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LBBJ: In San Bruno, about two years ago, there was a major natural gas pipeline explosion that killed 8 people.
Garner: We have about 1,800 miles of pipe within Long Beach and Signal Hill. The bulk of it was installed back in the 1940s, '50s and '60s as the city grew north and eastward. We've been able to extend the life of the pipelines through proactive monitoring as far as leaks. We keep track of all that going back to the 1920s. We have a great new GIS system we installed in the last few years that allows us to keep track of the pipeline material, the soil condition, leakage history.
We started, about six or seven years ago, a major pipeline replacement program. We're investing somewhere between $8 and $10 million a year in pipeline replacement, targeted based on our knowledge of leaks. So we stay on top of that. We are audited by the federal Department of Transportation, and have passed with flying colors.
The problem with San Bruno was that it had a high-pressure pipeline and they had terrible record keeping. In Long Beach, we operate a low-pressure pipeline system. And our record keeping is tremendous. We've also gone to plastic pipe. Our system used to be virtually all steel. It is much less expensive for us to install. It's much safer, too.
LBBJ: What is Occidental's role in partnering with the department?
Garner: The oil islands started out as THUMS – Texaco, Humble (now Exxon), Union, Mobil, Shell. Then they sold out to Arco. And Arco sold to Oxy. So they are our contractor for all the oil operations. We have a great relationship with them and have restructured the contracts. They used to be cost-plus models, meaning that Oxy, you're the contractor, we'll tell you where to drill and whatever your costs are, we'll give you a percentage on top of that. So they – and this goes back to Arco and THUMS as well – had a built-in incentive to maximize costs. Our job was to keep costs down. It was an adversarial relationship. So over the years we've restructured the contracts to a revenue-sharing agreement that puts us on the same page. So now our focus is not so much on monitoring their expenses because we are suspicious, it's about encouraging them to go out and find as much oil as possible, drill it in an environmentally friendly way and take care of the subsidence. The interests of the State of California, the city and Oxy are all the same. We have petroleum engineers on staff and they monitor the work. They have to bless some of the work that's done by Oxy. And we do that on behalf of the city and the State of California.
LBBJ: What is a typical workday like for you?
Garner: I have a great management staff. And the workers here have a lot of expertise. We have low turnover. People seem to enjoy working here. So I don't have to get so much involved in the day-to-day operations. What I try and focus on is the deal making with SERRF and on the oil and gas side, but I deal primarily with the political side. I work with the budget to make sure we have the resources necessary. But the expertise is really with my staff. They do a fantastic job.
LBBJ: How unique is Long Beach in having a gas and oil department?
Garner: There are really only three or four municipal gas utilities in California and we are by far the largest. Most utilities have cost-based models, but we're market-based and operate more and more like a business. My role is to keep costs to a minimum because I have to meet the market and our competitors. And that's worked really well for our customers.
On the gas side, if we didn't exist, Southern California Gas Company would be here. The downside would be – not that SoCalGas is not a good utility, they are – that revenues go to shareholders. Here, they are retained within the City of Long Beach. And because we don't pay taxes, we are able to generate a significant profit that goes toward police, fire. Our transfer this year is $12 million in gas revenues to the general fund. If the city had Southern California Gas Company here, they would generate probably close to $2 million versus our $12 million. So residents pay bills that are the same or lower than what they would otherwise be and they get the benefit of the city services the revenues provide. So that's unique. We are about the fifth largest municipal gas utility in the country.
In the last 10 years, with the public-private partnership with Oxy we have generated, just from our local oil operators, $2.3 billion for the state and nearly $400 million for the City of Long Beach. Not only is it revenue generation, but it helps lessen the state's and the country's dependence on foreign oil.
LBBJ: Have you considered that there might be a day – given the push for alternative, renewable energy sources – when the city's gas and oil department will be no more?
Garner: Yes. And I certainly hope, for the city and for the country, that we have some type of energy independence and that they are renewable resources. When I started with the city in 1984, the expectation was that we had about 15 years left of oil, locally.
LBBJ: We're always hearing about peak oil.
Garner: Yes. And the country just hit our highest oil production since 1997. New technologies have come into play and this keeps extending the life of the field. Now we're expecting another 20 to 25 years of oil in Long Beach. We've seen quite a bit of reduction in sales in Long Beach because of a combination of conservation efforts and more energy-efficient equipment. I think people now are just much more conscious of energy conservation.
LBBJ: Do you think that environmental concerns about drilling can be alleviated with new technology?
Garner: One of the differences between our operation offshore in Long Beach and what happened down on the gulf with the BP oil spill is that their wells are naturally pressurized, so when things went awry the oil just gushed out. Ours has to be powered, because it's not pressurized, to bring oil to the service.
LBBJ: So there could be no instance of a months-long leak like what we saw in the Gulf of Mexico?
Garner: No. And we have contracts, just in case, with the world's top emergency response operations. Any drop that hits the water – and I literally mean any drop – has to be reported. It's very expensive when something like that happens. So Oxy goes above and beyond to make sure there is no risk. And the oil islands are designed so that if there is some kind of rupture, it would be self-contained so the oil doesn't reach the water.
LBBJ: Where is this department headed in the next few years?
Garner: On the gas side, eventually we will go to automated meter reading. We're looking at that right now. We're also really focusing on pipeline repair. We have to be diligent about that. On the oil side, we continue to work with Oxy and the State of California. We just finished two major oil deals with the revenue-sharing model.
LBBJ: What misperceptions might there be about the gas and oil department?
Garner: Well, the question gets raised: Why does the city own its own gas utility? I feel like we provide as good or better customer service. And if there is ever a major earthquake, we have our own in-house resources and we will make sure that our focus is on Long Beach first. We have the ability to shut off gas electronically. The other major benefit is the profits, which are retained in Long Beach rather than going to shareholders. Without it, the cuts to services we have experienced this year would have quadrupled.
LBBJ: Do you have any political aspirations?
Garner: I was born and raised in Long Beach. I'm fourth-generation Long Beach resident. So I love the city. I really want to see what's best for it but right now I have three children, so I've got a ways to go as far as working. I need a full-time job. Haha. So no political aspirations right now.
LBBJ: Is there anything else you want to talk about?
Garner: I feel like we're a hidden jewel as far as city departments go. The workforce does a great job. We touch about 10,000 residents per day and the number of complaints I get are dwarfed by compliments. We sort of fly under the radar because we do such a great job. We run like a business and we're proud of that.
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