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Needy California takes a new look at big oil project

Bob Tippee
Editor

Fiscal distress is nudging California toward a measured embrace of—gasp!—oil and gas development.

Staggering under a budget deficit of $26 billion, the government will try to maneuver around opposition to a plan to develop the Tranquillon Ridge prospect off Santa Barbara (OGJ Online, July 23, 2009).

With extraordinary concessions, Plains Exploration & Production Co. last year won the approval of hypersensitive Santa Barbara County and antioil environmentalists for production of perhaps 100 million bbl of oil from beneath state waters via Platform Irene on federal acreage.

The concessions included an agreement to cease all production off California and to remove onshore processing facilities when Tranquillon Ridge production ceased in about 15 years.

In January, however, the State Lands Commission, including Lt. Gov. John Garamendi, rejected the lease. Garamendi said the state didn’t want to imply acceptance of offshore drilling anywhere (OGJ, Feb. 23, 2009, p. 18).

Now, Gov. Arnold Schwarzenneger is reported to have made Tranquillon Ridge revenue part of a fiscal deal with the legislature. The package includes $100 million in advance royalty and the expectation of $1.8 billion in royalty over the project’s life.

Generally opposed to drilling off California, Schwarzenneger has voiced support for Tranquillon Ridge development because of the reliance on directional drilling from an existing platform in federal waters.

And, of course, he needs the revenue. Desperately.

Although supporters of the project include such environmental groups as the quintessentially Californian Get Oil Out, the proposal is controversial.

Some Californians, including Garamendi, want to infect the rest of the US with their costly energy delusions.

“We are taking dirty money,” he said of the suggestion that the state earn money from resource development.

And he added, “Big Oil has offered to California $100 million to seduce the state into granting the first new oil drilling lease in California since the Santa Barbara oil spill 41 years ago.”

This may be the first time an independent producer has been characterized as Big Oil. But it’s hardly the first time a California politician spouting off about energy has betrayed an impressively limited grasp of relevant facts.

(Online July 24, 2009; author’s e-mail: bobt@ogjonline.com)


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