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Santa Maria Sun / Cover Story

The following article was posted on January 31st, 2018, in the Santa Maria Sun - Volume 18, Issue 48 [ Submit a Story ]
The following articles were printed from Santa Maria Sun [santamariasun.com] - Volume 18, Issue 48

Murky future: Santa Barbara County is at crossroads following Trump administration's proposal to expand leases for offshore

By SPENCER COLE

Bright blue waves crash against the cliffs beneath Highway 101. Light dances off the water’s glittering surface with each successive surge. Surfers carve through the liquid azure field as the sun reaches its zenith. Down on the beach below, a family places the finishing touches on a sand castle. An older couple armed with binoculars stands huddled nearby in search of whales spouting to the surface for air.

Some 2 miles to the east, a similar scene is no doubt transpiring at Refugio State Beach, a small piece of sand that breaks miles of tall, jagged cliffs above the Pacific Ocean.


COVER PHOTO COURTESY OF DOC SEARLS

The outlines of the Channel Islands can be seen as tiny black mountain ranges off in the distance. It is this sight that so many environmentalists, recreationists, and outdoor adventurers say make Santa Barbara County the enviable tourist destination it is. But there is a blemish on the horizon, that same group will say—a half dozen-plus oil rigs that have sat idle since the Refugio oil spill in 2015, when the Plains All American Pipeline ruptured and tens of thousands of gallons of black crude stained beaches along this pristine coast for miles.

The oil infrastructure stands as a reminder to the ever-prevalent risks that come with fossil fuel extraction.

More than three decades have passed since the last offshore oil platform was constructed off the coast of California, a testament to a state that has long been hailed as the epicenter of the environmental movement. However, all that could change given new direction from the Trump administration and pending national legislation that could lift restrictions that once protected outer continental shelf waters, marine animals, and ecosystems from development.

Shockwaves rippled throughout coastal regions across the United States in January following U.S. Secretary of Interior Ryan Zinke’s announcement proposing to expand offshore oil and gas drilling. The plans revealed a goal that, if realized, could potentially open swaths of coastline along the Atlantic and Pacific oceans to new exploration for fossil fuels, as well as drilling, through a leasing program that would last from 2019 to 2024. At least six zones on California’s federally managed outer continental shelf—two northern, two central, two southern—were mentioned as potential areas of development. The outer shelf waters sit just 3 miles off the state’s coastline.

The proposal was met with immediate opposition from environmentalists, citizen activists, and politicians from both sides of the aisle, especially in California, which has not seen offshore oil development occur in its waters since 1984.

“For more than 30 years, our shared coastline has been protected from further federal drilling, and we’ll do whatever it takes to stop this reckless, shortsighted action,” Gov. Jerry Brown wrote in a joint letter with the governors of Washington and Oregon to Zinke the day the plan was announced.

Meanwhile, petroleum experts noted that although the West Coast in particular could offer up potentially billions of barrels of oil, companies seeking to extract the minerals face increased exploration costs that could curb profits and hinder development in the targeted areas.

Nils-Henrik Bjurstrøm, product portfolio manager and head of exploration analyses at Rystad Energy, an independent oil and gas consulting services and data firm based in Norway, said in a statement on Jan. 5 that other constraints standing in businesses’ way included limited access to capital, a lack of existing infrastructure, and environmental concerns.

“The question remains, what is the likelihood of companies prioritizing exploration and development in all of these areas,” he said, adding that the U.S. saw sizable shifts from domestic companies moving toward investments in shale. In 2017, those companies directed more than 60 percent of their total investments to shale, and the trend is likely to increase to about 70 percent in the coming decade, according to Rystad projections.

“This prevailing trend could impose a risk for the offshore exploration potential to be realized,” Bjurstrøm said.


ILLUSTRATION BY JORDAN DUNN

Zinke’s proposal also comes at a time when many states, especially California, are attempting to set ambitious goals to diversify their energy portfolios with renewable sources like solar and wind power.

“It will be difficult for the Trump administration to justify threatening marine and coastal environments and local economies with marginal oil development that simply is not needed to meet the domestic demand for energy,” said Michael Adamson, an independent scholar who has published widely on the oil industry and related topics since he received his Ph.D. in history from UC Santa Barbara in 2000.

The complex issue is no better illustrated than in Santa Barbara County, which possesses at best a conflicted historical relationship with fossil fuels, Adamson explained. On one hand, areas like the Santa Maria Valley would most likely never have developed to the extent they have without the presence of oil and its industry, he said. But on the other lies a history of a county equally marred by catastrophic ecological disasters, such as the state’s largest single oil spill in the Santa Barbara Channel in 1969.

That relationship is now taking center stage as Central Coast officials, with a few exceptions, are rallying in arms against the proposal. Both of its state Assembly members and its senator, as well as its representatives in Washington, issued statements condemning the move. Their voices are supplemented by members of Santa Barbara County’s Board of Supervisors, as well as environmental activists. The initial reaction from California’s coastal politicians points to an imminent conflict revolving around state, federal, and local land jurisdiction, potentially throwing a wrench in future offshore drilling projects.

