The oil and natural gas industry is a large financial contributor to the state, county, city and— in places like Beverly Hills— to the school district through royalties and property taxes. On a local level, Venoco pays property taxes just like home and business owners in the community. In addition to taxes and royalties paid to government entities, all production from the Beverly Hills West field results in royalty payments to individuals who have mineral rights associated with their properties.
In 2012, Venoco paid approximately $270,000 in property taxes to the city of Beverly Hills and $13,000 in production taxes.
Royalties from oil and natural gas operations are paid to mineral rights owners as long as the associated field is producing. Venoco has been paying royalties—which vary based on oil prices—to mineral rights owners since the Beverly Hills West field was purchased in 1995. Prior to Venoco’s ownership, royalties were paid by Wainoco and previous owners. The total paid to all royalty owners in the Bevery Hills West Field area from August 2012 thorugh July 2013 was more than $1.75 million.
The largest royalty payment as a result of oil production at the Beverly Hills West Field is paid to the Beverly Hills Unified School District and varies based on production. From August 2012 through July 2013 the school district received nearly $640,000 in oil royalty income. The second largest royalty payment is made to the city of Beverly Hills, for nearly $525,000 for the same period of time.
In general, royalty dollars are used by a city government for anything from public safety equipment for police and fire departments to parks and recreation improvements. The Beverly Hills Unified School District is one of the few school districts in California to receive royalty dollars, which are used for teacher salaries, learning tools and resources, and school site maintenance.
Although the Beverly Hills West field does not generate royalties to the State of California, other active oil fields in the State do contribute millions of dollars annually to California’s General Fund. The General Fund dollars are used for education, public safety and health and welfare programs. Local communities like Beverly Hills see some of those royalty dollars in the form of State-supported programs and projects like transportation and education. Royalties paid to the State of California from other Venoco fields totalled more than $32 million from August 2012 through July 2013.
The contribution of any industry to an economy goes beyond the direct activities of the businesses that make up that industry. The energy industry interacts with many other sectors making the direct impacts of the sector to local jurisdictions and royalties only a small part of the economic importance of the industry.
In addition to generating jobs at Venoco offices and facilities throughout California, additional jobs are created in sectors that provide services to the industry including engineering, environmental consultants, transportation firms, and material manufacturers. Venoco spends approximately $5 million a year in the Los Angeles Basin on wages, contractors, supplies and materials, services, utilities, and taxes.
It has been estimated that overall the energy industry creates about 3.6 indirect jobs for every direct job. This compares to, on average, a half of a job created for every one job in the economy as a whole.