OFFSHORE DRILLING:

Details emerge on Calif. plan to end 40-year moratorium

SAN FRANCISCO -- California lawmakers are expected to vote on a budget bill late today that would authorize the first new offshore drilling in the state since 1969.

The offshore-drilling proposal embedded in a budget pact crafted by leaders in Sacramento would override a state commission that voted recently to block drilling. The agreement also assumes $100 million in immediate revenue from an oil-services company that would run its lease through existing platforms operating in federal waters.

The beneficiary of the deal is Houston-based Plains Exploration and Production Co., or PXP, which manages oil platforms off the scenic Santa Barbara coast. The area has seen no new drilling in state waters since an oil spill four decades ago sparked local opposition and, to many, helped launch the modern environmental movement.

A senior Democratic aide in Sacramento confirmed that the state would get a $100 million check from PXP up front if the budget legislation survives the Legislature. The aide refused to offer more details on the plan, saying the provision was still being worked out just hours before the anticipated votes.

Environmentalists mobilizing against the effort were still trying to get the provision removed from the budget deal at press time, threatening to sink the fragile momentum behind a bill that seeks to ease the state's $26 billion deficit with a host of spending cuts and budget gimmicks.

The groups were marshaling their forces against the provision because, they say, it would:

  • Trump the California Lands Commission, which in January rejected PXP's lease application.
  • Fail to require a net reduction in offshore oil.
  • Fail to set a minimum lease revenue figure of $1.9 billion.
  • Not shut down four platforms in federal waters.
  • Not shuttle some of the oil revenue to mass transit.
  • Weaken the greenhouse gas mitigation requirements for new drilling operations by listing emissions as indirect.

Lisa Page, a spokeswoman for Gov. Arnold Schwarzenegger (R), confirmed that PXP's so-called Tranquillon Ridge project is part of the budget agreement crafted by the governor, Senate President Pro Tem Darrell Steinberg (D) and Assembly Speaker Karen Bass (D).

But Page insisted that the proposal would ultimately curtail drilling. She cited a policy memo from the governor's office that says the proposal would result in "permanently pulling out four oil platforms off the coast of Santa Barbara as well as removing the oil processing facilities in the cities of Lompoc and Gaviota."

"This proposal to use Tranquillon Ridge as a vehicle to bring new revenues into the state and end oil drilling off Santa Barbara's coast will benefit California now and will speed up the permanent removal of drilling platforms from the Santa Barbara coastline," Page said in an e-mail.

Moreover, the administration argues, the "T-Ridge" project would be carried out from an existing platform that is already drilling in federal waters adjacent to state waters. Drilling in federal waters has continued for decades off the coast of California and will continue for decades to come under existing leases.

Yet environmentalists counter that many of the provisions meant to end drilling and ensure clean operations are unenforceable. Tina Andolina, legislative director of the Planning and Conservation League, said many of the governor's justifications for the plan are less fact than fiction.

"Instead of making oil companies pay on a yearly basis -- like even Texas does -- we're giving them a sweetheart deal in exchange for a glorified, one-time loan," Andolina said. "It's outrageous."

The state's Department of Finance estimates that extending PXP's lease through 2022 would generate $1.8 billion over the next 14 years. Schwarzenegger says the added revenues would be a much-needed boost, given the soaring deficit figures and lower tax receipts.

The Democratic aide said the state Assembly and Senate should vote on the entire budget package by the close of business today.

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