In Cal­i­for­nia, many ob­sta­cles to off­shore drilling re­main

The Washington Times Weekly - - Politics - BY PA­TRICE HILL

The Bush ad­min­is­tra­tion and oil com­pa­nies say they want to open up the na­tion’s coastal ar­eas to new drilling, but in two cases in­volv­ing some of Cal­i­for­nia’s most promis­ing oil fields they are do­ing lit­tle to make that hap­pen.

The U.S. Air Force is stand­ing in the way of a project to tap into fields con­tain­ing as much as 300 mil­lion bar­rels of crude — the big­gest new oil find in Cal­i­for­nia in 40 years — de­spite stren­u­ous at­tempts to ac­com­mo­date the mil­i­tary’s con­cerns by oil com­pa­nies seek­ing ac­cess to the off­shore fields us­ing a 25-acre par­cel of land on Van­den­berg Air Force Base.

Mean­while, the ma­jor oil com­pa­nies them­selves — ExxonMo­bil, Shell and oth­ers — have aban­doned hopes of tap­ping into an even larger trea­sure trove of oil fields off the cen­tral Cal­i­for­nia coast that could yield 200,000 bar­rels a day. Un­moved by this year’s ma­jor shift in pub­lic opin­ion in fa­vor of drilling, even in en­vi­ron­men­tally con­scious Cal­i­for­nia, they are de­mand­ing re­im­burse­ment of more than $1 bil­lion they paid the fed­eral gov­ern­ment to lease the fields decades ago.

“We want our money back, clear and sim­ple,” said Ed­ward Bruce, a Cov­ing­ton & Burl­ing at­tor­ney rep­re­sent­ing the oil com­pa­nies in a long-run­ning case against the In­te­rior Depart­ment over the leases. “You need a tremendous change in the law” to con­sider drilling there again. A fed­eral ap­peals court up­held the oil com­pa­nies’ claim late last month.

Re­vived pub­lic in­ter­est in drilling prompted Pres­i­dent Bush in July to lift a mora­to­rium on leases for off­shore oil ex­plo­ration that his fa­ther put into place two decades ago, declar­ing that now is the time to re­con­sider the drilling ban as Amer­i­cans buckle un­der the bur­den of oil prices that went as high as $147 a bar­rel this sum­mer, send­ing gaso­line prices well over $4 a gal­lon and as high as $5 at many West Coast sta­tions.

Sen­ti­ment has changed even in Santa Bar­bara County, where a ma­jor spill of 88,000 bar­rels of crude off the coast in 1969 be­came a sem­i­nal event that not only led to to­day’s re­stric­tions on drilling but helped to start the mod­ern en­vi­ron­men­tal move­ment in the United States.

Late last month, the county coun­cil voted 3 to 2 to ask the state to open up drilling again, cit­ing the lack of ma­jor oil spills in the past 40 years made pos­si­ble by new and safer drilling tech­nolo­gies, as well as the need for po­ten­tially bil­lions of dol­lars that could be raised in oil rev­enues for the fi­nan­cially strapped state and county.

But while the po­lit­i­cal ob­sta­cles to drilling are fall­ing rapidly, get­ting to the point where oil starts flow­ing again from the con­ti­nen­tal shelf prom­ises to be a long slog re­quir­ing pro­po­nents to over­come mon­u­men­tal le­gal, in­sti­tu­tional and bu­reau­cratic ob­sta­cles.

“It’s just mind bog­gling. We have tried ev­ery­thing un­der the sun” to get the Air Force to ap­prove the Van­den­berg drilling project, said Bob Nunn, pres­i­dent of Sun­set Ex­plo­ration, a small Cal­i­for­nia oil com­pany that teamed up with ExxonMo­bil to pro­pose the in­no­va­tive drilling plan. “We are stopped at ev­ery turn.”

Mr. Nunn owns the le­gal rights to the min­er­als be­neath an 8,000acre tract on the Air Force base, but he needs the mil­i­tary’s per­mis­sion to use a small piece of the tract to es­tab­lish on­shore fa­cil­i­ties that would tap into the off­shore oil through hor­i­zon­tal drilling tech­niques per­fected in re­cent years.

Some ex­perts be­lieve this ap­proach of tap­ping off­shore oil through on­shore fa­cil­i­ties, which avoids the risk of oil spills that can dev­as­tate ocean ecosys­tems, may be the best way to de­velop Cal­i­for­nia’s sub­stan­tial off­shore oil re­sources without ma­jor en­vi­ron­men­tal harm and the pub­lic op­po­si­tion it gen­er­ates. The drilling site se­lected by Mr. Nunn would seem to have lit­tle en­vi­ron­men­tal value, project pro­po­nents say, as it was used for tar­get prac­tice af­ter World War II and still con­tains un­ex­ploded ord­nance that would have to be cleared away be­fore it could even be used for drilling.

The Air Force, which uses the site to launch three or four mil­i­tary satel­lites a year, has raised var­i­ous ob­jec­tions to the drilling project since 2002, say­ing it could in­ter­fere with the launches, al­though Mr. Nunn has pledged to clear the prop­erty of all oil equip­ment be­fore each launch and not hold the Air Force re­spon­si­ble for any dam­age done to oil fa­cil­i­ties if a launch goes awry.

