicant shall not be required to obtain leases or contractual rights to explore all of the real property within such exploratory area, but the applicant shall agree, in writing, that the owners of any oil and gas rights within the exploratory area may join in any leasing arrangements covering the pooled area containing their property for the production of oil and gas from the area. The owners of oil and gas rights within the exploratory area shall have the right to join in any such lease and to share in the rental or royalty payments for oil and gas produced from the approved exploratory area or pooled area. The shares of royalty to be paid shall be computed on the same basis as that of the average of real property owners, by surface area, who have by lease or other document agreed to the drilling for and production of oil and gas by the applicant from the subsurface of the exploratory area.

The owner of any oil and gas rights within the exploratory area shall be granted the right to join in any such pooled area on the basis set forth in this section. The permittee or lessee shall accept the owner of such rights into the pooled area as provided in this section upon receiving written notice that such owner will join in and become a part of such pooled area covering the exploratory area and upon the execution of the same form of lease executed by other owners; provided, however, the oil and gas rights are appurtenant to real property included in the exploratory area. The owner of oil and gas rights within the exploratory area may join such pooled area and be included in the right to receive a pro rata share of oil and gas royalty the same as if the owner had joined such lease by giving notice to the permittee at any time after the exploratory area is approved; provided, however, such owner waives any right to oil and gas royalties, rentals, or proceeds on or for any and all production from the exploratory area up to the first day of the following month after the time such notice is given to the permittee within 5 years of the effective date of the first oil/gas production permit issued in the exploratory area. The permittee shall be required to impound the oil and gas royalty for all property within the exploratory area (in which the permittee does not have a contractual or proprietary right to drill for oil and gas beneath the surface) for a period of 5 years from and after the effective date of such first oil/gas production permit and to, during such 5-year period, pay such royalty, as they are entitled, to the owners of oil and gas rights who give written notice and execute the same form of lease or agreement executed by other owners. Upon the expiration of 5 years from the effective date of the first oil/gas production permit, the permittee shall distribute the remainder of the funds impounded to the owners of oil and gas rights who have executed the lease in the same manner as shares of royalty are apportioned. No such owner of oil and gas rights shall be entitled to an oil/gas production permit or the right to drill an oil and gas well due to failure to join any pooled area or nonparticipation in oil and gas royalty from real property located within the exploratory area.

The pooling or unitizing of oil and gas rights within the exploratory area as between owners, lessees, or others having rights therein may be made a condition to the approval of the exploratory area.

The city council may modify the restriction and conditions required by this chapter and impose such other conditions as it may deem necessary to carry out the purpose and intention of these sections and to fairly and equitably protect the oil and gas rights of the owners in any exploratory area.

G. In its action upon the application, if the city council shall find that the boundaries of the proposed exploratory area include all of the subsurface portion of real property in which there is likely to be found deposits of oil and gas from a probably single pool, it shall approve the boundaries of the proposed exploratory area, or, if such boundaries can be modified to justify such a finding, it shall approve the boundaries of the exploratory area as modified.

(Ord. 1515)

Notwithstanding the provisions of this chapter requiring that the exploratory or producing area contain not less than 40 acres, the holder of a valid oil/gas production permit may drill and produce an oil and gas well where such well is bottomed and produced from a developed area.

(Ord. 1515)

It shall be unlawful and a nuisance for any person hereafter to conduct any drilling operations for a well hole or hereafter to drill and produce any oil and gas well or well hole in the surface or subsurface of the city from any drill site without first having applied for and obtained from the city council an oil/gas production permit.

(Ord. 1515)

A. Each oil/gas production permit application shall be made in writing and shall include:

1. The legal description of the proposed drill site.

2. A description of all properties, both within and outside the city, through which such well is proposed to pass.

3. A statement that the applicant has the right, by reason of ownership or the permission of the owner, to pass through and enter all property through which such well is proposed to pass.

4. The proposed location, the type, kind, size, and amount of equipment, and the method of operation of the proposed well, or an approved well plan.

5. The proposed method of handling and using any product proposed to be developed.

6. In all cases where the well is proposed to be bottomed in the city, a statement that the applicant has the contractual or proprietary right and authority to drill for oil and gas under the surface of at least 75% of the real property described and included in the approved exploratory area or a statement bringing the application within the requirements for production in developed areas.

7. In all cases where the well is proposed to be drilled from a controlled drill site within the city, a statement that the applicant has complied or will comply, before spudding in the well, with all requirements of the city (or in the case of unincorporated territory, the county) in which the well is to be bottomed.

