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A Houston Energy Corporation and Santa Barbara Environmental Group Stand Poised to Reopen Offshore Oil Drilling in California

The Green Drillers

by DARWIN BOND-GRAHAM

Several years ago from their headquarters ensconced in a Houston office tower, the Plains Exploration and Production Company, or PXP, devised a plan to slant drill from an ocean platform it owns in federal waters off the coast of Lompoc in northern Santa Barbara County, California. Slant drilling would allow them to reach out horizontally under the earth and reach a huge reserve of oil within what’s called the Tranquillon Ridge, a massive oil deposit within three miles of shore, on state lands. While technically sweet the plan had a several major political hurdles in its way.

The State Lands Commission has observed a ban on issuing permits to drill off the coast since the devastating 1969 spill from a Union Oil platform just offshore Santa Barbara. In 1994 the State Legislature formalized this ban by passing the Coastal Sanctuary Act. Even so, a loophole in the law allows for extracting oil from under state offshore lands, so long as it is done from a facility in federal waters, or onshore. The State Lands Commission must still approve these leases. None have been approved because offshore drilling has existed, alongside property tax increases, as one of the "third rails" in state politics.

According to some political analyst, rising gasoline prices in recent years have undermined popular opposition to coastal drilling. Under this assumption, several corporations have moved in to break the spell of more than forty years of banned oil exploitation between San Diego and Crescent City. Seeking to utilize the Sanctuary Act’s loophole, PXP knew that in order to gain the consent of the Commission the company would nevertheless have to greenwash its project. Greenwashing generally is when a corporation disingenuously portrays itself and its operations in environmentally friendly terms, usually by emphasizing small contributions it makes to environmental causes, or nominal changes in its business practices, while its main operations remain sources of ecological destruction. The end result is that the industrial polluter marches on under the cover of a "sustainable" image that is increasingly friendly to consumers, veiling the company’s real impacts on community and ecology.

Desiring the many billions of dollars worth of oil held in the Tranquillon Ridge, PXP’s corporate brass knew that their greenwashing efforts would have to go above and beyond the usual corporate dog and pony shows used to deflect mainstream environmental activists, so the company decided to cut a deal with some of Santa Barbara’s green elite. Two years ago PXP struck a secret deal with none other than the Environmental Defense Center, a legal nonprofit that has fought for decades to prevent oil drilling offshore. By late 2008 EDC and a number of other "environmental" organizations were going so far as to lobby the State Lands Commission and local political leaders to allow PXP to slant drill into Tranquillon Ridge. Environmental groups lobbying to open up coastal drilling off the California coastline by a Houston energy giant, proclaiming that to do so will put an end to offshore drilling! How did it come to this?

Again the political situation has helped PXP and pro-drilling forces quite a bit, especially in the latest round of lobbying which began with the new year. The State’s fiscal crisis has opened opportunities for oil severance tax legislation, and proposals to open up state waters to drilling in the name of revenue. Tranquillon alone would possibly pay about a billion dollars into the state’s general fund over fourteen years. Most recently Governor Schwarzenegger has proposed using Tranquillon Ridge dollars to shore up a massive hole in the state parks budget, but it’s worth noting that the hole exists largely due to a highly regressive tax code. The original PXP deal was penned before California sunk to these new budget lows, and groups like the Environmental Defense Center were its biggest boosters back when the deal wasn’t being touted as a fiscal blessing.

On first glance enlisting EDC’s support seems to have cost PXP quite a bit. The company’s agreement appears to have delivered a wish list of wins to many of the local conservationist groups that have opposed offshore oil development for decades. I say "appears to have" because the actual text of the agreement has never been made public. What is known is that the deal allows PXP to slant drill into Tranquillon and extract as much oil as it can until 2022 when the lease would expire. In exchange PXP is to (1) close down three of its other oil platforms in federal waters, (2) close two onshore oil processing facilities, and (3) hand over thousands of acres near Lompoc and about two-hundred acres in Gaviota as ecological reserves or parks. Furthermore PXP agreed to purchase carbon offsets to mitigate greenhouse gas emissions associated with operations at its Tranquillon Ridge Project.

With so many "green" measures built into it, the agreement seemed sure to pass the approval of the State Lands Commission. EDC and other mainstream conservationists touted the deal to let PXP drill in state waters as unprecedented, even portraying it as "the most effective action we can take to prevent future Federal oil leasing of the California coast." Even so the State Lands Commission voted the proposal down in January 2009, citing what appeared to be the deal’s possible un-enforceability. Other environmental groups that maintained consistent criticisms of PXP and its "environmentalist" lobbyists like EDC cheered the decision.

On January 8, 2010 the Environmental Defense Center let the world know that it still supported PXP’s bid to drill, and that the group welcomed Governor Schwarzenegger’s pledge to put the issue before the State Lands Commission once again, this time after he nominated a new member, Abel Maldonado, who many suspect will vote in favor of the deal.

