A RIGGED GAME? OILMAN SAYS THIEVES AT WORK IN DOWNTOWN FIELD.

Byline: Beth Barrett Staff Writer

Under the paint, the grime, the oil and the years, Philip McAlmond - the independent oilman operating for nearly two decades on the hill overlooking the Belmont Learning Center - smiles as sweetly as ever.

There are riches under here, McAlmond, 72, said recently as he surveyed 10 oil pumps and three storage tanks at his 1596 Rockwood St. compound enclosed by razor wire-capped fences and under round-the-clock surveillance by four video cameras mounted on a 45-foot pole.

The problem is ``thieves'' are getting most of it, sucking tens of millions of dollars worth out of his tanks through a break in the sewer, contends McAlmond, who lives in Sherman Oaks.

``It's an absolute nightmare,'' McAlmond said, pointing to a 4-foot-high tangle of pipes and valves splattered with oil and paint, the remnants, he says, of his efforts to safeguard his investment. ``I can't afford to let it go. This is everything I've worked for all my life.''

McAlmond was unable to provide documents to back up an elaborate theory that a cabal of thieves - including, he believes, top-ranking city officials - have broken into the sewer line that catches the water from his tanks, and using powerful vacuum tubes have pulled out his oil and run it through a rogue pipeline to a hidden storage tank nearby.

McAlmond is one of two companies still pumping oil from the Los Angeles Oil Field, once covered with dozens of rigs, but now replaced with homes, businesses and the unfinished $175 million Belmont Learning Center.

As the debate continues on whether the nation's costliest school should ever be opened because of the danger posed by toxic gases leaking from oil fields, McAlmond has a key role to play.

Regulators warn that if the wells are shut down, the field could repressurize, sending potentially explosive methane or deadly hydrogen sulfide into the school and other buildings, or even oil to the surface.

About 100 feet away from McAlmond's operation, regulators still are grappling with how to abate an oil well under an apartment complex owned by Mario Flores. The methane and hydrogen sulfide levels got so high the family and tenants were evacuated.

Over nearly two decades, regulators have listened to and dismissed McAlmond's claims as technically impossible.

``It's extremely unlikely someone is going after his oil,'' said Richard Baker, district deputy with the California Division of Oil, Gas and Thermal Resources, though to be 100 percent certain would probably require tearing up the street.

McAlmond has been a fixture at the Los Angeles Police Department's Rampart Division since the mid-1980s, too. At one point, his repeated claims were all sent to a particular investigator in the division's mental evaluation unit, said Detective Fred Faustino, who for years worked on McAlmond's claims.

``Our professional people feel he's sane, so when he makes reports, we're compelled to do some kind of investigation,'' said Faustino, who like most view McAlmond as a ``pleasant guy.''

Indeed, he said, the city has spent thousands of dollars responding to McAlmond - without ever verifying his allegations.

``Since the '80s, there have been several extensive investigations by the LAPD and by city engineers, but everything comes back to disproving the allegations of theft,'' Faustino added. ``He has all these theories and ideas how the theft occurs, but there's never been proof of it. He's a chronic complainer on this.''

More recently, the city's Department of Water and Power tried once again to investigate McAlmond's claims of the secret pipeline, but found no evidence of one, said DWP spokeswoman Darlene Battle.

And the District Attorney's Office, which is conducting a criminal investigation at the environmentally plagued Belmont Learning Center, recently sent an investigator to interview McAlmond.

His son, Phil McAlmond Jr. and a pastor in Omak, Wash., declined to discuss his father in detail, saying we ``want to keep it in the family.''

Regarding the oil operation, McAlmond Jr. said, ``I think my father is more than able to explain and defend his situation and how he sees it.''

But while investigators have dismissed McAlmond's allegations, they can't dismiss him.

That's because McAlmond runs 10 of the 58 wells operating in the Los Angeles Oil Field, and keeping them operating is important to guarantee the shallow oil field that runs under the unfinished Belmont Learning Center about a quarter mile away doesn't repressurize.

Los Angeles Unified School District board members in January 2000 voted to abandon the school, but new Superintendent Roy Romer later convinced the board to consider private bids to complete the nation's most expensive high school and to include a system to guarantee potentially explosive methane and deadly hydrogen sulfide gases won't get into the buildings.

State regulators have repeatedly warned that stopping production of the wells in the area could send crude oil to the surface, threatening homes and businesses.

McAlmond's unorthodox efforts to ``protect'' his oil have included elaborate valves, and mazes of pipes painted bright red, yellow, blue and white, in addition to a complex surveillance system.

