For more than 50 years, Peter Allen provided services to oil fields. Drilling for oil was never in his game plan.

But five years ago, he took over the lease of an old oil field near USC that had been owned by a debtor. He then invested more than $2 million in bringing it back to life. But those moves now might lead to a big financial hit for the 81-year-old Allen.

That’s because his company, AllenCo Energy, has fallen victim to the controversies of urban drilling. Repeated complaints of fumes and respiratory ailments from nearby residents and workers led U.S. Sen. Barbara Boxer to ask AllenCo to suspend operations. The company complied and has since been working with local, state and federal regulators to make sure there are no problems with odors or emissions, with the aim of restarting operations in the next few months.

But then Los Angeles City Attorney Mike Feuer filed a lawsuit in January demanding that the oil operation shut down permanently. And local community activists say they want the facility closed for good and that oil drilling has no place in such a dense urban neighborhood.

In an interview with the Business Journal, Allen said that if the oil operation is forced to shut down permanently, he will lose his life savings and dozens of workers will lose their jobs. He added that his company has become collateral damage in the debate over fracking, a process he doesn’t use. He’s bitter and frustrated.

“I’m 81 years old and I’ve been in some tough situations in this industry over the years,” Allen said. “But I’ve never had a problem like this. Never had people I couldn’t work with and talk to and be honest with them. We’re a small company and I feel like I’ve been beat up on pretty bad, that we’re getting a raw deal.”

Allen believes his critics might be exploiting the widespread concerns over fracking, the pressurized injection of water and chemicals into wells.

“Fracking is such a big thing in the news today and even though we’ve never done any fracking, we’re getting caught up in that larger debate,” he said.

Fateful decisions

Allen, a Georgia native, came to Long Beach nearly 60 years ago to work as a backhoe operator for an oil well service company. He rose through the ranks to president and then, in the mid-1990s, bought the company and renamed it AllenCo Well Service. The Signal Hill company has about 50 employees and specializes in well maintenance and abandonment.

A few years later, he made a deal with a friend who had purchased a lease on a small oil field near Figueroa and 23rd streets about a half-mile north of USC. As a result, he became the exclusive provider of well-maintenance services for that field. But his friend’s company – St. James Oil, sharing the names of a street and park near the site – made some other investments outside California that didn’t pan out. St. James eventually stopped producing oil at the field and owed Allen’s well-service company more than $500,000.

Allen said he decided to purchase the lease to the oil field with the aim of bringing it into production and using the revenue to pay off the debt to his well-service company. He formed a separate company, AllenCo Energy, to handle production at the oil field. That company now has six full-time employees and uses more than 30 contract workers.

“I didn’t really want to buy that lease,” he said. “I just took this to pay off a debt of mine to AllenCo Well Service.”

After spending nearly $2 million to repair the wells, piping and other equipment on the property, AllenCo Energy started modest production of about 12 barrels a day in 2009, ramping up to 70 barrels a day – or about 25,000 barrels a year – in 2010. Opponents have noted this is a production increase of about 400 percent, which Allen calls a skewed figure.

He said that the site produced 750 barrels a day in the mid-1980s, so that would be a better benchmark. The recent level of 70 barrels a day is less than 10 percent of that.

“All this talk about a 400 percent increase: This is still one of the smallest oil fields in all of Los Angeles,” he said. “We merely turned on wells that had been taken out of production. We’re hardly overproducing.”

For comparison, Freeport-McMoRan Oil & Gas of Houston pumps more than 1 million barrels a year from its Baldwin Hills field.

Allen declined to comment on whether the original debt had been repaid to his well service company. However, he did say, “I haven’t made a dollar of profit on this lease.”

Fume complaints

As AllenCo turned on the wells again, nearby residents and workers complained about fumes, telling regulatory agencies they suffered headaches, nausea, nosebleeds, asthma and other respiratory ailments due to the oil field.