While the agreement undoubtedly does have big cookies built into it for the conservation groups that helped draft and lobby for its passage, it’s worth noting that many of these supposedly green components are in fact not as environmentally beneficial as they first appear. Some may even be designed to further enrich PXP.

First there’s the issue of PXP’s three platforms the company is required to close under the deal. EDC touts this as a major victory because it will close down the infrastructure for three federal oil leases that have no expiration date, meaning that without the deal PXP could pump indefinitely from them. Assuming there is no tricky loophole here that would allow the company to someday bring these back online, it’s still a less than positive balance for mother earth. For one thing it’s unlikely that PXP will want to operate these three platforms far into the future regardless of any agreement they strike with EDC.

The requirement that they shut the three platforms down "within 9 years," from the date PXP wins approval to drill Tranquillon Ridge means that PXP will likely be sucking the last drops of the most economically accessible oil and gas from around them, and then shutting them down on a schedule less defined by environmental concerns, and more by the fact that the platforms and surrounding fields are economically ready for retirement. Why else would the agreement allow PXP to continue operating them for nine years?

According to the County of Santa Barbara’s Energy Division these three platforms —named Hidalgo, Harvest, and Hermosa— began production in 1991, their production peaked around 1994, and today they are producing at relatively low-levels. It’s quite likely that PXP wants out of these anyway, especially if it can exchange them for permission to drill into the vastly lucrative Tranquillon Ridge. Thus while EDC touts closing three platforms as a major environmental win, it’s not clear that the continued operation of these three would produce anywhere near the developmental impact or quantities of oil that the Tranquillon Ridge well will produce in its thirteen or so years of allowable exploitation. So it appears that the Environmental Defense Center has simply helped PXP shutter mostly tapped wells and inefficient infrastructure in exchange for a major gusher of a field, and all in the name of the environment. PXP gets a green sheen while doing what it’s likely going to do anyway.

Then there’s the issue of land. Setting aside thousands of acres in preserve is certainly a great achievement in the urban sprawl of Southern California, but once one reads PXP’s corporate literature it becomes clear that it may not only be the public that would benefit. PXP has plans to develop much of its landholdings into tracts of housing which it would sell off at a total profit of about $800 million in California. To facilitate this business plan the company has entered into an agreement with Cook Hill Properties, LLC, a real estate consulting firm that helps large corporate owners develop land. One of these planned subdivisions is in Lompoc. As the company describes in its 2007 Annual Report:

"We are actively pursuing the entitlement process for our Montebello and Lompoc properties and are engaged in pre-entitlement activities in Arroyo Grande. Our current development plans include master planned communities with a range of housing from entry level to executive and estate homes, parks and recreational land uses."

From PXP’s perspective, wouldn’t it be fantastic if its housing developments were boosted in value because of their proximity to such large beautiful "ecological preserves" or state parks? In Montebello, an East LA neighborhood, PXP has pursued the same exact strategy with its 500 acre oil field, asking for political approval to build a suburban sprawl of condos and Mcmansions by promising to set aside part of the land as a park.

Finally there’s the issue of the carbon offsets. Under the EDC-PXP agreement, the company is required to buy offsets in order to mitigate CO2 emissions related to drilling the Tranquillon. These are only stipulated to offset CO2 emissions from the trucks, boats, and materials used to get the oil out of the ground, not to address the fact that the whole purpose of the project itself is to pump out 200 million barrels of oil buried beneath the Tranquillon Ridge. These 200 million barrels will have no offset and will contribute to the already damning levels of carbon pollution in the world’s atmosphere. Furthermore, carbon offsets are dubious environmental mechanisms. Many studies of carbon markets show that rather than neutralizing CO2 pollution, they instead obscure the sources of carbon emissions and create complex and opaque financial instruments for speculators to profit from. Their environmental benefits are hardly proven. Carbon trading may even prove counterproductive in reducing CO2 emissions.

Besides being a faux win for conservationists, the PXP deal has political implications worth considering. The oil industry has been strategizing for decades on the best way to regain access to state waters in California. Many politicians like Pedro Nava and Susan Jordan rightly point out that approval of the deal could serve as a "camel’s nose under the tent," a precedent that would lead to further deals being struck allowing for drilling state waters. Other companies are watching the PXP deal with great interest.

Beyond the politics of the state, the agreement is an example of the environmental movement’s own internal dysfunctions. EDC, a once respected conservation group, appears to have become much like the maligned Natural Resources Defense Counsel in that this supposed environmental organization is now lobbying on the behalf of big oil companies to drill in protected waters. This neoliberal turn in environmental politics —neoliberal in the sense that so-called environmental organizations are striking deals with big business and crafting market-solutions to ecological problems— signals an elite tier of the environmental movement that has lost its radical truths and powers, one that identifies more with the suites who destroy mother earth than the grassroots communities who protect the earth and their homes.

DARWIN BOND-GRAHAM can be reached at: darwin@riseup.net