Drill, Maybe, Drill
Few proposals have had as many twists and turns in 2009 as a plan to allow new oil drilling in waters less than three miles off the California coast. But even after serious setbacks, few expect the proposal to fade away anytime soon.
The proposal is known as Tranquillon Ridge, and it's the focus of my lengthy story that aired this morning on The California Report. You can listen by clicking below.
There's one thing on which everyone would likely agree: this is an oil drilling project that, if it ever gets underway, would send a powerful message. Of course, there's disagreement on what that message would be. Supporters say it's an example of a 'win-win' of cooperation between the oil industry and environmental groups. Opponents say it would send a dangerous signal to the nation -- and maybe the world -- that California is embracing new oil drilling beyond just this one deal.
The radio story covers the essential points: the first new oil lease in state-controlled ocean waters since 1969, possibly attached to a guaranteed shutdown of four offshore oil platforms plus two onshore processing facilities... a $100 million upfront payment to the state from Plains Exploration & Production Company (PXP), the oil company that would drill 'T-Ridge'... and serious questions about whether the state can enforce the terms of the private deal struck between an oil company and an environmental coalition, especially given the feds have yet to render any formal opinion on whether they would bless the deal -- or battle it in court.
But there are several more layers to this story which didn't make it in to this morning's extended radio piece. So consider this an online companion to help explain the many layers of the T-Ridge debate. (Note: Click on main photo above for a look at my visit out to Platform Irene.)
Other Deal Points: Our radio coverage focuses on the fact that the proposal as outlined proposes early closure of four offshore oil platforms (Platform Irene, Platform Harvest, Platform Hidalgo, Platform Hermosa) and two onshore processing facilities, including the below facility near Gaviota.
Also included is the preservation of what's believed to be more than 4,000 acres of land near or on the coast, near the area seen below.
The agreement also includes actions that PXP believes will help mitigate any greenhouse gas emissions created by the T-Ridge operation. "We just think it's a good project," said PXP's Steve Rusch in a recent interview aboard Irene.
Confidentiality: Critics have raised questions about why the deal hasn't been made public. The April 2008 agreement between PXP and the enviro groups represented by EDC remains confidential. Staffers at the State Lands Commission were allowed to review it for their analysis of the project this winter, but only after signing confidentiality agreements. Both PXP and EDC now say they'll release the deal once it is scheduled for a formal hearing. But Assemblymember Pedro Nava (D-Santa Barbara), a vocal T-Ridge critic, says that's not good enough. "I can't imagine anybody in a position of responsibility accepting that," says Nava. PXP's Rusch counters that all relevant info in the deal has been publicly discussed, but the issue doesn't seem to have gone away.
The Enviro Split: Perhaps one of the most difficult things to grasp about the T-Ridge deal, struck in the spring of 2008, is why it has left the usually unanimous environmental community so divided. The agreement was crafted by the well-known Environmental Defense Center of Santa Barbara, on behalf of Get Oil Out! (GOO) and the Citizens Planning Association of Santa Barbara. GOO, in particular, is a notable supporter, given the group was created in response to the infamous 1969 blowout of Platform A in the Santa Barbara Channel -- the very same event that prompted the moratorium on new state waters drilling that T-Ridge must overcome. A list provided by the PR firm representing PXP counts 21 enviro groups supporting the drilling project. But a list from Assemblymember Nava counts more than four times as many in opposition. The list of opponents seems to include more groups from places outside of the Central Coast, while the list of supporters are, in general, more locally tied in to the issue. During the course of my reporting this week, opponents often cited two events as key to their stance: the January 29 rejection of the deal by the California State Lands Commission (SLC), largely on the belief that the PXP-EDC agreement wasn't enforceable, and the decision by Governor Schwarzenegger to attempt to enact the T-Ridge lease without SLC approval (more on that one in a moment).
It's A Santa Barbara Thing: A sidenote to the enviro battle is how the T-Ridge project has inflamed local politics in Santa Barbara. Most notably, watch for it to be a key issue in the Democratic primary to replace Nava, who's forced from office by term limits in 2010 and is now a candidate for Attorney General. Candidate Susan Jordan, a longtime environmental advocate, opposes T-Ridge (she's also married to Nava); her opponent, SB city councilmember Das Williams, is a T-Ridge supporter.