Regulators say the devices intended to prevent sabotage may have been the cause of a recent, highly unusual citation and $6,000 fine from the California Division of Oil, Gas and Geothermal Resources after inspectors found untreated water pouring from McAlmond's oil operation into the street and storm drain Feb. 15, rather than into the sewer as his permit requires. McAlmond has appealed the fine.

The city's Stormwater Management Division also issued McAlmond a notice to comply.

While the unknown quantity of water that flowed down the street was probably fairly uncontaminated by oil - samples have not yet been analyzed - there's concern some oil may have gotten into the ground, or the ocean.

After McAlmond claimed the water backed up, because his lines were tampered with, a state inspector in a Feb. 28 report concluded, ``the plug actually appeared to be a combination of mud, tank sediment and gravel that was probably inadvertently placed there by Mr. McAlmond himself.''

Baker said until recently McAlmond's operated within division guidelines.

He's just been viewed as ``unique,'' he said.

Now with his money running low and regulators monitoring him more closely, McAlmond's ``faith'' - built on Gospel songs and evangelicalism - has been deeply shaken and hinges ever so fragilely on someone believing his story.

Working so many hours he hasn't even had time to go to his barber to trim his long hair, while even his red Thunderbird shows signs of wear, McAlmond looks around the compound and sighs.

``This has all been ungodly.''

State and local regulators say they're helpless to do much, beyond listening to McAlmond's allegations and making sure he operates within his permit.

His wells are pumping on par with other wells in the Los Angeles Oil Field, none of which are realizing the wealth McAlmond claims his wells should be generating.

Virtually all of the oil that's extracted today out of the Los Angeles Oil Field is done by longtime middleman Manley Oil Co., which in 1999 drew 27,955 barrels of oil from 48 wells, most of them owned by elderly, absentee landlords who in good times pad their nest eggs with the proceeds.

Scott Baldry, Manley Oil's general manager, said in the last 20 years production from the oil field, and the oil wells dotting back yards, has been constant with most generating a couple of barrels a day.

``We don't really deal with Phil,'' Baldry said, noting McAlmond's high production expectations. ``He goes his own way.''

A former U.S. Senate candidate in Oregon who finished fifth in the 1968 field of five after financing his candidacy on the proceeds of a construction business, McAlmond nearly gave up on the oil wells himself in the mid-1990s.

He said he'd admitted to himself he was no match for the ``thieves'' and left the state, vowing never to return and was set instead to build a retirement home in Washington state.

``I was never going to set foot in California again,'' McAlmond said.

But then the Belmont Learning Center controversy erupted, and McAlmond was drawn, like so many, into it - playing a cameo in the far larger theater of the project.

As McAlmond tells it, Baker, with Oil and Gas, called him in while he was in the Pacific Northwest and said the wells needed to be kept in production and that the state would pay him out for $1.

Baker said that was a standard offer for wells in the Los Angeles Oil Field - indeed two downtown were purchased for that price in 1992. The state then makes sure the wells remain in operation, to help avert repressurization of the oil field.

``Our position has been clear, we want all the wells to continue in operation,'' Baker said.

But McAlmond took the state's inquiry as a threat and said there were no assurances the ``thieves'' wouldn't end up with the oil field his father, a pastor, had bought in 1946.

His dad, who McAlmond said he idolized, made a little profit off the well since he'd drilled there when Phil was a teen-ager, attending nearby Belmont High School.

``It was only $200 or $300 a month, but to Dad it was very important,'' McAlmond.

He had returned to the property when his life unraveled in Oregon, and in 1984 had the old family well restored, and drilled for more.

McAlmond had soil samples taken, but said he there was a range of opinions as to whether he'd hit mostly oil or mostly water.

There was no doubt in McAlmond's mind, however, that he'd hit pay dirt.

That dream never died, even as McAlmond flirted with retirement. With Baker's call it was re-ignited.

``They picked the wrong guy. I decided, `I'll make it work,''' McAlmond says, a bit of pluck entering his voice.

But, it vanishes just as quickly.

``I was dreaming,'' he says.

CAPTION(S):

2 photos, map

Photo:

(1 -- color) Oilman Philip McAlmond has operated for nearly two decades on the hill overlooking the Belmont Learning Center.

(2 -- color) Philip McAlmond is one of two operators still pumping oil from the Los Angeles Oil Field, once covered with dozens of rigs.Hans Gutknecht/Staff Photographer

Map: Oil pumps and storage tanks