Push to limit California offshore oil after O.C. spill threatened by high taxpayers costs

An ambitious legislative effort to shut down three offshore oil rigs along the coast of Orange County, whose beaches and fragile wetlands were dumped following a major oil spill in October, could hampered by concerns about the ultimate cost to California taxpayers.

The complexities of dismantling even a handful of oil rigs off the coast of California were the focus of Tuesday’s hearing in Sacramento, a reminder of why the oil industry’s value The state’s billions of dollars are still going strong for generations – even in an era when prominent California Democrats are actively promoting the transition to a renewable energy-based economy. to reduce oil and gas consumption and production.

Senate Bill 953, a proposal that cleared the first hurdle on Tuesday, would allow the State Lands Commission to end offshore oil leases by the end of 2024 if sales agreements with the Oil companies cannot be negotiated in advance. The measure would affect only three offshore oil platforms operating in state waters along the coast of Orange County. The 23 oil rigs in federal waters, further from the coast, will not be affected.

Although both California’s oil producers and powerful unions oppose the bill, the concerns of some Democrats about the state’s potential financial liability are among the most pressing. the biggest obstacle to this measure. Although the bill was passed by the Senate Water and Resources Committee, some Democrats said the measure’s fate could depend heavily on the price tag, which has yet to be determined.

State Senator Bob Hertzberg (D-Van Nuys) said: “Money doesn’t print on trees. “So you’re saying we’re going to take this money from foster care or we’re going to take it out of the money that we need to build housing for the homeless? We in government have an obligation, when we spend our taxes, to balance this out. “

State Senator Dave Min (D-Irvine), the bill’s author, said SB 953 still faces “unforeseen dangers” as it passes through the Legislature. But he remains hopeful that as talks with the oil industry, environmental leaders and union representatives continue, the bill’s prospects will be bright.

Min filed the legislation after an October oil spill in Huntington Beach dumped an estimated 25,000 gallons into the ocean. Investigators suspect the cause was a cargo ship anchor that got caught in a 17-mile pipeline that ran from an oil rig in interstate waters to the Port of Long Beach.

“I think it is clear that the risks posed by offshore drilling are not justified by their benefits. Offshore oil production in both federal and state waters in California accounts for less than 0.3% of annual production in the United States,” Min told the commission Tuesday. “At the same time, these offshore rigs threaten California’s vibrant coastal economy, which generates $44 billion in economic activity each year and employs more than half a million Californians.”

Victoria Rome of the Natural Resources Defense Council told lawmakers that the only way to avoid a catastrophic oil spill off the coast of California is to switch from fossil fuels.

If signed into law, Min’s measure would require the State Lands Commission to perform an amortization study on three oil and gas leases in state waters. The study will include an estimate of the expected revenue from the leases and the expected costs oil companies face when decommissioning oil rigs – a requirement in the contracts. existing leases – including dismantling all structures, plugging wells and restoring the ocean floor.

For example, Min said, state officials estimate that one of the rigs off the coast of Orange County will cost $92 million to decommission. If the oil company’s revenue from that lease is estimated at $100 million, the state will have to pay the company $8 million and also be responsible for the cost of removing the oil rig.

Hertzberg and other lawmakers specifically mentioned the costs incurred in decommissioning Platform Holly off the coast of Santa Barbara, expressing concern that the state could find itself in a similar predicament with other states. oil rig offshore Orange County. The state of California took control of Platform Holly in 2017 after its operator, Venoco, filed for bankruptcy and ceased operations.

Jennifer Lucchesi, executive director of the State Lands Commission, in January told state lawmakers that Holly’s original operator, Exxon Mobil Corp., was responsible for plugging in all wells and decommissioning all of them. its foundation set. The company has estimated the cost to be $350 million. However, the state is responsible for picking a quarter of the tab, which is expected to run at least $132 million.

Sean Wallentine of the California Independent Petroleum Company. told lawmakers that the organization opposes the measure “in its current form” because it contains a provision that would allow the state to terminate a tenancy if a settlement cannot be negotiated. That could be seen as a legal “take over” by the state, since the oil leases in question are legal, and the matter could turn into a costly battle in court.

Chris Hannan, executive secretary of the Orange County/Los Angeles Building and Building Trade Council, also objected. Hannan said the reduction in oil production in California would lead to more oil being transported via tankers, which also poses environmental risks.

https://www.latimes.com/socal/daily-pilot/news/story/2022-04-27/any-effort-to-limit-california-offshore-oil-could-be-costly-to-taxpayers Push to limit California offshore oil after O.C. spill threatened by high taxpayers costs

Edmund DeMarche

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