Los Cerritos Wetlands Restoration sign

Lyon Housing, the owner of the Pumpkin Patch east of the Marketplace shopping center on Pacific Coast Highway, has agreed to pay the city’s consulting costs for a proposal to move oil operations from the Los Cerritos Wetlands on the other side of Second Street.

The proposal to restore 152 acres of the wetlands was made public more than a year ago by Synergy Oil, the current owner of the property. Synergy CEO John McKeown said he wants to move all active oil operations to part of the Pumpkin Patch and an adjacent five acres owned by the Los Cerritos Wetlands Authority — a joint powers authority formed to hold and restore wetlands.

An agenda item on next Tuesday’s City Council meeting asks the council to approve an agreement where Lyon Housing will pay up to $132,000 a year to reimburse the city for work done by Lisa Wise Consulting to complete an Environmental Impact Report and secure permits for the project. The agreement limits the Lyon payments to cost of actual work done, and could be renewed for two more years.

Lyon is a partner in the project to move oil operations and restore the wetlands west of Second Street. If the project is approved by the city and the state Coastal Commission, Synergy would build its headquarters (a 5,000-square-foot office building) as well as 12,000 square feet of storage, storage tanks and a water treatment facility on the Pumpkin Patch property.

Oil could continue to be pumped from the field underneath the wetlands using diagonal, or slant, drilling from the land east of Second Street. McKeown said last year that the wetlands could be restored by creating a mitigation bank — where entities like the Port of Long Beach would pay for wetlands restoration in return for development credits at other coastal zone locations.

Synergy currently has 58 operating wells, more than 66,000 feet of pipeline and oil storage facilities on the property. McKeown said the oilfield Synergy pumps from is only 7% to 10% depleted, with easily 200 million barrels of oil still to be recovered.

It would cost up to $80 million, with new wells costing another $5 million to $7 million to drill. Another $6 million to $7 million will be needed to do the restoration work and make the wetlands accessible to the public, McKeown said at a March 2015 Belmont Shore Residents Association meeting.

Since that announcement, the cost of oil has plummeted from around $100 a barrel to between $30 and $40 a barrel today. That makes creation of a mitigation bank even more important to financing the project.

According to the staff report and a scope of work prepared by Lisa Wise in February, the consultant would “work with the City to usher the project application through development review” including California Environmental Protection Act requirements, zoning and land use permits.

In what might be a complication, the city is nearly ready to release a draft EIR for the Southeast Area Specific Plan — an update of the SEADIP (Southeast Area Development and Improvement Plan) master land use plan for the area including the Los Cerritos Wetlands and the Pumpkin Patch. It’s unclear now what zoning and development regulations will apply to the Synergy/Lyon project.

Harry Saltzgaver can be reached at hsalt@gazettes.com.

Harry has been executive editor of Gazette Newspapers for more than 26 years. He has been in the newspaper business for more than 35 years, with experience on both weekly and metropolitan daily papers in Colorado and California.

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