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California Lands Panel Rejects Offshore Drilling Request

A request to resume the first offshore drilling in state waters in 40 years was turned down Thursday by the three-member California State Lands Commission on a 2-1 vote at a meeting in Santa Barbara, CA. Plains Exploration and Production Company (PXP), which holds the federal lease for the offshore Point Pedernales Field about 50 miles northwest of Santa Barbara, had applied for two state offshore leases to develop the Tranquillon Ridge Oil Field.

PXP had worked out a settlement with major environmental organizations by agreeing to date-certain ending dates for the Tranquillon Ridge drilling in 2022 and for another field, Point Arguello, in 2017, but there was no assurance that the federal government would go along with those deadlines if profitable drilling was still possible after those dates, critics said. Proponents stressed that the PXP deal eventually would have closed four of 20 offshore platforms in the region.

In a discussion that last five hours prior to the vote, many local officials, residents and environmental activists supported the agreement as a long-term means of better protecting the California coast.

The oil and gas that PXP proposed to extract from 17 new wells would be transported to shore through an existing pipeline tied to the Lompoc Oil and Gas Plant, located just north of Lompoc, CA.

PXP's unprecedented agreement would not only end all of its drilling in the area by 2022, but it also included setting aside thousands of acres of land and funding for a hybrid bus system. However, even with the local stakeholders' approval, PXP's request was left to the State Lands Commission, a little known, but long powerful state commission, which has the authority to override California's ban on drilling in designated offshore sanctuaries.

The lands commission is headed by the state Lt. Gov. John Garamendi, and includes state Treasurer John Chiang and the state Finance Director Michael Genest. Genest was the lone supporter for the leases, who wanted the added revenue they could provide the state at a time when it is facing a $42 billion budget deficit.

Garamendi, a past candidate for governor who may to seek the Democratic nomination next year, told local news media that approval would have sent the wrong message, giving the impression that California had switched to a "drill, baby, drill" philosophy.

Chiang expressed a number of concerns about the leases, including the fact that the terms of the agreement between the Environmental Defense Center and PXP were confidential, and uncertainty about whether the drilling termination dates could be enforced.

"The federal Minerals Management Service (MMS) receives royalties from the oil production in federal waters and is compelled by law to encourage drilling until it is no longer economically viable," Chiang said. "The state cannot interfere with contracts between PXP and MMS."

He and other officials were also concerned that the granting of the leases now, with a Congressional protection against natural gas exploration offshore California no longer in place, the impression would be left that there was now a pro-drilling preference after four decades of a moratorium on any drilling in state waters.

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