8. A detailed written report of a geologist or other person experienced in the field of subsidence as a result of petroleum extraction. The report shall indicate the nature and extent of the subsidence, if any, that can reasonably be expected to occur as a result of the proposed drilling and production or drilling or production, as the case may be. The report also shall indicate the nature and extent of the damage to property, if any, that could reasonably be expected to occur as a result of the drilling and production or drilling or production, as the case may be.

B. The filing of an oil/gas production permit application shall be accompanied by an application fee in an amount set by city council resolution. The application fee shall be used to defray the costs to the city of study and investigation by the city manager, other staff members, consultants, and the city council concerning the proposal set forth in the application. No fee for an application for an exploratory well shall be required.

(Ord. 1515)

A. Upon receipt of an oil/gas production permit application the city council shall refer such application to the city manager for study and investigation. The application shall be considered by the city council within one month after the city has complied with the California Environmental Quality Act.

B. In its action upon the application, if the city council finds that the terms and conditions of this chapter have been complied with and that the persons and property within the city will not be adversely affected by the granting of the application, and that there is no reasonable probability of danger or damage to any real or personal property or injury to any person within the city by reason of subsidence of the surface of the earth or other reason due to the extraction of oil or gas or oil and gas, and if, in a case where the proposed drill site is located within the city, the city council shall find that there is no reasonable probability of danger or damage to any real or personal property or injury to any person by reason of the production and extraction of oil or gas or oil and gas or other hydrocarbon substances, it shall grant the permit upon such terms and conditions as deemed appropriate to protect persons and property within the city from injury or damage or hazard of injury or damage, and when the drill site is in the city, such further conditions as deemed appropriate to eliminate or minimize the adverse affect of such drill site on persons and property in the vicinity. In all other cases, the city council shall deny the application.

C. When the city council has approved an oil/gas production permit, the permit shall not be effective until it is issued by the city manager. The city manager shall issue an oil/gas production permit approved by the city council upon receipt of written acceptance of the permit by the permittee and payment to the city of a permit fee in an amount set by city council resolution. Such permit fee shall be in addition to the application fee.

(Ord. 1515)

Drilling shall be conducted in accordance with the following operation standards:

A. Drilling operations for any well shall commence within 90 days from the effective date of the permit and thereafter be prosecuted diligently to completion. If a producing well is not secured within one year from the effective date of the permit, the well shall be abandoned. The city council, for good cause, may allow additional time for the commencement of the well.

B. The permittee shall comply with all ordinances, rules, and regulations of the city and of any other city through which the well or any part thereof is located or to be drilled, and the permittee shall comply with all ordinances of the county when the well or any part thereof is located or is to be drilled partly within the unincorporated territory of the county. The permittee shall comply with all rules and regulations of the South Coast Air Quality Management District.

C. A copy of the complete record of any such well furnished to the Division of Oil and Gas of the state shall be filed by the permittee with the city manager upon request. The permittee shall, within 30 days after any oil and gas or oil or gas well is placed on production, file with the city manager a plat showing the location of the producing interval and the drill site. All records submitted pursuant to the provisions of this subsection shall be confidential and privileged.

D. All well holes and oil and gas wells passing through or bottomed in or under any real property in the city, which wells are drilled from drilling sites outside the city, shall be below a depth of 200 feet upon entering any real property within the city.

E. All well holes, oil and gas wells, oil wells, and gas wells bottomed in the city shall be bottomed in a preliminary exploratory area, an exploratory area or a developed area.

F. City representatives shall be permitted at all reasonable times to review and inspect the drill site and any operations or methods used in the drilling for and production of oil and gas.

G. The permittee shall hold the city and its officers and employees harmless from any claims by third parties arising out of or resulting from the permittee's operation under any oil/gas production permit. The permittee upon request and after commercial production is established shall be insured for not less than $2,000,000 against liability in tort arising from the drilling or production activities or operations incident to the drilling and production of an oil and gas well. A certificate of such insurance shall be filed with the city clerk before drilling is commenced. As an alternative to the afore required liability insurance, the city council may approve a satisfactory bond in a minimum amount of $2,000,000 or the city council may approve a plan of self insurance by the permittee. Drilling and production shall be suspended at any time when the required insurance, bond, or self insurance plan is not in full force and effect.

H. The oil/gas production permit shall become null and void unless the permit is accepted by the applicant in its entirety in writing, filed with the city manager within 30 days from the effective date thereof, together with the payment of the permit fee and no work on such drill site shall be commenced until such permit is accepted and issued.

I. The operation of any oil and gas well and production therefrom drilled pursuant to an oil/gas production permit shall be in accordance with the rules and regulations of the Division of Oil and Gas of the state, or any successor agency or body thereto.

