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California Rejects Offshore Drilling Plan

California legislators late last month rejected a plan proposed by Gov. Arnold Schwarzenegger to allow offshore drilling to begin again after a 40-year hiatus.

Without the drilling compromise, Schwarzenegger will have to look elsewhere for the long-term review the state expects to receive from the new drilling.

State lawmakers wrestled with the attraction of added revenues and more new natural gas supplies against the state's historic aversion to offshore drilling. An oil spill off the Santa Barbara cost in 1969 led state officials to stringently regulate coastal development and create the California Coastal Commission in 1972. In the end legislators bowed to history.

Environment California, a Sacramento-based green lobbying group, immediately lauded the action by the state legislature's lower house Assembly, noting that the state lawmakers "understand that for California the coast is the economy and the economy is the coast." The group's legislative director, Dan Jacobson, said the Assembly has literally "beat back the waves of oil lobbyists" wanting to open the coast for additional oil/gas drilling.

Calling it a "difficult but necessary budget solution," Schwarzenegger thanked the legislature for making various cuts and reforms in state government under the dire circumstances now facing the state, which has been issuing IOUs to various citizens and organizations and a mandatory series of work furlough days for state employees.

Houston-based Plains Exploration and Production Co. (PXP) was in line to be the developer of the first new offshore drilling along the California coast in 40 years.

If the legislative budget action had retained the offshore drilling deal, PXP said it was ready "to move forward with the state leasing process immediately" thereafter. But even with the state budget approval, PXP would have needed approvals from the state coastal commission and the U.S. Minerals Management Service.

PXP had worked out a settlement with major environmental organizations by agreeing to date-certain endings for the Tranquillon Ridge drilling in 2022 and for another field, Point Arguello, in 2017.

PXP had emphasized that there were additional benefits to the state besides the potential $1.8 billion in added revenues during the life of the new oil/gas drilling offshore Santa Barbara County. The company also offered some environmental benefits, including:

Led by the Environmental Defense Center, a coalition of 25 local environmental groups supported the PXP proposal as a way to "guarantee an end to several existing oil and gas developments off the coast of Santa Barbara County."

But an official with the Santa Barbara-based environmental organization told NGI late last Thursday that his group did not support legislative budget negotiations overriding the California State Lands Commission that earlier this year rejected the proposed drilling resumption. "If everyone's concerns can be worked out in the budget process, we stand ready to support the agreement," the official said.

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