There is the potential for new natural gas supplies as part of the deal being worked out to resolve California’s $26 billion budget deficit (see Daily GPI, July 23), a Houston-based spokesperson for Plains Exploration and Production Co. (PXP) told NGI Thursday. PXP is in line to be the developer of the first new offshore drilling along the California coast in 40 years.

Following state legislative action that could come before the end of the day Friday, PXP said it will “move forward with the state leasing process immediately” thereafter. Then there would need to be subsequent review and approval by the California Coastal Commission and the U.S. Minerals Management Service.

“We await final legislative action on the bill and remain committed to working with the state leaders to ensure the legislation allows the benefits of the historic agreement PXP reached with the environmental community to come to fruition,” PXP said Tuesday as the budget deal was being made public.

Another official with the Santa Barbara-based environmental organization told NGI late Thursday that his group continues to support the agreement, but it does 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.

In the midst of the negotiations with some reluctant state legislators opposed to new offshore drilling, PXP has emphasized that there are additional benefits to the state in addition to the potential $1.8 billion in added revenues during the life of the new oil/gas drilling offshore Santa Barbara County. The company also is offering some environmental benefits, including:

Led by the Environmental Defense Center, a coalition of 25 local environmental groups has 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.”

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