San Francisco is selling off property located within the Kern River Oil Field, the densest oilfield in the United States. (Courtesy photo)

SF to shut down 82 oil wells on Kern County property

‘Keep It in the Ground’ legislation prohibits the extraction of oil, gas and minerals from city land

San Francisco’s days of enriching the public library and Golden Gate Park with oil money from city-owned land in Southern California are drawing to a close.

Under a little known arrangement, The City has for years received oil royalties by leasing hundreds of acres it was bequeathed in the Bakersfield’s Kern River Oil Field to Chevron. Lately, that’s been to the tune of $24,000 a month.

But in 2016, the Board of Supervisors passed “Keep It in the Ground” legislation introduced by then-Supervisor John Avalos requiring The City to no longer allow extraction of oil, gas and minerals from the leased property and to figure out an alternative.

“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 said at the time. “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.”

The City is now advancing plans to sell all of the approximately 1,500 acres of land that were bequeathed to San Francisco in 1941 by the Estate of Alfred Fuhrman, with about 40 acres in Fresno County, just west of the city limits of Coalinga, and the remainder in Kern County, both north and west of Bakersfield. All properties sold will have a prohibition on extraction and exploration for oil, gas or minerals.

The Library Commission Thursday approved the first of those sales, of the 40-acre Fresno County parcel for $170,000. The Recreation and Park Commission and the Board of Supervisors will also need to approve the deal.

In 1978, The City leased the parcel to Oil Well Service Co. The lease expired in January. The property was used for “material storage purposes,” according to a memo to the commission from John Updike, a senior project manager with the Real Estate Division.

From the sale, the library and and Rec and Park are expected to each receive $45,000.

For the remainder of the land, details of those sales are expected to come before the commission later this year or early next year. Updike declined to speculate how much The City could get for them.

There are 700 acres in Kern County not leased by Chevron. “We anticipate several individual sales of the various parcels,” Updike told the San Francisco Examiner. “Some of the parcels are well-suited for single homesteads, some just for grazing, some just for speculative investment. Many of them are already on the market.”

He said the decision was made by The City to “monetize these assets that have been fallow for quite some time.”

Chevron remains in a lease with The City for about 800 acres of land north of Bakersfield in the Kern River Oil Field. That lease, which dates back to 1963 when it was held by Shell, expires March 31.

Chevron currently has 82 operating oil wells across 200 acres of the site, with the remaining 600 acres used for grazing, according to Updike.

Under the 2016 legislation, The City cannot renew the lease with Chevron when it expires in March.

Updike told the Examiner that “the termination of the Chevron leasehold is a pretty complex matter, still in negotiation.”

He said that The City wants “to ensure that the 82 operating oils wells are properly decommissioned and any environmental issues are dealt with by Chevron at no expense to the City” and that the 800-acres “are preserved to enable habitat not just to survive but thrive in the area.”

“We’re negotiating a path forward that may entail a sale of the property with a reservation of a conservation easement enforced by a non-profit to preserve the habitat that has been identified in the area, with the costs of enforcement funded through an endowment from Chevron,” Updike wrote in the memo.

Jsabatini@sfexaminer.com

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