Oil Drilling Battle Looms Over Tracts Off Central Coast

After a decade of calm, California’s long-running battle over offshore oil is about to flare anew.

Federal officials are expected this month to grant oil companies permission to press ahead with development of 40 sea-bottom leases off the Central Coast, a majority of them in untapped waters off southern San Luis Obispo County. Renewed exploration could kick off later this year, with construction beginning in 2005 on the first of four proposed oil platforms in federal waters.

Gov. Gray Davis and coastal lawmakers are lined up to oppose the renewed push for offshore oil drilling. The California Coastal Commission, which holds statutory power to challenge oil development in federal waters, meets Tuesday in Santa Barbara to take up the issue.

“This is when the war resumes,” said Susan Jordan, a League for Coastal Protection board member. “The public thinks we’re protected, they think there’s no more oil drilling. They have no idea what could be coming.”

What could be coming is development of about 1 billion barrels of crude oil--an amount exceeding all that has been taken from federal waters this century.

The oil industry, which paid more than $1.2 billion for the rights to the offshore leases, says stepped up production is a good thing. Californians consume an average of 2 million barrels of oil daily. About half is produced in the state or off its shore.

“Mother Nature put an awful lot of oil off California,” said Frank E. Holmes, coastal coordinator for the Western States Petroleum Assn., an oil trade group. “We all drive our cars, heat our homes. We need the energy. And we don’t get to pick and choose where oil fields are.”

The industry faces a tough task. Offshore oil has been a galvanizing political issue in California for decades, ever since a catastrophic spill 30 years ago that blackened the Santa Barbara coast and helped usher in a new era of nationwide ecological awareness.

With the push for development, environmentalists paint a bleak picture of new derricks and platforms and a coastline besmirched by messy production facilities. A single spill, they say, could foul miles of precious coastline, mar the state’s most enduring tourist attraction and crimp the booming shoreline economy.

Oil industry officials envision a different scene. They say there actually would be fewer platforms dotting California’s coast, with a few older oil rigs expected to be scrapped over the next decade. On the shoreline, meanwhile, existing plants would handle the bulk of the new oil that is produced, with a single new facility proposed for the northern coast of Santa Barbara County.

Safety has improved, industry officials say, both in spill prevention and cleanup. Moreover, oil companies now can tap new deposits from far fewer platforms. Using techniques that allow rigs to drill horizontally for several miles, some of the new tracts--3-mile-wide squares that checker the coastal waters along Ventura, Santa Barbara and San Luis Obispo counties--can be tapped from existing platforms as early as 2002.

“People won’t notice a lot of new stuff going in because it will hardly be visible,” said J. Lisle Reed, regional director for the U.S. Minerals Management Service, which oversees oil drilling on the outer continental shelf.

“There’s no big issue here. [It’s] a lot less than occurred in the ‘90s and a whole lot less than occurred in the ‘80s.”

The 40 undeveloped leases must travel a byzantine regulatory path before platforms sprout and crude oil begins flowing.

Although the Minerals Management Service technically holds final sway over offshore oil development, the state Coastal Commission has the power under federal law to step in and attempt to block drilling off the California coast. The commission could seek to review--then torpedo--exploratory or development permits for the 40 leases on a case-by-case basis in the coming months.

Adding an extra layer of complexity to the process, any decision could be appealed to the U.S. secretary of commerce. On top of all that, numerous other regulatory agencies--from the U.S. Environmental Protection Agency to the local air pollution control district--have a say before any of the leases start producing oil.

Offshore oil drilling in California dates back to the turn of the century, when wildcat oilmen began following the trail of crude right into the surf. Drilling off the coast began to take off in the 1960s, but was dealt a near fatal blow by the Santa Barbara spill in 1969. New leasing within the 3-mile limit marking California’s territorial waters was essentially shut down by the spill, which soiled miles of beach and killed hundreds of shorebirds.

But federal waters farther offshore remained another matter. Lease sales boomed in the early 1980s during the Reagan administration, prompting pitched battles between the state and the U.S. government.

Leases Languished Untapped

At the behest of California lawmakers, Congress has for 18 years passed a series of one-year moratoriums on new lease sales off the state’s coast. It hasn’t always been easy. Some years, the oil sale ban won approval by a single vote. In the 1990s, the congressional moratorium has been buttressed by presidential declarations from George Bush and Bill Clinton prohibiting the sale of new oil leases off California through 2012.

But the ban on lease sales didn’t affect offshore tracts that oil companies had already purchased. Dozens were drilled in the 1980s. Now the oil industry wants to go forward on the 40 leases that remain untapped.

