Santa Barbara, Exxon OK Ocean Drilling Plan

Exxon and Santa Barbara County officials announced Wednesday that they have reached an agreement to clear the way for the largest American offshore oil and gas development outside of Alaska’s Beaufort Sea.

Known as the Santa Ynez Unit, the $2.5-billion to $3-billion project covers 91,000 acres in federal waters seven to nine miles off Point Conception on the Santa Barbara County coast. Up to 400 million barrels of crude oil and 600 to 700 billion standard cubic feet of natural gas are believed to lie there beneath the ocean floor.

The announcement was viewed by Exxon and county officials as a significant turning point in a protracted controversy that has pitted the Reagan Administration’s push to develop domestic oil and gas reserves against local environmental concerns.

Site preparation for onshore facilities to support the project--including an oil and gas treatment plant and a 49-megawatt co-generation plant to produce electricity for offshore drilling platforms--could begin as early as the end of this year. Work on two of three mammoth oil and gas drilling platforms to be anchored in more than 1,000 feet of ocean was expected to begin in 1989. The tallest rig, from the ocean floor to its drilling platform, would be as tall as the 110-story World Trade Center in New York.

The platforms are expected to begin producing in 1992.

Despite the Santa Ynez Unit’s rich crude oil and natural gas reserves, they have remained largely untapped because of a long standing controversy between Exxon and the county over air pollution from diesel and natural gas generators on the platforms.

The county, which will not comply by the December deadline for meeting the federal Clean Air Act standard for ozone, has long been alarmed that oil and gas development beyond its control in federal waters would make matters worse.

At the same time, federal officials, including Interior Secretary Donald P. Hodel, have called for the earliest possible development of domestic oil and gas reserves to stave off further dependence on foreign oil.

The understanding announced Wednesday appeared to address both concerns.

The terms call for Exxon to take steps that would not increase emissions of hydrocarbons or nitrogen oxides, which can cause smog.

A major element of the compromise calls for Exxon to build a 49-megawatt co-generation plant at its Las Flores Canyon facility to provide electrical power to the three new offshore drilling platforms, as well as to an existing platform, named Hondo.

Previously, Exxon wanted to generate electrical power with diesel and natural gas-fueled generators on the platforms.

The new platforms are to be named Heritage, Harmony and Heather. The latter will be not built immediately, in part because of market conditions and in part to minimize air pollution emissions.

In addition, in 1992 Exxon will shut down its existing offshore oil storage and treatment plant located on a converted ship. There are now few air pollution controls on the facility because it is outside the county’s jurisdiction.

For its part, the county will disregard emissions from Exxon’s existing Hondo platform. In addition, the county will allow Exxon to trade air pollution credits with Chevron U.S.A. in order to help Exxon meet the county’s air pollution standards.

Santa Barbara County Supervisor Toru Miyoshi said Wednesday: “I think the entire country should be very satisfied that we met the requirements of allowing outer Continental Shelf production to meet our energy needs and protecting the environmental assets of Santa Barbara County and the state of California.”

Exxon still must obtain approval for the project from the Santa Barbara County Planning Commission, the Santa Barbara County Air Pollution Control District, the state Lands Commission and the California Coastal Commission.

But Exxon and county officials said that, in view of the understanding reached, they do not believe that the obstacles would be great.

“I’m very, very optimistic that this will fly,” said Board of Supervisors Chairman William Wallace, who in the past has insisted on the most stringent environmental controls.

Thomas J. Tibbitts, regulatory affairs manager at Exxon, told reporters at a separate press conference, “We’ve come together with mutual agreement on it and we’re going to stick by it.”

Before the latest understanding, the county said, Exxon’s Santa Ynez Unit overall would have produced 1,131 tons of emissions of oxides of nitrogen annually, and 293 tons annually of hydrocarbons. Now there will be no net increase in air pollution, Wallace said.

The understanding announced Wednesday was the latest chapter in a stormy relationship between Exxon and the county that has involved several lawsuits.

The parties also appealed to U.S. Commerce Secretary Malcolm Baldrige to intervene after a tentative agreement fell apart last September when the Board of Supervisors called for tougher air pollution controls than Exxon believed had been agreed to.

Exxon then abandoned its plans to build the onshore oil treatment plant and reopened its drive to expand an existing offshore treatment plant located on a converted ship--one over which the county had no jurisdiction. Both sides said Wednesday that Baldrige encouraged a local solution to the controversy.