Resource-Rich Real Estate

Jane Van Ryan
Posted September 25, 2009

Thursday was another gorgeous day in Long Beach, with blue skies and a pleasant breeze blowing along the harbor. At Lighthouse Point, children picnicked with their families while fishermen on a nearby pier caught croakers for supper. At the docks, you could hear seals barking at the Aquarium of the Pacific as tourists returned to shore on boats offering whale watching tours.

Long Beach has many attributes, among them a moderate climate, one of the busiest seaports in the United States and facilities that lure tourists to the area, including a massive convention center. But most residents here aren't aware of the hidden resources that have contributed so much to the City of Long Beach.

"A lot of residents don't know there is oil and natural gas development going on here," explained Curtis Henderson, the city's manager of oil operations.

In the early 1900s, the City of Long Beach won the right from California to manage its tidelands, including the port and its fisheries. When oil was discovered many years later, the city had the right to become a working partner with oil companies to develop it. In the 1960s, Long Beach and several companies agreed to create the THUMS Islands, a series of four man-made islands in the harbor to produce the oil and natural gas that exists in the close-in coastal waters and under the city itself.

Last year, when oil prices broke the all-time record, energy development generated $70 million for the city. In an average year, it provides about 5 percent of the city's revenue.

"When you hear the numbers and see how much fluid is being processed every day, it's mind-boggling," Henderson says. "We want people to understand it better."

According to a new Pricewaterhouse Coopers study, nearly 753,000 jobs in California are supported by the oil and natural gas industry, accounting for 3.7 percent of California's total employment. These jobs make up 4.6 percent of the state's total labor income.

Yet in Long Beach, energy development is out of sight and therefore, out of mind. The THUMS islands are disguised to make them visually pleasing, and equipment noise is blocked by sound barriers. From the shoreline, the islands look like resorts studded with palm trees, condos and waterfalls. In fact, the islands are so attractive, real estate agents often are asked whether any THUMS condos are available for sale.

Tomorrow I'll take a boat to the islands to see how Occidental Petroleum produces oil and natural gas in Long Beach harbor. I'll report my observations on Twitter during the tour and in Monday's blog post.