Drilling for Oil in Downtown L.A.

LOS ANGELES, May 11, 2008 -- Record prices are prompting oil prospectors to renew interest in drilling in Los Angeles, where urban sprawl, environmental opponents and decades of production make for one of the world's toughest oil fields.

"We're more active than ever," says Tim Marquez, CEO and founder of Venoco, which is running wells and reviving old ones in the city and elsewhere in California.

"That increase in oil prices has caused expansion of exploration and production throughout the country and especially in California," says Steve Rusch, vice president of a Texas oil company that does extensive drilling in and around Los Angeles. "There's a huge incentive."

Oil has been produced in Los Angeles since the early 1900s, directly offshore as well as along city streets. To meet the demands of environmental opponents and gain needed permits, oil drillers have come up with a variety of methods to disguise oil wells so that most passersby don't even know oil drilling is going on.

Among the sites: on the campus of Beverly Hills High School, where students have decorated the panels that hide drilling from public view, and along Pico Street in one of L.A.'s busiest areas, where Rusch's company has hidden its rigs and drills behind facades that appear to be 14-story buildings.

At Long Beach, whose harbor adjoins Los Angeles' harbor, more than 2,000 wells are working on a small island immediately offshore, the production all hidden behind what looks like a condominium building. The wells are drilled diagonally for miles out to sea.

"It's built to resemble a resort island (and) blend in with the surroundings," says Richard Kline, vice president of Occidental Petroleum Corp., one of the big operators in Southern California and owner of the disguised harbor site.

California is the nation's biggest consumer of gasoline and is fourth among oil-producing states behind Texas, Alaska and Louisiana, according to the state's division of oil, gas and geothermal resources.

Higher prices have prompted oil companies to seek permits to reopen wells where drilling had been halted when lower prices made the expensive and difficult drilling not worth pursuing, says Hal Bopp, California's oil and gas supervisor. Most of the new activity involves old abandoned or capped wells because it is so difficult to obtain permits to start new wells in dense urban areas, he said.