The Only Possible Project? The T-Ridge proposal seeks to use a narrow exception to the 1994 California law that generally bans any new drilling in state-controlled waters. That exception is generally made up of two parts: a determination that oil residing in state waters is being drained into federal waters by an existing drillng operation -- and therefore not providing its full financial benefit to the state, and that the project is "in the best interests" of the state. Paul Thayer, executive director of the State Lands Commission, says a scientific analysis commissioned by the SLC indicated that drainage is probably (but not definitively) an issue -- due to current drilling by PXP from Platform Irene into the the T-Ridge oilfield. But the second criteria is a tougher nut to crack, and Thayer maintains that questions about the deal's enforceability make a "best interests" determination, for now, impossible.
Odds Makers: The SLC rejection of T-Ridge was, in large part, due to questions about reaction to the deal from the feds. Platform Irene and its three neighbors would all be shuttered (and possibly, though not definitely, removed) under the deal. But they sit in federal waters, and the leases they service are controlled by the U.S. Minerals Management Service. So the question is: might the feds -- angered over PXP shutting down platforms earlier than required --step in and demand either the platforms, the onshore facilities... or both... keep operating? Linda Krop, the EDC attorney who drafted the PXP deal, says such a scenario by state officials misses the point. "Right now, we have a 100% guarantee those platforms are out there indefinitely," she says. Krop estimates the likelihood of federal intervention at ".000001%." But critics of the deal that Krop helped craft point to testimony at the January 29 hearing before the Lands Commission by MMS regional manager Ellen Aronson. When asked by Lt. Governor John Garamendi, the SLC's chairman, whether MMS would allow a company like PXP to shut down its platforms in federal waters ahead of schedule, Aronson said, "They are obligated under their lease to produce those resources until the resources are commercially exhausted." The key is commercially exhausted. Three of the platform shutdown dates in the T-Ridge deal are based on estimates of when oil flows are expected to slow to a trickle. But if new technology is developed to keep drilling operations viable... or if new nearby federal leases are activated... might the feds balk at the deal? There's no definitive for now. And that uncertainty is perhaps the main policy hurdle to the T-Ridge deal moving forward.
Commandeered In the Capitol: A key turning point came this summer, when Governor Schwarzenegger's revised budget included a bypass of the State Lands Commission for approving the deal and getting the money flowing to the state. That suggestion, while modified somewhat during marathon legislative deliberations, failed to pass the Assembly (in fact, the Assembly vote was curiously wiped from the official records). Last week, Assembly GOP Leader Sam Blakeslee revived the T-Ridge legislation, adding a sweetener, perhaps, for hesitant Democrats: the earmarking of the T-Ridge royalty payment for programs cut by the budget deficit deal. Hard to see this one making it out of the final hours of the 2009 legislative session, but never say never.
Full Court Press: PXP's strategy these days seems focused on drawing public attention to the deal and its purported benefits for the environment and the Central Coast. In addition to hiring a new PR firm, the company commissioned its own statewide poll that appears to show bipartisan voter support for T-Ridge (though full poll results have not been released). PXP now has two well-connected lobbying firms working on its behalf in the Capitol, and more than tripled its lobbying budget in recent months. But the company has not yet resubmitted the project to the State Lands Commission, the only route for approval environmental lawyer Linda Krop says her clients support. No firm answers as to why, but one reasonable theory involves...
Political Dominoes: Last week's victory by Lt. Governor Garamendi in a congressional primary could play a major role in the quest to approve California's first new oil drilling in state waters since 1969. While the job of 'lite guv' is often ridiculed as a meaningless post, the LG serves as one of three members of the State Lands Commission -- along with the state controller (John Chiang) and the governor's finance director (Mike Genest). Garamendi and Chiang oppose T-Ridge; Genest (through deputy Tom Sheehy) voted for it in January. So how can the Schwarzenegger administration get the second vote it needs on the SLC? If Garamendi wins the seat in Congress in November, the governor would get to appoint his replacement. Granted, the Democratically controlled Legislature can block a lieutenant governor appointee. But you can bet that if supporters run out of other options, a new T-Ridge friendly lieutenant governor will be tops on the wish list.
Video of helicopter liftoff from Platform Irene during my reporting visit on August 26.
Note: An earlier version of this posting incorrectly said that PXP and EDC would release their confidential proposal once it had been "approved by the state." Their position is now accurately reflected in the appropriate paragraph.