Schwarzenegger Considers Oil Drilling Off Coast

Tuesday, 09 June 2009 06:44 By David Rohde and David R Baker, The San Francisco Chronicle | name.

Schwarzenegger Considers Oil Drilling Off Coast
Oil drilling platform off the shore of Santa Barbara, California. Faced with a budget crisis, Gov. Arnold Schwarzenegger is considering offshore drilling as a solution. (Photo: Chris Carlson / AP)

    Desperate to plug California's gaping budget hole, Gov. Arnold Schwarzenegger has turned to an idea he has long opposed - offshore oil drilling.

    Schwarzenegger has thrown his support behind a Texas company's proposal to tap an oil field just off the coast of Santa Barbara County. Drills lowered from an existing oil platform near Vandenberg Air Force Base would bore as many as 30 wells into the seabed over the life of the project. The state could reap $1.8 billion in royalties over 14 years.

    Viewed on an annual basis, that isn't much - just over $100 million a year. But with California's government facing a $24.3 billion deficit and literally running out of money, the Tranquillon Ridge drilling project would give the governor a rare new source of revenue.

    To critics, that smacks of selling out California's treasured coast.

    Federal bans on offshore drilling along the nation's East and West coasts expired last year, done in by the historic spike in oil and gasoline prices. California officials - including Schwarzenegger - have been pushing the Obama administration to reinstate the bans. If the state allows this one project, critics say, that argument will be much harder to make.

    "The symbolism of drilling in the Santa Barbara Channel is like the symbolism of drilling in the Arctic National Wildlife Refuge," said Assemblyman Pedro Nava, D-Santa Barbara. "It means you can drill anywhere."

    The project's supporters - including many environmentalists - consider those fears misplaced. Tranquillon Ridge, they say, is too unique to serve as a Trojan Horse for opening the coast.

    California law still blocks new oil drilling in waters controlled by the state, within 3 miles of shore. But the Tranquillon Ridge project would take advantage of a little-known and extremely specific loophole that allows tapping an oil field in state waters if some of the oil seeps into a federally controlled field, beyond the 3-mile line. Few other oil fields identified along California's coast fit that description. A 14-year plan

    The project also comes with its own expiration date.

    The company behind Tranquillon Ridge, Plains Exploration & Production Co. of Houston, has agreed to stop pumping oil there in 14 years and shut down four of the company's offshore platforms - but only if the state approves the project. The company made that pledge as part of a landmark agreement it reached last year with several environmental groups.

    As a result, Schwarzenegger and the project's other supporters say it would help end drilling along the California coast, not expand it.

    "Those of us in Santa Barbara know platforms can be out there indefinitely," said Linda Krop, who helped negotiate the agreement as chief counsel of the Environmental Defense Center. "For us, it was a dream come true. We've had a hard time explaining that to people who don't live with oil development. They think the platforms are going to go away anyway. They're not."

    Tranquillon Ridge's future, however, keeps getting more complicated.

    The State Lands Commission rejected the project in January over fears that the expiration date couldn't be enforced. Schwarzenegger then included the project in his May budget revision, asking the Legislature to approve it - essentially bypassing the Lands Commission. If the Legislature agrees, the project would still need the approval of the state Department of Finance, the California Coastal Commission and the federal Minerals Management Service.

    The Lands Commission last week urged the Legislature to back off. Even some of the project's supporters don't like the governor's approach. They consider the Lands Commission a staunch defender of California's environment and don't want to see the commission's authority undercut.

    "We're in the awkward position of having a means to an end that is very problematic for us," said John Abraham Powell, president of Get Oil Out!, one of the environmental groups backing Tranquillon Ridge. "We think it's a great project. But we are also in strong support of the use of independent commissions." Steering clear of politics

    Plains Exploration, for its part, wants to steer clear of the maneuvering in Sacramento.

    "For us, it's about the project, and we'll leave the politics on how the project moves forward to the policymakers," said John Martini, the company's manager of government affairs.

    Versions of the Tranquillon Ridge project have been discussed for years. Its current incarnation is unusual in many ways.

    Its location straddles the line between coastal waters controlled by the state and those managed by the federal government. The Tranquillon Ridge oil field lies almost entirely in state waters. But the oil platform where the drilling would be performed sits in federal waters.

    That adds to the project's political complexity, and its technical complexity as well. Rather than drilling straight down, Plains Exploration would slant-drill into the oil field. The wells would start in the federally controlled portion of the seabed, then burrow into the state area underground.

    The oil platform, named Platform Irene, was built in 1986 about 6 miles from shore and has been draining another nearby oil field, in federal waters, ever since. A trio of pipelines running along the seabed transport its oil to shore. The Tranquillon Ridge project, if approved, would not require any additional platforms or pipelines.

    As a result, it could be up and running by late 2010, Martini said, if the state grants approval. And even though the federal offshore drilling bans have been lifted, Plains remains committed to the closure date in the agreement, he said. No end dates in permits

    "We negotiated in good faith a legally binding agreement with the environmental coalition," Martini said. "Our commitment to shut down the project in 14 years ... remains intact. None of the external politics has affected the integrity of the agreement."

    But federal drilling permits from the Minerals Management Service don't include end dates. Critics fear federal officials could extend the project's life if they wanted to. Under normal circumstances, they say, the project probably wouldn't win the Legislature's approval. But these aren't normal circumstances.

    "Strictly on its policy merits, I think it would be defeated," said Assemblyman Wesley Chesbro, D-Arcata (Humboldt County), whose district includes the Northern California coast. "But we are in the worst budget crisis in our lifetimes, so I wouldn't rule anything out."

Last modified on Tuesday, 09 June 2009 07:55