J. The oil and gas or oil or gas well drilled shall be drilled only within properties which the permittee set forth in its application as the properties through which such well was proposed to pass unless the permittee secures approval of the city council to cause such well to pass through other properties.

(Ord. 1515)

No oil/gas production permit shall be issued where all or any part of the proposed drill site is located within the city without the following additional standards being required and made a part and condition of such permit; provided, however, that the city council may in the event the proposed drill site is more than 1,000 feet from any current or proposed residential or commercial area, waive any or all of such following standards upon a finding that the standards would impose a hardship on the permittee and would not serve to protect the citizens of the city. The city council may require the following additional standards to be made a condition of any permit for wells drilled from a site outside the city, if such drill site is within 1,000 feet of any developed residential or commercial area.

A. All drilling shall be done by means of a steel derrick enclosed with fire proofed and sound-proofed material, and operations shall be carried on diligently from the commencement of the drilling until the completion of the well or until such well is abandoned.

B. All drilling and production equipment shall be operated by either electric or muffled internal combustion engines. All engines shall be equipped with Maxim Silencers or such other types of mufflers as may be satisfactory to the city council.

C. No sump holes shall be permitted, and rotary mud, drill cuttings, and other waste material from drilling operations shall be discharged into a steel tank. Such tank, drill cuttings, rotary mud, and waste material shall be removed from the controlled drill site upon completion of drilling operations.

D. During all drilling or production operations, except in the case of emergency, all equipment or supplies to be delivered to the drill site shall be transported, trucked, or conveyed to the drill site and unloaded only on Monday through Saturday between the hours of 8:00 a.m. and 6:00 p.m. As soon as commercial production has been established in any new well, acquisition of a right-of-way or the construction of a pipeline shall be started within 10 days and work thereon diligently prosecuted until such pipeline is completed in order to eliminate the trucking of oil. Except in cases of emergency, all oil and gas shall be shipped and transported through pipelines when completed. All pipelines outside of such drill site shall be laid to a depth of at least 3 feet below the surface of the ground.

E. Private roads for ingress and egress to and from the drill site shall be surfaced with gravel and maintained in good condition at all times during drilling and production operations. No signs shall be erected on the drill site except those required by law or permitted by this code.

F. Within 90 days after the completion of drilling operations or abandonment of further drilling, the derrick and all drilling equipment, including temporary tanks, shall be removed from the drill site. Well abandonment shall be in accordance with the requirements of the Division of Oil and Gas of the state. Upon such well abandonment, the permittee shall restore the property as nearly as possible to its original condition and shall remove all concrete foundations, oil-soaked soil, and debris; all holes or depressions shall be filled to the natural surface.

G. The applicant or permittee shall designate a competent representative who shall be responsible for the supervision of drilling operations and the carrying out of conditions of any permit. Such representative shall be available at all times during drilling operations and shall be the responsible contact agent of the applicant or the permittee whom the city council may require to carry out the provisions of the permit.

H. Within 30 days after commercial production has been established, there shall be commenced and prosecuted diligently to completion on each controlled drill site adequate landscaping and screening, either with shrubbery, masonry, or concrete wall or their equal, so that the same shall not be unsightly nor hazardous. All tanks shall be depressed so that the top of any tank and other equipment and appurtenances shall not extend more than 5 feet above the surface of any controlled drill site unless otherwise permitted by the city council.

I. Oil produced from such wells may be stored in steel tanks on the site. Unless otherwise permitted by the city council, the total amount of storage for production, recycling, and all storage and operational purposes shall not exceed 2,000 barrels, and no tank shall exceed 1,000 barrel capacity.

J. All drilling and production equipment installed or operated upon any controlled drill site shall be so constructed, operated, and maintained that no noise, vibration, odor, or other harmful or annoying substances of effects therefrom which can be eliminated or diminished by the use of modern and approved types of equipment silencers or greater care shall ever be permitted to result from operations on any controlled drill site to the injury or annoyance of persons in the vicinity of such controlled drill site. Proven technological and mechanical improvements in methods of drilling and production and in the type of equipment used therefor shall be adopted from time to time, as the same become available if the use of such equipment, improvements, and methods will reduce noise, vibration, odors, or the harmful effects of annoying substances. The use of equipment in any controlled drill site, which equipment causes noise or vibration, shall at all times be subject to the approval of the city council, and the city council may amend any permit and require the permittee to abate any noise or vibration which constitutes a nuisance and is detrimental to persons or property in the vicinity where such equipment is being operated.

K. All of the operations at the drill site shall be conducted in a careful and orderly manner, and the premises shall at all times be maintained in a neat, clean, and orderly manner.

