An oil well pumps crude out of the Kern County oil fields. San Francisco is selling of land in Fresno and Kern counties that has been used for oil drilling operations. (Courtesy photo)

SF to sell city-owned land used by the oil industry in Southern California

The City is expected to close on the sale of 40 acres of land it owns in Southern California that were used for oil drilling operations.

The Board of Supervisors Budget and Finance Committee voted Wednesday to approve the terms of the sale of the 40-acre parcel just west of Coalinga in Fresno County for $170,000.

The sale is only a small portion of the approximate 1,500 acres of Southern California land gifted to The City in 1941 from the Fuhrman Estate. Outside of the 40 acres, the remainder are in Kern County.

San Francisco’s ownership of the land was largely unknown until 2016, when then Supervisor John Avalos called attention to the property where the City is leasing hundreds of Kern County acres to Chevron for oil drilling.

In 2016, Avalos passed a law called “Keep It in the Ground.” The law requires The City to no longer allow extraction of oil, gas and minerals from the leased property and to figure out an alternative.

That alternative is to sell off the land. All properties sold will have a deed restriction to prevent any exploration or extraction of minerals, oil or gas products.

The sale approved Wednesday by the board committee is the first batch of land to move forward. Both the Library Commission and the Recreation and Parks Commission previously approved of the sale. They must vote on the deal since under the terms of the estate’s gift, each city department must receive 50 percent of the revenues from the land. Both were receiving a share in the oil revenues generated by Chevron, which as of July were estimated at $24,000 a month.

Under the restrictions of the deed, the library must use all proceeds from the land to buy certain books or other media on specific topics and Rec and Park must use the funding on Golden Gate Park.

From the first land sale, each department will receive about $75,000 apiece.

The 40 acres have been leased since 1978 by Oil Well Service Co, which used the property for material storage purposes. That lease was terminated on Jan. 31.

The lease with Chevron on 800 acres expires in Spring of 2020. As of July, city officials said there were 82 operating wells.

John Updike, senior project manager with The City’s Real Estate Division, told the San Francisco Examiner Wednesday that negotiations are ongoing with Chevron for an “exit strategy,” which includes addressing environmental issues on the 800 acres.

For the remaining 700-acres in Kern County not under lease, Updike said that they are “spread around the county” and “available for sale (individually or as a package) by Cushman-Wakefield’s central valley brokerage affiliate, Pacific Commercial Realty.”

Updike said The City has not received any “hard offers” yet, but has a goal of bringing sales forward for city approval by the end of 2020.

The full board will vote on the $170,00 land sale Tuesday. The sale is to Richard S. Storti, Jr., who is listed with a Coalinga address.

jsabatini@sfexaminer.com

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