Closure of Downtown Oil Wells Could Have Disastrous Result : Environment: Firm facing bankruptcy may cap its 50 wells. If no buyer is found, state may have to take over pumping to avert seepage.

By LOUIS SAHAGUN

March 19, 1992 12 AM PT

TIMES STAFF WRITER

Threatened closure of up to 50 working oil wells that pump black gold from beneath downtown Los Angeles may send crude oil seeping into homes, businesses and neighborhood streets, state and local officials warned Wednesday.

The wells are owned or operated by Manley Oil Co., which is up for sale and on the verge of bankruptcy. If no buyer is found, the company would be forced to cap the wells--with potentially disastrous results, the owner said.

“If anybody wonders what the city may be facing in the future, they have only to look at the La Brea tar pits,” said Bruce Manley, 37, owner of the oil company founded by his great-grandfather in 1896.

State petroleum engineers agree, explaining that built-up pressure from ground water under the un-pumped wells can force crude oil to the surface.

Richard Baker, district deputy director of the Long Beach office of the California Division of Oil and Gas, said the problem is heightened because oil in the Los Angeles City Field, on which Manley-owned and operated wells are located, is so close to the surface. Oil in the field, located about a mile northwest of City Hall, is 900 feet down, compared with 8,000 feet in some other fields, Baker said.

“Our concern is that if Manley ceases production there would not be enough fluid drawn from the oil reservoir to keep pace with the natural water drive,” Baker said. “If the pressure reaches a critical point, some wells may start to flow.”

“It might be next year, or a hundred years from now,” Baker added. “We just feel it is going to happen if production in this field is curtailed.”

City fire officials estimate that there are about 2,000 working oil wells in Los Angeles.

The Los Angeles City Field alone once had at least 1,200 wells. Baker said the gradual capping of wells around Los Angeles--coupled with geological “re-pressurizing” under the surface--may have contributed to recent incidents of oil seepage reported in the Wilshire District and in MacArthur Park neighborhoods.

On Wednesday, for example, the ground floor of a four-story 41-room apartment building being refurbished near Wilshire Boulevard and Coronado Street was covered with a gummy black mess that smelled like rotten eggs.

“When we got the job to refurbish this place we were told there was a ‘tar situation’ in the basement,” said project architect Scott Stapleton, who is heading the refurbishment for the Community Redevelopment Agency. “Two months ago we installed a containment tank that will have to be pumped out every time it fills.”

Manley said he has been forced to put the business up for sale because of declining profits coupled with soaring operating permit costs. He will not reveal details of company finances, but said wells in the field are pumping two to three barrels of crude a day. He is asking $10 million for the downtown business and 5.5 acres of land it operates on. “So far, nobody’s even shown an interest,” he said.

Fifteen of the 50 wells in the field are owned by Manley; the rest are owned by others, some of whom are trying to peddle their wells separately.

The state is so concerned about the prospect of the closure of some or all of the wells that it is considering a proposal to take over the operation of any that are not sold.

“We’d like to see wells in this area continue to produce because they are our best defense against seeps,” Baker said. “We might want to keep operating the wells to relieve pressure on the oil field.”

But, he added: “We don’t want to get into the oil production business unless we are forced into it.”

Meanwhile, City Councilman Mike Hernandez, concerned about the potential for seepage, on Wednesday filed a motion calling for creation of a city task force to “assess the potential health crisis to area residents” if Manley caps its wells.

Hernandez’s proposal calls for the city’s chief legislative analyst, the city administrator and the city attorney’s office to prepare reports on the potential costs of cleaning up and containing oil seeps, as well as addressing the issue of liability for the city should Manley Oil shut down.