Arco Abandons Drilling Rights Near Santa Barbara : Oil: The state-sponsored settlement allows the company to drill 300 new wells off Long Beach.

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A long squabble between Atlantic Richfield Co. and two government entities--the State Lands Commission and Santa Barbara County--ended Friday with Arco formally returning 4,000 acres worth of offshore oil-lease deeds in exchange for the right to drill 300 new wells in Long Beach Harbor.

Arco spokesman Al Greenstein said that the settlement ends the company’s development plans off the Santa Barbara coast.

Arco agreed to drop its plans to drill more than 200 wells connected to three oil platforms it would have built in the Coal Oil Point field, less than two miles from a UC Santa Barbara marine research station.


Arco will also withdraw an $800-million lawsuit seeking damages from delays imposed by the state and county.

State Controller Gray Davis, who is also chairman of the California State Lands Commission, praised the company for acting “responsibly.”

Equally pleased was Santa Barbara County.

“We’re very glad to see that this solution has been reached,” said Santa Barbara County Supervisor Tom Rogers. “We think it makes a lot more sense for them to be drilling where they have already been drilling.”

Environmentalists in Long Beach have already raised opposition to the deal, which would double the number of wells operating in Long Beach Harbor.

Arco discovered oil reserves of 200 million barrels in the Coal Oil Point field in 1982. But intense public opposition arose, much of it spawned by memories of the disastrous 1969 Santa Barbara oil spill.

One of the opponents was UC Santa Barbara. Scientists at the university’s marine sciences laboratory worried that the seawater system used to maintain their marine animals could become contaminated by the wells, some of which would have been operating directly offshore.


In 1987, Davis persuaded his colleagues on the State Lands Commission to reject Arco’s drilling plans. Arco, which had already invested $200 million in the project, promptly filed suit against the Lands Commission and Santa Barbara County.

Agreement in principle had been reached by the parties last fall but legislation allowing the deal only became law Jan. 1.