L. All fire-fighting equipment as required and approved by the fire chief shall be installed and maintained on the controlled drill site at all times during the drilling and production operations.

M. No earthen sump shall be used or maintained on any controlled drill site, and all waste water, mud, oil, or other waste products from drilling and producing operations shall be accumulated in steel tanks, and such tanks shall not be permitted to overflow at any time.

N. The city council may restrict the use of certain streets, alleys, or roadways in connection with the permittee's operations, which streets, alleys, or roadways shall be named in any permit granted. In the event any street, alley, or roadway is damaged by the permittee's operations, such damage shall be paid for by the permittee upon demand by the city, and the failure to pay such damage, being the reasonable cost of the repair of any such damaged portions, shall be grounds for the revocation of the permit and the collection of such damage at law by the city.

O. No permanent derrick shall be installed or maintained on any controlled drill site or used for the drilling or production of any oil or gas well.

P. After an oil and gas well is placed on production, all equipment with moving parts in use at such well shall be securely enclosed in a building or by an adequate type of fence or approved wire screen or housing, sufficient to prevent the entry of unauthorized persons to such moving parts. Such protections shall be subject to the approval of the chief building inspector. Any gates thereto shall be securely fastened at all times except when authorized personnel are in attendance at such well.

(Ord. 1515)

An oil/gas production permit may be suspended or revoked by the city council for any material violation of the conditions of the permit by the permittee or for persistent violation of any law by the permittee in the operation of any such well. The city council shall not revoke a permit without first giving the permittee 10 days' written notice of the nature of the violations and the city council's intention to revoke such permit. If, within such period, the permittee requests a hearing, the city council shall grant such hearing within 15 days after the date of the request. At such hearing, evidence shall be presented to establish to the satisfaction of the city council the extent and nature of the violation that constitutes grounds for the revocation, and the permittee shall be given an opportunity to cross-examine all witnesses testifying at such hearing. The permittee shall thereafter be permitted at that hearing, or at a continued hearing (if a continuance is requested by the permittee) to present evidence to disprove or explain such alleged violations. The city council shall thereupon, after hearing all the evidence, determine whether or not the permit should be revoked, and the city council determination thereon shall be final. If the city council determines that the permit should be revoked, it shall order the revocation, and the permittee shall thereafter abandon the well in strict conformity with the requirements of law.

(Ord. 1515)

A. The city engineer shall, from time to time make such tests and observations as deemed appropriate to determine if any adverse effect upon the surface of the city is occasioned or is in danger of being occasioned by reason of the removal of oil, gas, or other hydrocarbon substances from the subsurface of the city pursuant to a well, no part of which is located within the city, but which drains a subterranean oil or gas pool, part of which is in the city. Upon determining the existence of such adverse effect or danger, the city engineer may order the immediate suspension of further production from such well or wells as may be located entirely or partly within the city, and, in the event of such an order, production on such well shall be suspended by the permittee or other operator immediately upon receiving notice of such order. The permittee or other person lawfully producing oil or gas, or oil and gas, or any other hydrocarbon substances from any such well may appeal to the city council. The city council may, upon good cause being shown by the permittee or such other person, vacate or modify the order of the city engineer, or if no part of the well is in the city, the city council may direct the city attorney to immediately commence such actions or proceedings as may be necessary for the abatement, removal, and enjoining of further drilling operations which adversely affect property within the city in the manner provided by law and to take such other action and to apply to any court having jurisdiction to grant such relief as will restrain or enjoin any person from drilling or producing any such well.

B. Notwithstanding any other provision of this chapter, the city council may require an applicant for a final exploratory area or oil/gas production permit to submit a plan for water injection or other plan for secondary recovery and to eliminate any possibility of subsidence or other possible damage to property within the city.

(Ord. 1515)

It is hereby declared to be unlawful and a nuisance for any person, whether as principal, agent, servant, employee or otherwise, to drill any well for oil, gas or other hydrocarbon substances upon those portions of the territorial limits and boundaries of the city lying landward from the Pacific Ocean or to produce oil or gas or other hydrocarbon substances from any well so located, or to erect, construct or install, or cause to be erected, constructed or installed, or to work upon or assist in any way in the erection, construction or installation of any derrick, machinery or other apparatus or equipment designed or intended to be used for the purpose of drilling or producing any such well located landward from the Pacific Ocean, except that the provision hereof shall not apply to the land and territory lying within the area commonly known as the United States Naval Ammunition and Net Depot, and further, the foregoing shall not apply to any territory which may be annexed to the city from and after January 1, 1956. [Enacted by Ordinance No. 483 by initiative.]

(Ord. 1515)