Page 10 - nlf1953sri

However, it must be pointed out that drilling in residential areas can
and does take place. Zoning variances are required and the oil com-
pany must abide by a number of regulations that provide maximum pro-
tection for the home-owner and his investment. A good example of
these regulations is to be found in Appendix A on zoning.

Even with zoning variances in effect, the oil companies have found
strong opposition to drilling fr om the home owners. One solution to
the problem of homeowner opposition is to sell a part of the mineral
rights with the surface rights. Another is to assure the surface rights
owners by contract that should oil be discovered under their property
they will share in the royalties. The latter method has proved quite
successful in the La Habra Heights Tract between Whittier and Fuller-
ton, where the Union Oil Company owns 100 percent of the mineral
rights but pays local property owners a percentage of the net operating
revenues prorated according to the assessed ~aluation of each property
I
owner s land. This would appear to be a work able arrangement satis -
factory to both Union Oil Company and the La Habra Heights residents .
Union Oil Company believes that proration based upon the actual amount
of land owned would be preferable to proration based upon assessed
valuation; however, in La Habra Heights the latter method had to be used
because no satisfactory map is available that delineates all the proper -
ties precisely.

It is reported that the former method of out-right sale of a portion of
the mineral rights has been used by some subdivi ders. The Stanford
Research Institute team has been unable to- verify this report. At any
rate , this method would probably be used only in areas where scant
possibility of oil production exists.

Probably the most attractive method of participation from the view-
point of the Newhall Land and Farming Company would be for the C om-
pany to offer potential subdividers and the eventual landowners a share
of the royalties rather than a percentage of the mineral rights. This
method allows the Company to retain 100 percent of the mineral rights
and all income from exploration but assures the landowner some income
should oil be discovered. From the ultimate landowners viewpoint, the
actual transfer of the mineral rights would seem to be more desirable.
Further study of the method of participation to be offered appears ne-
cessary, since a conflict of interests could develop if the participation
1s not handled in the most equitab1e manner .

Furthermore, the Company should retain carefully selected drilling
islands throughout _the entire community. Plans for the ultimate beauti-
fication of these islands would undoubtedly be developed. A land use
map should show clearly where these islands are to be spotted. Each
island would have to be expertly located by geologists and petroleum
engineers so that all the land could be explored with a minimum of slant
hole drillings.

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