San Francisco’s city budget has benefited from oil drilling for decades through a little-known land bequest dating back to 1941.
But for a city that prides itself as being an environmental leader, never missing a chance to extol its green image, the oil revenues that continue to fund the San Francisco Public Library and Golden Gate Park will likely come as a surprise to many.
San Francisco has an agreement with Chevron — before, it partnered with Shell — for a royalty payment of 15.5 percent of the oil and gas extracted from an 800-acre city-owned parcel in Kern County that is part of Chevron’s Kern River oil field, the nation’s fifth-largest oil field.
That oil field was the center of a recent controversy regarding the quality of the recycled oil field wastewater that Chevron sells to Central Valley farmers, and allegations of contamination risks of drinking water, according to news reports.
But San Francisco may soon cut ties with Chevron.
Today, Supervisor John Avalos is expected to introduce “Keep it in the Ground” legislation to ban leases for extracting fossil fuels from public land. The legislation wouldn’t impact the existing lease with Chevron, which expires March 31, 2020, but wouldn’t allow for a renewal.
“The City getting revenue from fossil fuel extraction when we’re trying to reduce our dependency on fossil fuel doesn’t make a lot of sense,” Avalos told the San Francisco Examiner on Monday. “We have to keep fossil fuel in the ground. We cannot burn it. If we were to burn it all we will destroy the planet.”
Avalos said that the proposal builds on his previous effort beginning in 2013 to have San Francisco divest its pension fund from fossil fuel companies and instead invest in other areas like renewable energy. To date, the retirement board has not divested, but Avalos remains active in the effort.
The ban would come at a cost to both the Public Library and the Recreation and Park Department, which have a 50-50 split in the share of revenues as stipulated in the will from local businessman Albert Fuhrman, according to city records. Fuhrman left the Kern County land to The City as a gift, which the Board of Supervisors officially accepted on Dec. 31, 1941.
The 800-acre parcel is part of the 1,440 acres in Kern County and 40 acres in Fresno County that were part of the bequeathed Fuhrman Estate.
The terms in Fuhrman’s will were specific. One half of the revenues would go toward the library for “acquisition of additional books on economic and political subjects” and the other half for “the further adornment of our famed and beloved Golden Gate Park, as may be determined by the Park Commissioners.”
San Francisco’s revenues from the agreement has fluctuated widely year to year. In 2009, for example, the revenues totaled $749,972, said John Updike, director of Real Estate. Last year, revenues totaled $320,605.
Updike said in an email that “there has been a noticeable decline in revenues over the past year and a half (started in late 2014), due to decreasing yield from the field and lower fair market value of the product.”
Avalos defended the monetary hit. “It’s not a significant amount of revenue,” he said. He does foresee approval by the board. “People want to be on the right side of climate change,” Avalos said.
When the lease expires, The City will explore other land uses.
“Previously, we looked at the efficacy of a solar farm, and it was found to be too far from major power transmission lines to make that a viable venture,” Updike said. He said The City would examine the feasibility again closer to the lease termination date.
Chevron spokesman Cam Van Ast declined to speak specifically about the lease. “Chevron has an oil and gas lease granted by the City and County of San Francisco on lands located in the Kern River oil field,” Van Ast said in an email. “As a matter of long standing policy, we do not comment on contractual arrangements, including those with lessors and royalty owners.”
The company did take aim at Avalos’ proposal. “Chevron opposes efforts to restrict domestic oil and gas production,” Van Ast said.
Avalos’ proposal follows the announcement last month by Congressman Jared Huffman, D-San Rafael, of the “Keep It in the Ground Act,” which would ban new fossil fuel leases on federal public lands.