The most re­cent re­view of the mat­ter, by Air Force Deputy As­sis­tant Sec­re­tary Kevin W. Billings, ap­peared to aban­don ob­jec­tions on the grounds of in­ter­fer­ing with launches and in­stead con­cluded that the Air Force must con­duct com­pet­i­tive bid­ding on any plan to drill from its base. Mr. Nunn con­tends that he holds exclusive le­gal rights to the oil found un­der the base prop­erty and that would pre­vent other oil com­pa­nies from es­tab­lish­ing drilling projects there.

“It’s pretty bizarre. Af­ter five years, they still don’t un­der­stand th­ese are our leases. No one else can bid,” he said.

Mr. Nunn’s plan could wind up los­ing out to a com­pet­ing pro­posal from an oil con­sor­tium that would tap into the oil fields us­ing an ex­ist­ing off­shore drilling rig known as “plat­form Irene.” But since the group was re­spon­si­ble for a small oil spill in the past, it had to drum up en­vi­ron­men­tal sup­port for its project by agree­ing to stop drilling af­ter 2022 af­ter with­draw­ing only half the re­cov­er­able oil.

De­spite lin­ger­ing con­cerns about oil spills, Mr. Nunn be­lieves the state as well as the county may now be more open to drilling, if only to help solve its mon­u­men­tal bud­get prob­lems.

“We’re talk­ing about Cal­i­for­nia ba­si­cally go­ing broke with $18 bil­lion in debt,” he said. He es­ti­mates his project would pro­vide Cal­i­for­nia with $4 bil­lion in much-needed rev­enues from roy­al­ties.

In an at­tempt to clear the road­blocks laid down by the Air Force, Mr. Nunn said he has ap­pealed to top Air Force brass as well as Vice Pres­i­dent Dick Cheney’s staff. While ex­press­ing some sym­pa­thy, the high-level ad­min­is­tra­tion of­fi­cials of­fered no as­sis­tance in the end, he said.

One top ad­min­is­tra­tion of­fi­cial, who asked to re­main anony­mous, said the blame for the de­lay lies with Cal­i­for­nia, not the White House.

“The whole prob­lem is the state won’t let them go af­ter the re­serves,” the of­fi­cial said. “If the state were to act, they wouldn’t have to deal with Van­den­berg.”

The of­fi­cial con­tended that the Bush ad­min­is­tra­tion was do­ing ev­ery­thing it can to pro­mote drillng. “This may be the first story that ac­cuses the ad­min­is­tra­tion of not mov­ing on drilling projects. Usu­ally we’re ac­cused of try­ing to poke holes in na­tional parks.”

Dou­glas K. An­thony, an of­fi­cial who has been han­dling the drilling mat­ter for Santa Bar­bara County, said the Air Force is block­ing the project on the Van­den­berg base, dubbed the Va­he­vala project.

“Van­den­berg sent [the oil com­pa­nies] a let­ter say­ing they don’t have a site on base that’s ac­cept­able at this time,” he said, adding that the county has turned its at­ten­tion to the com­pet­ing ap­pli­ca­tion for off­shore drilling.

Mr. An­thony said that the changed po­lit­i­cal and eco­nomic en­vi­ron­ment could even­tu­ally lead the state to re­con­sider pro­hibi- tions that have stopped oil com­pa­nies from tap­ping into ma­jor off­shore oil fields for decades.

“Higher oil prices make it more at­trac­tive to drill off­shore. We can see that play out in the halls of Congress,” he said. “To me, the first step is what hap­pens with Congress. We’ve seen dif­fer­ent sce­nar­ios pro­posed from no leas­ing to leas­ing only if the state con­sents.”

P.X. Kel­ley, for­mer Com­man­dant of the Marine Corps gen­eral and ad­vo­cate for more do­mes­tic pro­duc­tion of oil and gas, said it will be dif­fi­cult to start up drilling in Cal­i­for­nia again af­ter be­ing taboo for so many years. He said Se­cure Amer­ica’s Fu­ture En­ergy, a group ad­vo­cat­ing more do­mes­tic drilling for na­tional and eco­nomic se­cu­rity rea­sons, re­cently pushed to es­tab­lish liqui­fied nat­u­ral gas port fa­cil­i­ties in Cal­i­for­nia, but had to aban­don the ef­fort in the face of stiff en­vi­ron­men­tal op­po­si­tion and reg­u­la­tory ob­sta­cles.

“Cal­i­for­nia is not a wel­come en­vi­ron­ment” for drilling, Mr. Kel­ley said. “They have reg­u­la­tory pro­hi­bi­tions, and those low-level bu­reau­crats are quite suc­cess­ful in Sacra­mento.”

Per­sis­tent ob­sta­cles have led the en­ergy ad­vo­cacy group to push for more mod­est drilling leg­is­la­tion in Congress that would start by au­tho­riz­ing drilling off the coast of South­ern states like Vir­ginia, North Carolina and South Carolina, where con­ser­va­tive vot­ers are more open to oil pro­duc­tion and want to share in the rev­enues, he said.

“It’s rather pe­cu­liar. The Chi­nese can drill in the Gulf of Mex­ico for the Cubans,” but U.S. com­pa­nies can­not tap the same re­sources from the Amer­i­can side, he said. “I think we should be re­think­ing the whole is­sue. We have a ma­jor cri­sis in this coun­try. We use 25 per­cent of the world’s oil and only pro­vide 3 per­cent of the re­sources.”

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