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Drill Baby, Drill?

news2-oil1California, breathe easy—offshore oil drilling has been tabled
What do President Barack Obama’s decision to open up parts of the U.S. coast to oil exploration, the Gulf of Mexico oil rig explosion, and Gov. Arnold Schwarzenegger’s withdrawal of his support for new oil drilling off of Santa Barbara have in common? They may all influence the future of offshore oil drilling in California.

Though the West Coast was conspicuously absent from Obama’s announcement that he would open parts of the Atlantic Coast, northern Alaskan Coast and the Gulf of Mexico to oil exploration, some fear that opening up those areas may pave the way for new offshore drilling in California.

 

“I think the concern in the environmental community is the fact that [Obama’s] even looking at any offshore oil drilling anywhere,” says Bill Monning, Assemblymember for the 27th District. “It raises concerns that California could be at some point included in that list.”

California hasn’t had new offshore drilling for more than 40 years, since the State Lands Commission (SLC) put a moratorium on new offshore drilling in state waters after the 1969 Santa Barbara oil spill. However, in recent years, Houston-based Plains Exploration & Production Company (PXP) has been pushing a deal that would have put offshore drilling back on the table.

In 2008, PXP proposed an agreement to Santa Barbara’s environmental community called the Tranquillon Ridge Project; environmental groups would not oppose PXP slant drilling new shafts in California state waters (off of the existing Platform Irene, located in federal waters), in exchange for a number of perks, the most significant being that PXP would shut down its existing offshore oil production by 2022.

“The incentive for the environmental community was that even though it would initiate new drilling, in the long run it would result in no drilling,” says Monning. “That’s what enticed the environmental coalition in Santa Barbara to support it. They entered into an agreement with PXP, but the environmental groups don’t represent the state of California, they don’t own the oil fields… In a contract, you need the parties that can control the future behavior that you’re contracting over.”

The SLC stated similar concerns about the proposal’s lack of enforceability by the State of California (because shutting down federal platforms would involve the federal government, not just the state) and rejected the agreement in 2009 in a two-to-one vote.

But that wasn’t the end of it. After the deal was defeated by the SLC, the governor put it in his 2009/10 budget as a revenue source. As part of the slant drilling deal, PXP had said it would advance $100 million to the state’s general fund and generate up to $1.8 billion in advanced royalties over 14 years for the State of California.

Monning was one of several members of the Assembly who led the fight against the deal, which passed in the Senate and then was blocked by the Assembly.

“It died as part of the budget vote last year,” says Monning. “[Then] we’re looking at the governor’s budget that was introduced in January, and he’s put it back in the 2010/11 budget as a revenue source. He claims that he’d use that money to pay for state parks—which is a rather interesting formulation, I believe, to pit different elements of the environmental community against each other.”

While the Tranquillon Ridge Project appeared in the budget in January, it won’t appear in May’s budget revision—because Schwarzenegger withdrew his support of the Tranquillon Ridge Project on Monday, May 3, citing the Gulf of Mexico oil spill as the reason for his change of heart. The April 20 explosion on a Gulf of Mexico oil rig left 11 workers presumed dead and caused an oil slick that’s growing by as much as 5,000 barrels of oil per day. Schwarzenegger told reporters, “If I have a choice to make up $100 million and what I see in the Gulf of Mexico, I'd rather find a way to make up that $100 million.”

This may come as a surprise to PXP, who came out with a revision of their 2008 proposal in early April. The new agreement attempted to address the criticisms of the previous deal by making its terms public, giving the state the ability to enforce its terms by making it a third-party beneficiary, and strengthening provisions to ensure an end to its Santa Barbara County offshore operations.

The new deal had been a source of concern to opponents, especially with the recent confirmation of Republican Abel Maldonado as Lieutenant Governor. Like the previous Lieutenant Governor, Democrat John Garamendi, Maldonado had pledged his opposition to the Tranquillon Ridge project, but some were concerned that the governor might try to persuade him otherwise. With the governor’s new opposition to the deal, that’s no longer a concern.

That the moratorium on new offshore drilling off of California remains intact will come as welcome news to local leaders who staunchly oppose offshore drilling. One such leader is Third District Supervisor Neal Coonerty, who urged the Santa Cruz County Board of Supervisors to re-state its opposition to offshore drilling after Obama’s initial announcement. At their April 13 meeting, the board unanimously agreed to affirm their previous opposition to offshore oil drilling, and planned to send a letter stating the board’s opposition to federal representatives.

“I felt that suddenly oil drilling off the coast is on the table, and we have to respond quickly about it, so I proposed that we take a stand and fortunately my fellow supervisors agreed,” says Coonerty.

Coonerty says that he opposes offshore drilling because of the potential for environmental damage, such as that occurring in the Gulf of Mexico.

“I think my main opposition [to offshore drilling] is exactly what’s happening in the Gulf of Mexico right now,” says Coonerty. “That sort of long term damage that’s done … I don’t think the pursuit of a marginal oil supply at the cost of possible environmental damage is worthwhile.”

In response to the Gulf of Mexico spill, Obama put a temporary freeze on new offshore oil drilling leases until a review of the accident is done and new safety measures are in place.

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