City and Senentinel Peak Resources Reach IOF Shutdown Agreement
Would Apply to Culver City Portion of Oil Field
January 25, 2024
On December 7, the City of Culver City ("City") and Sentinel Peak Resources California LLC ("Sentinel") executed a Settlement Agreement ("Settlement") to resolve Sentinel's potential legal claims relating to the City's Oil Termination Ordinance ("Ordinance"). The Ordinance, which was adopted by the City Council on October 25, 2021: (1) prohibits the drilling of any new wells and the redrilling or deepening of any existing wells; (2) requires the plugging and abandonment of all oil and gas wells by 2026; and (3) requires termination of oil and gas operations, including remediation and restoration of oil use premises, within the City by 2026. The Settlement addresses the Ordinance as applied to Sentinel as the current Operator of the Culver City portion of the Inglewood Oil Field ("City IOF") and serves as the Termination Program and Schedule for the City IOF.
In the intervening period since adoption of the Ordinance, the City and Sentinel have held discussions toward defining and documenting the implementation and enforcement of the Ordinance as applied to Sentinel for the City IOF. By mutual acceptance of the implementation terms, the Settlement releases the City from any potential claims and potential litigation against the City by Sentinel relating to the Ordinance and its related actions.
"Culver City appreciates the cooperative spirit in which Sentinel Peak Resources has engaged with the City over the past twenty-four months to define a Termination Program and Schedule for the closure and removal of all oil and gas activities within the Culver City portion of the Inglewood Oil Field. The City is pleased to announce the formalization of this momentous process through signing of the Settlement Agreement. We look forward to the transformation of our hillside area away from oil uses and the future use of this area as an integral part of our Culver City community," said Mayor Albert Vera.
About the Executed Settlement Agreement
On November 14, 2022, the City Council approved a settlement framework; and authorized continued discussions with Sentinel and preparation and execution of a settlement agreement. Consistent with the approved framework, the executed Settlement includes the following provisions affecting the timing, process and requirements related to the plugging and abandonment of wells and the overall termination and closure of the City IOF:
Drilling of new wells and redrilling of existing wells is prohibited, effective from and after the effective date of the Ordinance, November 24, 2021.
Sentinel must plug and abandon a minimum of 15 wells by December 31, 2027, at a rate of a minimum of three wells per calendar year over the five-year period between 2023-2027.
Sentinel must plug and abandon all remaining wells and complete the overall closure ("Termination") of the City IOF by December 31, 2029.
After December 31, 2027, extension may be conditionally authorized under special circumstances, but not to extend beyond December 31, 2032.
Termination will include restoration of the well sites and remediation, restoration and revegetation of the areas of the oil uses' premises affected by the plugging and removal activities to as near a natural state as practicable and in accordance with, and documented per, the California Geologic Management Division ("CalGEM") requirements.
Until and up to the final Termination date of December 31, 2029, Sentinel may continue with existing oil and gas activities and operations, including routine maintenance that does not involve redrilling or deepening of existing wells.
Sentinel must maintain performance bonds through completion of Termination in amounts consistent with the estimated true costs, documented by a Cost Study, for all work required to be performed to complete Termination.
Sentinel must maintain insurance coverage, including sufficient coverage for sudden accident and pollution liability, through completion of Termination.
Sentinel must indemnify the City against certain third-party claims.
Remedies available to the City include performance bonds, specific performance and liquidated damages.
Annual Well Renewal, Annual (Fire) Inspection and Well Abandonment fees must be paid in accordance with Chapter 11.12 and the City's adopted Fee Schedule.
Redevelopment of the Inglewood Oil Field
The City acknowledges its support for the thoughtful redevelopment of the IOF to transition to certain compatible land uses, including, but not limited to, residential, commercial and recreational uses, and access, subject to all applicable regulations, requirements, and procedures including, without limitation, environmental review under the California Environmental Quality Act and community and stakeholder participation (the "IOF Redevelopment"). Further, upon the filing of any deemed complete application for IOF Redevelopment of the City IOF, the City will process such application in accordance with all applicable procedures and requirements. The City is receptive to working collaboratively with the County in an effort to create a coordinated review process and timeline for the IOF Redevelopment process. The City's support for thoughtful redevelopment shall not presume any expectation as to the outcome of any IOF Redevelopment application.
As may be applicable to any potential IOF Redevelopment application, the City desires to work cooperatively with any future applicant(s) to the extent possible through regular communications and other means and prioritize informal resolution of any disputed issues instead of initially resorting to litigation.