This should be very foreboding news to anyone with a stake in the future of offshore drilling in America.
California Governor Arnold Schwarzenegger is pulled the plug on support for a California project that would have fed at least $100 million/year into state coffers. And $100 million per year is not the kind of thing the state can easily part with right now.
AP: SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger says he will find another way to help close the state’s $20 billion budget deficit after the massive oil spill in the Gulf of Mexico caused him to withdraw his support for a plan to expand oil drilling off the California coast.
Schwarzenegger announced his decision on the plan Monday, saying TV images of the spill made him change his mind about the safety of ocean-based oil platforms.
“You turn on the television and see this enormous disaster, you say to yourself, ‘Why would we want to take on that kind of risk?'” he said at a news conference near Sacramento.
The Republican governor had proposed expanding oil drilling off the coast of Santa Barbara County to help plug the state’s budget deficit. Democrats last year blocked a similar proposal, but Schwarzenegger renewed his support, saying it was a reliable way to increase revenue as the state grapples with an ongoing fiscal crisis.
A drilling deal struck in 2008 between some environmental groups and Plains Exploration & Production Co., known as PXP, was estimated to bring the state some $100 million a year. The governor’s budget had set aside that money to keep state parks open in the next fiscal year.
On Monday, Schwarzenegger said he would come up with another way to fill the deficit.
“If I have a choice to make up $100 million and what I see in Gulf of Mexico, I’d rather find a way to make up that $100 million,” he said.
The announcement assures that no new drilling will take place off the state’s coastline in the foreseeable future because Schwarzenegger would have to include the drilling proposal in his May revision of the state budget.
Scott Winters, a spokesman for the Houston-based PXP, did not immediately respond to a phone call and e-mail seeking comment. The company was going to slant-drill up to 30 new shafts into state waters from an existing platform that is sitting in federal waters.
Republican state Sen. Tony Strickland of Thousand Oaks said it was unfair for the governor to compare the type of drilling proposed in the Tranquillon Ridge area off California’s coast to the drilling in the Gulf of Mexico.
“They are two completely different types of drilling. In the Gulf they had to use floating platforms because of deep waters. T-ridge is only 1,000 feet deep and the platforms would be fixed,” Strickland said. “If we don’t drill oil here, then we have to import it from overseas, which also has a big risk of oil spills.”
California’s drilling plan still needed final approval from the three-member State Lands Commission. Schwarzenegger has one appointee and one ally on the commission, newly installed Lt. Gov. Abel Maldonado. Schwarzenegger’s announcement means all three commissioners are likely to oppose any efforts to expand offshore drilling.
The California coast was not part of President Barack Obama’s announcement a month ago when he said he wanted to expand oil drilling off the Atlantic coast and in eastern portions of the Gulf. Including California would have been too difficult politically because of strong opposition within the state’s congressional delegation and with environmental groups in the state.
A 1969 blowout on a Union Oil Co. platform off Santa Barbara fouled miles of ocean and beaches and led to a moratorium on offshore drilling.
Currently, 27 platforms operate off the Central and Southern California coasts. They produced 13.3 million barrels of oil in 2009.
The PXP plan split environmental groups in California. Some conservation groups threw their support behind the plan in exchange for a promise that PXP’s operations would end in 2022.
Environmental defence centre attorney Linda Krop, who represents the groups that signed the agreement with PXP, said PXP agreed to shut down existing oil production from three offshore platforms in nine years and a fourth platform in 14 years.
“We’re very mystified,” Krop said. “We had a plan that would have eliminated the risk of an oil spill.”
But others worried the deal would open the door to expanded drilling along the entire California coastline.
“I don’t care when someone is converted to oppose offshore oil drilling, I’m just pleased when it happens,” Assemblyman Pedro Nava said after hearing about the governor’s decision. The Democrat from Santa Barbara has been a vocal opponent of the proposed oil drilling.
The project was rejected by the State Lands Commission in early 2009 with the help of former Lt. Gov. John Garamendi, a Democrat. Since then, Garamendi was elected to Congress and Maldonado, a Republican who as a state senator represented a long strip of the Central California coast, took his place.
Associated Press writers Alicia Chang in Los Angeles and Don Thompson in Sacramento contributed to this report.
Business Insider Emails & Alerts
Site highlights each day to your inbox.