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State Lands Commission Rejects Offshore Drilling Plan

The historic Tranquillon Ridge agreement between PXP and environmentalists would have meant the first new drilling in 40 years — and an end in sight.

After five hours of testimony, the State Lands Commission voted 2-1 to reject a proposal to close four oil platforms in exchange for the first new offshore drilling in California in 40 years.
After five hours of testimony, the State Lands Commission voted 2-1 to reject a proposal to close four oil platforms in exchange for the first new offshore drilling in California in 40 years. (Michelle J. Wong / Noozhawk photo)

Despite the urgings of many environmental groups and what looked to be widespread support from the local community, the State Lands Commission on Thursday turned down a historic offshore lease application by Plains Exploration & Production Co., or PXP.

“It (would) be the first time in 40 years that the State Lands Commission ... has issued a new drilling lease for oil production in the state lands off the California coast,” said Lt. Gov. John Garamendi, the panel’s chairman.

“That is a message that will be heard across America. And those who call for ‘drill, baby, drill,’ will hear this message very, very clearly, and they will use this as an argument with Congress, and with the president to not reinstate the moratoriums that have expired,” he continued.

The 2-1 vote came after about five hours of testimony on the PXP Tranquillon Ridge Project, a new lease proposal that was the result of an unusual collaboration between the local environmental community and the Houston-based oil company. With an agreement crafted between PXP and the Environmental Defense Center, the proposal would have opened the first new offshore lease since 1969, but it also would have incorporated into the lease agreement the first date-certain closure of up to four offshore platforms off Point Conception, as well as the abandonment of onshore facilities and a dedication of 3,900 acres of coastal land.

Steve Rusch, PXP vice president, estimated the agreement would have brought in as much as $4 billion in revenue to California, which is mired in a budget impasse that shows no sign of easing.

According to the EDC’s Linda Krop, whose organization had fought a previous proposal to develop that lease, it was PXP’s willingness to abandon those platforms by 2022 that convinced her organization to work with the company. By abandoning and removing the platform it owns — Platform Irene — and abandoning the three other Arguello rigs it co-owns with other operators, as well as its onshore facilities, PXP would make it extremely difficult, if not impractical, to develop that area subsequently.

“Without this agreement, there could be drilling out there indefinitely,” Krop said.

The lease agreement also had the support of local elected officials, including 1st, 2nd and 3rd District Supervisors Salud Carbajal, Janet Wolf and Doreen Farr, respectively, who all urged the commission to approve the lease.

The State Lands Commission's hearing at Fess Parker's DoubleTree Resort drew a crowd of project proponents and opponents, and those who just wanted to see history made.
The State Lands Commission’s hearing at Fess Parker’s DoubleTree Resort drew a crowd of project proponents and opponents, and those who just wanted to see history made. (Michelle J. Wong / Noozhawk photo)

Commission staff, however, recommended against the proposal because of concerns over the actual enforcement of the agreement, and there did not seem to be enough evidence to convince Garamendi that the protections and authorizations written into the PXP/EDC agreement would ultimately prevent attempts to drill in the area even after PXP left. Ellen Aronson of the Minerals Management Service said that if oil could still be profitably extracted after PXP left, it would be a responsibility of her department to try to extract it.

Greenhouse gas emissions, the reduction of which is one of California’s primary goals, was another concern raised by commission staff.

State Controller John Chiang, another commissioner, had his own reservations about the privacy of the agreement between PXP and the EDC, a notion that wasn’t lost on some of the proposal’s opponents.

“A lot of these people here are supporting something they haven’t even read,” said one speaker.

Sitting in for state Finance Director Michael Genest, deputy director Tom Sheehy was the only one of the three commissioners to throw his support behind the proposal, citing the much-needed revenue — at least $1 billion — the project could bring to the state over the 13-year life of the project. A $100,000 up-front payment by PXP that is part of the agreement could ease any one of the multitude of cuts cash-strapped California is considering, he said.

While there was some support for the commission’s decision, if the proportions in the room were any indication, many others in the community seemed to be baffled, if not disappointed, by the rejection of the lease, which Santa Barbara County had approved without controversy last year.

“It’s an odd twist of fate when local environmentalists come to understand firsthand the frustration of being at the mercy of environmental extremists in positions of power,” Joe Armendariz, executive director of the Santa Barbara County Taxpayers Association, said afterward.

Garamendi had cited the opposition of House Speaker Nancy Pelosi, D-Calif., and other members of the California congressional delegation, who he said were concerned that approving the proposal could undercut their efforts to reintroduce a federal drilling moratorium lifted by the Bush administration. That sentiment wasn’t shared by Rep. Lois Capps, D-Santa Barbara.

“I am disappointed by the State Lands Commission’s decision to reject the agreement hammered out by the Environmental Defense Center, Get Oil Out! and the Citizens Planning Association of Santa Barbara,” Capps said in a statement.

“I am concerned that by rejecting this innovative proposal in favor of maintaining the status quo, our coastal community is left vulnerable to endless offshore oil and gas development.”

Unless PXP files suit over the commission’s decision or reapplies to the agency with a new proposal, officials said the project is essentially dead.

The vote at Hotel Mar Monte came a day after the 40th anniversary of the massive 1969 oil blowout in the Santa Barbara Channel. The incident is considered to be the catalyst of the modern environmental movement and it led to a moratorium on offshore drilling.

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