Image: California offshore well
Chris Carlson  /  AP
This oil drilling platform off Santa Barbara, Calif., is one of several grandfathered in the state.
updated 5/20/2009 1:52:27 PM ET 2009-05-20T17:52:27

With California facing a huge budget deficit, officials at the state Department of Finance saw an opportunity to resurrect a controversial proposal for oil drilling off the coast of Santa Barbara as a way to boost revenue and potentially bring $1.8 billion into state coffers over time.

Tom Sheehy, the department's chief deputy director, said he started working on a plan in March to ask the Legislature to give his department head authority to reconsider a project that had just died before the three-member State Lands Commission. At that meeting, Sheehy represented the governor's appointee on the panel and was the lone vote for the project.

"We want to let 120 elected officials get a bite at the apple instead of a panel of three," he said. "We see this as a once-in-a-lifetime opportunity."

Last week, Gov. Arnold Schwarzenegger gave his blessing by unveiling the surprise plan. What could lead to the first new offshore drilling project in more than 40 years, also puts back into play one of California's most contentious environmental issues.

A Schwarzenegger spokesman insists the plan is not a lapse in his promise to oppose offshore drilling because the project falls within an exception in the state's moratorium. "The governor continues to support the moratorium on offshore oil drilling," Aaron McLear said. "This is an existing platform and drilling is already happening."

Others see it differently.

"Schwarzenegger has been at best disingenuous on his protection of the coast," said Lt. Gov. John Garamendi, who chairs the State Lands Commission and is opposed to the drilling proposal. "Here we are with an end-run around State Lands that for years has been responsible for protecting the public's land."

Strategy tied to vote?
Some wonder if the drilling proposal has a realistic chance or if its renewal is a political ploy to get voters out for Tuesday's special election on state budget-balancing initiatives. The governor recently unveiled other fundraising ideas that include selling state properties such as San Quentin prison and the Los Angeles Memorial Coliseum.

"I think it's a little of both," said Assemblyman Pedro Nava, D-Santa Barbara, who joined a group of legislators opposing the project. "I do think we have to be very concerned that the idea of offshore oil drilling may gain traction. I also think it's a legitimate fear that the budget pressures will lead some people to say 'Why not? Why shouldn't we drill offshore?'"

Last year, Houston-based Plains Exploration & Production Co. unveiled an unprecedented deal with longtime anti-oil conservationists in Santa Barbara County. Three environmental groups including Get Oil Out! signed a confidential deal with the company, agreeing to lobby for the project in exchange for money for the state, thousands of acres of donated land and a commitment from Plains to shut down its operations countywide by 2022.

While these groups continue to support the project, conservationists outside the county worry that it could open up the rest of the state's coastline to drilling. The Sierra Club, which initially backed the deal, has since raised concerns about whether the end date would even be enforceable.

"Arnold's legacy is he supports offshore oil drilling," said attorney Mark Massara, who oversees the Sierra Club's California Coastal Program. "He's playing semantics. If you say 'Yes' to PXP (Plains) on this exception, how can you say 'No' to companies from Mendocino to San Diego when they come and say their program is even more green than PXP?"

Limited proposal promised
Officials with the Department of Finance, however, say the legislation would only apply to the Plains' proposal. Should the Department of Finance approve the lease, the project would still go before the state Coastal Commission that oversees coastal development and the federal Minerals Management Service.

"We do not short-circuit any existing process," Sheehy said.

Sheehy estimates the state would immediately receive $100 million and a combined $1.8 billion over the lifetime of the project. A competing oil company has estimated the reserve could be as large as 250 million barrels worth billions of dollars in today's prices.

Linda Krop, the attorney who represented the Santa Barbara environmental groups, said at first they were opposed to the governor's proposal out of concern public process might be circumvented. On Friday, however, Krop said they were reassured that hearings would occur. "We feel better about that," she said.

Plains' spokesman Scott Winters said in an e-mail that the company was also pleased. The terms of the deal between PXP and the environmental groups would still apply if it goes before the State Finance Department, he said.

"We believe the project is worthy of being enacted and represents a rare win-win for a wide variety of stakeholders," he said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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