Santa Barbara Oil Battle: Energy Versus Environment

In a recent speech in New York, Interior Secretary Donald P. Hodel painted a grim picture of growing American reliance on foreign oil.

“The prospect for our not being dangerously dependent on imported oil is utterly black,” Hodel declared on Nov. 13.

Citing a National Petroleum Council study commissioned by the U.S. Department of Energy, Hodel warned that, in contrast to 1985 when foreign oil accounted for 27% of domestic consumption, imports have risen to 33% this year and could rise to 50% in four years.

“I have made no secret of my belief that the circumstances of the world oil picture constitute a substantial national security threat to the U.S.,” Hodel told a seminar of the Council on Foreign Relations in New York.

Hodel’s observations--part of an increasingly visible effort by the Reagan Administration to dramatize the need for exploiting domestic oil reserves--have a direct bearing on developments in Santa Barbara County where the competing imperatives for energy security and environmental protection are again coming to a head.

Hearing Scheduled

U.S. Secretary of Commerce Malcolm Baldrige has scheduled a public hearing in Santa Barbara today on Exxon Company U.S.A.’s plans to expand its offshore oil storage and treatment operations. Baldrige has the authority to approve the expansion. One of the factors he must consider is whether any adverse environmental impacts outweigh the project’s contribution to the national interests.

But, the larger issue--and the one that precipitated today’s hearing--is whether a county or state can impose air quality controls on oil and gas platforms in federal waters that are beyond local jurisdiction but whose emissions could be blown ashore to foul local air.

Ultimately, the jurisdictional controversy may have to be settled in court, by Congress, or await the outcome of separate negotiations between federal, state and local officials and industry and environmental groups that are attempting to fashion air quality rules for all outer continental shelf projects. The negotiated rule-making could take as long as two years.

Perhaps nowhere in the nation have the competing demands of national energy security and environmental quality been drawn in such bold relief as in Santa Barbara County. The Santa Barbara Channel and the adjacent Santa Maria Basin are believed to hold a veritable treasure of black gold, from 1 to 2 billion barrels of crude in federal waters alone and from 1.4 to 3.6 trillion cubic feet of natural gas.

One vast project alone--Exxon’s $2.5-billion Santa Ynez Unit oil and gas exploration and production proposal--is the largest offshore development ever proposed outside Alaska’s Beaufort Sea. Covering 90,000 acres, it could account for 300 to 400 million barrels of crude and 600 to 700 billion standard cubic feet of natural gas over a 25- to 35-year period.

‘Conflicting National Goals’

As such, it plays a critical role in the Interior Department’s drive to minimize dependence on foreign oil. Conversely, it has long been feared that the oil boom will hamper Santa Barbara County’s ability to meet federal Clean Air Act standards, which are enforced by the U.S. Environmental Protection Agency.

“This conflict proceeds fundamentally from two conflicting national goals--the goal of clean air quality on one hand and attaining that as quickly as possible, and the national goal of obtaining more domestic energy supplies,” said Robert W. Knecht, a Carter Administration appointee who was the first director of the federal Coastal Zone Management Program. Knecht now is an environmental consultant and a lecturer in political science and environmental studies at the University of California, Santa Barbara.

The clash between national energy security and environmental protection issues is being played out over one element of Exxon’s Santa Ynez project--a ship anchored offshore in federal waters that has been converted into a floating oil storage and treatment plant. The plant removes sulfur, gas, water and other contaminants from crude oil before it is sent to a refinery. The ship--known as the OS&T; for offshore storage and treatment--processes about 40,000 barrels of oil a day, pumped from Exxon’s existing platform “Hondo.” Exxon proposes to double the OS&T;’s capacity to 80,000 barrels a day so that it can handle the production from three new platforms that are planned.

Objected to Expansion

In 1983, the California Coastal Commission objected to the expansion, in part because of air quality concerns. Exxon appealed the commission’s decision to Baldrige. However, Exxon put its appeal on hold last July while it attempted to reach an agreement with the county to build an onshore alternative at Las Flores Canyon. That plant would have handled 140,000 barrels a day.

When the county attempted to impose air pollution controls on Exxon’s other Santa Ynez offshore operations, including three new proposed drilling platforms in federal waters, as a condition for building the onshore plant, Exxon threw in the towel and revived its appeal to Baldrige to expand the offshore plant. That appeal is the subject of a public hearing scheduled by Baldrige today at 4 p.m. at Santa Barbara High School. Baldridge is not scheduled to be present and a decision is not expected until the end of January.

‘Stick It in Your Ear’

“You can stick by your agreement, or you can stick it in your ear,” Exxon’s Don Cornett angrily told the Board of Supervisors when the agreement unraveled last Sept. 3. Exxon charged that after spending $13 million in negotiations, agreeing to 180 conditions that would add $100 million to the cost of the onshore plant, the county reneged on their informal understanding by adding the additional air quality controls at the last minute.

Thomas J. Tibbitts, regulatory affairs manager for Exxon, said in a telephone interview that there would be only a “minimal” environmental impact in operating the onshore plant “versus the benefits to be gained to the nation by developing these reserves.”

But, he said, the county unconstitutionally stepped beyond its jurisdiction in attempting to impose air pollution controls on Exxon’s proposed offshore drilling and production platforms to achieve greater overall emission reductions for the entire Santa Ynez project, both onshore and in federal waters.

Three-Mile Limit

At the same time, the Interior Department’s Minerals Management Service is pushing equally hard to get Exxon’s Santa Ynez under way while at the same time joining Exxon in arguing that the county has no authority to impose air quality standards on offshore oil and gas projects beyond the three-mile limit in federal waters.

The county, on the other hand, has said that it will have difficulty meeting the federal Clean Air Act’s 1987 ozone standard and is being pushed by the EPA to adopt control measures to bring the county into compliance. Ozone makes up 95% of what is commonly known as smog, and has adverse effects on human health and damages forests and crops.

“We’re already over the (ozone) limit. . . . We can’t afford to have any emissions from the outer continental shelf get on shore,” said Dianne Guzman, director of resource management for the county.

She said that one offshore platform’s emissions of nitrogen oxide, one of the key ingredients of ozone, would be equivalent to 23,000 cars traveling 50 miles a day. The Western Oil and Gas Assn. has placed the figure at 7,000 cleaner burning new cars traveling the same distance.

‘On the Cutting Edge’

Santa Barbara County Supervisor David Yager, whose vote switch resulted in the breakdown of the tentative agreement, said that the outcome of developments in Santa Barbara County are being closely watched by other local governments.

“Other counties are going to be confronted by this decision,” Yager told The Times. “There’s just no question about it. We’re on the cutting edge.”

Yager is not alone in his assessment of the controversy’s importance. Last month, Interior Department Solicitor Ralph W. Tarr asked the U.S. Department of Justice to file a brief on behalf of Exxon in a related federal court case (Exxon v. Fischer). In that case the state Coastal Commission’s authority was challenged after it denied Exxon’s offshore oil storage and treatment plant expansion on air quality grounds.

“We believe that the federal government should advise the court of our position because of the nationwide importance of this lawsuit,” Tarr wrote. That case is scheduled to be heard early next year.