The South Coast Air Quality Management District, Los Angeles Fire Department, Environmental Protection Agency and other agencies began investigations. The air district, as primary agency responsible for regulating oil field emissions, has worked with AllenCo to ensure that no fumes or odors escape from the site that could pose health risks for nearby residents and businesses. But residents want the oil field closed permanently, saying it has no place in the dense University Park neighborhood.

One local resident and worker told the Business Journal last week that she has suffered headaches and occasional bouts of nausea due to AllenCo’s operations. Sandy Navarro, project coordinator for Esperanza Community Housing Corp., a local non-profit affordable housing developer, said the oil field has to close.

“Ultimately, extracting oil from a residential community exposes residents to toxic chemicals and results in chronic illnesses,” Navarro said. “We don’t want anybody extracting oil there now or ever again.”

For several years Esperanza’s office was about a block away from the oil site. But last summer, it moved its office about a mile away; executive director Nancy Ibrahim said last week that the proximity to the oil field was a factor in the decision to move. She called the oil field incompatible with the neighborhood.

AllenCo maintains that repeated inspections from regulators have found no problems with odors or emissions from its operations. The company says that any health problems that residents have experienced are not due to its oil field activities.

Boxer letter

Esperanza, local residents and community activists took their case to Boxer and even wrote to Pope Francis, as the oil field land is leased from the Roman Catholic Archdiocese of Los Angeles.

In a November letter, Boxer urged AllenCo to suspend operations.

“Since 2010, local officials have received 340 complaints about strong odors from this facility and there have been 64 site inspections, 16 notices of violation and over $200,000 in penalties and actions to address violations at the facility,” Boxer said. “Unfortunately, according to local residents, the severe chemical odor problem has persisted.”

The letter asked AllenCo to work with the community and regulatory officials to ensure that any future operations on the site “will be safe for the people in the surrounding area, including pregnant women and children.”

Allen claims he complied with the request.

“We were asked by the senator’s office to do her a favor and shut down and we did so,” Allen said. “She called me personally and thanked us for agreeing to shut down. Since then, I must say her office has been very understanding. They know we are trying hard.”

But publicly, Boxer takes a harsher stance. In late November, her website featured a letter to constituents calling the shutdown a “victory for environmental justice” and she told the Los Angeles Times in January, “The oil operation should go elsewhere.”

Calls to Boxer’s press office for this article were referred to the public relations office of the Senate’s Environment and Public Works Committee that she leads; that office declined to comment for this story.

Surprise lawsuit

Allen said he had expected to restart drilling early this year, but in January he was hit by the lawsuit from the City Attorney’s Office.

The suit, which names AllenCo and Peter Allen personally, alleges that lax practices at the oil field led to the numerous complaints among local residents and workers, and seeks a permanent shutdown.

“No community should have to live this way, with windows shut, children kept indoors to protect their health, and neighbors seeking relief from intolerable conditions,” the lawsuit said.

Allen said he was completely surprised.

“They really came down on us,” he said, “and a lot of what’s in that lawsuit is totally untrue.”

Since then, he’s been trying to work with Feuer’s office to report the steps the company has taken to ensure emissions and odors don’t escape from the site. He said the company has had numerous community meetings and invited regulatory agencies on site to conduct their own detailed inspections. The oil company even paid to move air-conditioning intake vents at the adjacent Mount St. Mary’s College campus after workers there complained of headaches, nosebleeds and nausea.

“We want to work with everybody to make sure this operation is safe,” Allen said.

Feuer’s office released a brief statement in response to a Business Journal query about the case.

“We continue to work with federal, state and local regulators to ensure that the AllenCo facility complies with all applicable laws and does not pose a threat to public health,” Feuer said in the statement.

If Allen is ultimately forced to close his oil field operation, he said the consequences would harm his family, his employees and their families. His grandson, Logan Allen, works at the oil well-servicing company as vice president of operations. Also hurt would be the company’s royalty holders.

“We have a total of 622 royalty holders,” he said. “If the oil production stops, they won’t get any more checks. That’s less money going back into the community.”