Auctioned off by the government between 1968 and 1984, the leases languished while wells were sunk in other tracts. Although federal rules give oil firms five years to develop a lease, the companies have been granted several extensions by federal regulators.

The most recent delay came in 1993 at the behest of the U.S. Minerals Management Service. The federal agency, which shepherds the sale of oil and other resources to the private sector, put the brakes on development of the 40 leases to conduct a study on the impact of offshore oil drilling on the Central Coast.

After years of wrangling, the study is expected to be issued later this month. At the same time, the Minerals Management Service is pressing toward a June 30 deadline to give oil companies another extension to go forward with exploration and development of the tracts. Oil executives and environmentalists alike say approval seems a foregone conclusion.

That’s when the fight begins.

Environmentalists are pushing for the Coastal Commission, which for the first time in years is dominated by Democratic appointees with an ecological bent, to aggressively block new offshore oil operations. The commission staff is taking a cautious approach, wary of showing any bias on the matter. But some members of the coastal panel are concerned about giving the oil industry a new toehold.

“There’s always the possibility of a blowout that could be disastrous,” said Sara Wan, a commission member. “What is the California coast all about? It isn’t just about how much money we can take out of it in the short term.”

In Sacramento last week, Lt. Gov. Cruz Bustamante joined two Central Coast lawmakers to demand that the federal government terminate the 40 leases. Bustamante said new oil drilling “could pose a grave threat to California’s coast.”

The governor and other top state officials also are looking into whether the leases could be repurchased by the federal government. That tactic was used in Florida and Alaska to protect sensitive coastal waters slated for oil production. But even state officials say it would be costly and a tough sell in Congress.

California’s federal lawmakers will play a critical role. Sen. Barbara Boxer, a Democrat, and Rep. Lois Capps (D-Santa Barbara) already are wrangling with the Minerals Management Service. Boxer and Sen. Dianne Feinstein, also a Democrat, are expected to put pressure on Clinton and Interior Secretary Bruce Babbitt, whose agency oversees the Minerals Management Service.

On the other side, the oil industry will lobby the administration and Congress to make good on long-standing federal commitments to allow drilling on the leases.

Development of the leases will almost certainly become an issue in the 2000 presidential sweepstakes. California is a huge electoral prize and few issues incite passions in the Golden State more than offshore oil.

Politics aside, state lawmakers also talk about taking the federal government to court. Another potential remedy would be extending the boundaries of the state’s existing marine sanctuaries, which are off-limits to oil production. The tracts set for development sit between the Monterey sanctuary and another surrounding the Channel Islands.

Foes of offshore oil worry about legislation now winding through Congress that would require the industry to ante up money to coastal governments to offset negative effects of drilling. Richard Charter, co-chairman of the National Outer Continental Shelf Coalition, called it “the coastal bribe act” and says it would tilt the playing field in favor of drilling, softening up strapped local governments.

Environmentalists, who had hoped California’s oil platforms would disappear over the next decade, grouse that the 40 leases would give oil companies new life. Production that now averages 140,000 barrels daily probably would increase to 200,000 daily by 2009 if the 40 leases were pressed into service.

They also argue that new drilling along the Central Coast could renew the push for oil off Mendocino and other northern counties as well as such serene spots as La Jolla in San Diego County.

“We were hoping to see the exodus of oil companies from off our coast, not an increase,” said Linda Krop, chief counsel at the Environmental Defense Center in Santa Barbara. “This is a whole new generation of oil development.”

The crude pumped from the Central Coast is far from the best on the planet. Much of it is what oilmen call “heavy sour,” gloppy stuff that is hard to refine and fetches a low price on the market. Without a dramatic surge in crude prices, industry experts say, most of the oil pumped out of the new leases is destined to be used for highway asphalt instead of fuel.

But it has provided fuel for a rhetorical argument voiced by environmentalists: Should the state’s coast be put at risk to produce asphalt? Some raise the specter of a huge spill blanketing the shoreline, spreading north into territory occupied by the endangered California sea otter.

Industry officials are confident they can drill and avoid accidents. Since 1969, they say, 740 barrels of oil have been spilled from platforms into California waters--less than is released each week by natural seepage in the Santa Barbara Channel.

“Technology has changed tremendously,” said Rod Eson, executive vice president for Venoco Inc. “It’s much safer today than it was 30 years ago.”

Reed of the Minerals Management Service believes platforms and California can coexist.

“People keep thinking you can either have a beautiful coastline or oil and gas exploration and that’s not the case,” Reed said. “You can have both if you do it right.”

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Times correspondent Sally Ann Connell contributed to this story.