CA Officials Balk at Offshore Drilling

By Published On: August 22, 2008

While Congress debates lifting its moratorium on offshore gas and oil drilling in federal waters, state officials are digging in their heels to protect California’s 1,100-mile shoreline from an onslaught of new wells. New natural gas wells could fuel power plants, but state politicians remain against offshore drilling. The California State Lands Commission is set to vote August 22 on a resolution that asks Congress not to lift its 1982 moratorium on drilling on the Outer Continental Shelf. It protects from three to 200 miles offshore in U.S. waters. “The commission is unwilling to put the lands it holds as trustee at risk, environmentally and economically, for the sake of new energy exploration in the outer continental shelf,” the resolution states. Much of the offshore debate is due to the price of gasoline. California contains known offshore reserves of 1.46 billion barrels of oil and 1.56 trillion cubic feet of natural gas, according to the U.S. Interior Department’s Minerals Management Service. Total known reserves in all coastal areas under the federal drilling moratorium is 8.55 billion barrels of oil and 29.26 trillion cubic feet of gas. “That’s what we know is there based on actual discovery,” said Dave Smith, a spokesperson for the Service. On top of that, the Service estimates that there are nearly 86 billion barrels of oil and 420 trillion cubic feet of gas undiscovered and “technically recoverable” in federal waters protected by the offshore drilling moratorium. That includes at least 5.58 billion barrels of oil and 9.75 trillion cubic feet of gas recoverable off the Southern California coast; 2.31 billon barrels of oil and 2.41 trillion cubic feet of gas recoverable off the Central California coast; and 2.08 billion barrels of oil and 3.58 trillion feet of gas off the Northern California coast. These estimates are considered conservative because they are based on 30-year data, Smith noted. He added that the higher numbers for Southern California reflect the Service’s better data from current offshore oil production, primarily off Santa Barbara. As technology has advanced the oil and gas industry has been able to explore and drill in deeper waters. For example, drilling is now conducted 10,000 feet deep. The resolution also urges President George Bush to reconsider his decision last month to rescind the executive order prohibiting new drilling off California and other protected coastal states first imposed in 1990 by his father, the first President Bush. Republican Governor Arnold Schwarzenegger, along with Oregon Governor Ted Kulongoski (D) and Washington Governor Christine Gregoire (D) reiterated their opposition to lifting the offshore drilling ban in their West Coast Governors’ Ocean Action Plan released July 29. The West Coast governors endorsed developing renewable energy resources to replace fossil fuels and reduce greenhouse gas emissions. The State Lands Commission oversees tidal and submerged lands up to three miles off the shoreline. If the federal ban is lifted, developers would be required to sign leases with the state to ship oil and gas over pipelines from offshore wells to onshore facilities, said Mario De Bernardo, legislative liaison and staff counsel for the State Lands Commission. California also has a moratorium on offshore drilling in state coastal waters within three miles of the shore. “The three-mile limit is a states’ rights Constitutional issue,” De Bernardo said. The resolution stresses that opening protected federal offshore areas to drilling would not significantly impact domestic production of crude oil and natural gas or reduce prices before 2030, according to a U.S. Energy Information Administration report. Leasing of protected offshore areas for oil and gas drilling could begin no sooner than 2012, and production would not likely begin before 2017. California’s bipartisan support for continuing the offshore drilling moratorium is especially compelling because state lawmakers and the governor are wrangling over the state budget and a severe revenue shortfall to fund public programs. Oil and gas royalties from federal offshore leases could be a boon to the state’s depleted general fund. The State Lands Commission has generated over $6 billion in revenues from extraction of oil and gas in state waters and tidelands. The oil and gas royalties are deposited in the state’s general fund and support the State Water Project, capital expenditures for higher education, and other projects. Offshore production could make California’s natural gas-fired power plants less dependent on imports which comprise the bulk of the state’s natural gas supply. California produces only about 13.5 percent of the natural gas it consumes to produce electricity, for home and commercial heating and cooking, and other uses, according to California Energy Commission forecasts. The state consumes about 2 trillion cubic feet of natural gas each year, or about 6 billion cubic feet per day, producing about 327 billion cubic feet a year from onshore and federal leases in the Outer Continental Shelf. California receives 40 percent of its natural gas supply from the Southwest, 23.5 percent from Canada and 23 percent from the Rockies. Unlike Alaska, where oil and gas royalties to the state have fueled broad support for both offshore and onshore drilling, California’s elected officials remain committed to protecting the state’s coastal and marine environments. California energy utilities are staying neutral so far on lifting the moratorium even though expanding drilling closer to their power plants could significantly increase the gas supply and lower prices. Offshore drilling platforms could also supplant proposed controversial liquid national gas terminals along the California coast. “Obviously we support more supply because that helps put a downward pressure on prices,” said Art Larsen, Sempra Energy spokesperson. What They’re Saying We’re not taking a position on offshore drilling right now,” Art Larsen, Sempra Energy spokesperson. “There’s nothing the state can do about federal lands, but as a state that deals with leases we are asking Congress and the President not to lift the moratorium.” Mario De Bernardo, legislative liaison and staff counsel for the State Lands Commission. “We can include off-limits areas in the program with the understanding that a sale won’t occur unless Congress removes the limits,” Dave Smith, spokesperson

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