IOUs for oil lines

As many as 18 Newport Beach property owners may be due a small chunk of oil money from city pipelines underneath their homes.

The city owns 16 oil wells just north of West Coast Highway off West Newport. The oil is drilled on a slant and piped underneath the feet of 187 property owners in West Newport. City officials drafted an agreement to pay the property owners royalties for the oil in 1982, but the list of who is supposed to get what has not been kept up to date, said City Manager Homer Bludau.

“We send those checks out every year, but some don’t get to the rightful owner of the property because the new owner doesn’t know anything about it,” Bludau said. “We’re going to try to see that they go to the rightful owner of the property.”

Some of the property owners should have been receiving payments from as far back as the early 1980s, said Councilman Steve Rosansky, whose district includes West Newport.

One of Rosansky’s constituents recently told him he had been living in the area since 1982 and all of the royalties were still going to the former property owner.

“There’s bound to be other people in his situation,” Rosansky said.

The councilman recently asked city officials to look into the matter.

A few hundred dollars a year at most, the royalty payments from the oil wells aren’t exactly enough to strike it rich, said Steve Myrter, Newport Beach utilities director, but the price of oil has gone up considerably over the years.

When oil dipped to less than $15 per barrel in the 1990s, the royalty payments were only about $100 a year, depending on the size of the lot. The cost of oil skyrocketed to about $121 a barrel in 2007.

“The numbers are still relatively low — under $1,000 per year, not a large sum of money, but a sum of money,” Myrter said.

The city anticipates making about $2 million from the wells this year, Bludau said. The oil pays for city services on tidelands, such as lifeguards, he said.

Newport Beach is in the process of updating its list of oil royalties payees, Myrter said.

“The vast majority of property owners have been verified, but we’re still concerned about it and we want to help make sure that this doesn’t happen in the future,” he said.

BRIANNA BAILEY may be reached at (714) 966-4625 or at [email protected].