“[Zinke’s] proposal certainly hit a nerve, I’m sure,” Adamson told the Sun. “You don’t have to go back to 1969 to remember an oil spill in Santa Barbara County.” 

‘The ocean is boiling’

On Jan. 28, 1969, California’s relationship with fossil fuels and environmental policy changed forever.

“We got an anonymous call,” former Santa Barbara News-Press reported Bob Sollen told the Pacific Standard in 2017. “I answered the phone and they said, ‘The ocean is boiling!’”

The Good Samaritan tipsters were alerting Sollen and the local media to the third largest oil spill in state history and one some historians say sparked the modern environmental movement. The great Santa Barbara Oil Spill, as it came to be known, resulted in the release of some 2.4 million gallons of oil into the Santa Barbara Channel when Platform A, owned by Unocal, suffered a catastrophic blowout—an instance where natural formation fluids like gas, oil, or water flow uncontrolled from a well bore. According to California’s Division of Oil, Gas, and Geothermal Resources (DOGGR), controlling pressure in a well bore is “key to preventing blowouts” like the one that occured in the channel.

And while industry safety standards and regulations have vastly improved since the 1969 spill, the damages it inflicted on local wildlife—more than 3,600 dead birds and uncounted marine life—and beaches remains etched into the public’s consciousness.

“I think people, even if they weren’t there, or aware of the ’69 spill, it seems to be something that everyone knows about, and it’s definitely a moment, that whether it’s taught in schools, or passed down through stories, is always referenced,” Adamson explained. “Anytime there is a spill, and inevitably there is, the touchstone is always 1969. People don’t forget that.”

More importantly, he added, despite the best industry safety practices, the likelihood of a spill is never a matter of if, but when.

“The oil industry doesn’t have a reputation as a responsible citizen in most of the areas of the Central Coast,” Adamson said, citing the Guadalupe Oil Field and Avila Beach leaks, and the most recent Refugio State Beach oil spill in May 2015.

 

‘Drill, baby, drill’

Even if the leasing proposal was somehow able to make it past the objections of lawmakers, environmentalists, and litigation, oil and gas companies would still face considerable roadblocks in local jurisdictions.

“There still remains about two or three dozen leases offshore in Santa Barbara County that were leased in the ’80s but were never developed. And they sit there because they are in federal waters because there isn’t a way of getting that oil, even if it was developed offshore,” Adamson said. “You still have to get the oil onshore, and not only Santa Barbara but most coastal communities are not keen on approving those facilities. I see that as an obstacle for developing oil in federal water.”


HISTORY OF SPILLS
Santa Barbara County has a history of ecological disasters due to oil and natural gas development. The Santa Barbara Spill in 1969 was the largest single event in state history while 2015’s Refugio State Beach spill (pictured) killed hundreds of birds and stained beaches with crude for miles.
FILE PHOTO COURTESY JOSHUA SHELLY

One major piece of infrastructure that would be key to moving oil from the offshore platforms and onto the coast is the Plains All American Pipeline, which burst in 2015 and caused the Refugio State Beach spill. Despite the blowback from the disaster, the company’s newest proposal to replace the line appears to have support from both sides of the aisle. Indeed, every politician or representative interviewed for this story spoke in favor of allowing Plains to continue forward in its approval process to install more than 120 miles of old piping with new, “state-of-the-art” steel.

The pipeline’s completion would mean the eight offshore oil and gas platforms that have sat idle in the Santa Barbara Channel since the spill in 2015 could resume operations.

U.S. Rep. Salud Carbajal (D-California) told the Sun that he planned to initiate legislation in Washington, D.C., to prohibit future oil and gas development off the California coast.

On Jan. 4, state Sen. Hannah-Beth Jackson (D-Santa Barbara) reintroduced her own legislation to ensure pipelines and other fossil fuel infrastructure could not be built in California waters to support any new federal oil development. Senate Bill 834 is jointly authored by Sen. Ricardo Lara (D-Bell). Jackson has introduced similar bills in the past, including ones that specifically protect the channel; all have failed. California state Assemblymember Monique Limón (D-Santa Barbara) has an identical companion measure—Assembly Bill 1775—in the state Assembly, co-authored by Al Muratsuchi (D-Torrance).

“The Trump administration’s reckless decision to open these waters to further oil development represents a step backward into the outdated, dirty, and destructive energy policies of the past,” Jackson said in a statement. “It’s more important than ever that we send a strong statement that California will not be open for drilling along our coast, which could devastate our multi-trillion-dollar coastal economy, our coastal waters, and marine life.”

The Sun was unable to speak with Jackson for additional comment on this story.

Assemblymember Jordan Cunningham (R-Templeton) meanwhile, told the Sun he was a proponent of a diversified energy portfolio that includes oil and natural gas. He said he did not think new platforms off the coast of California were necessary, citing Florida Gov. Rick Scott’s approach, which included asking the Trump administration for exemption based on economic impact to the state’s tourism industry.

“California’s coast attracts tourism, fishing, recreation—there’s a lot of natural beauty, and people come to see it from all over the world,” Cunningham said. “There’s a certain risk; the safety standards in California are pretty good, but there’s always an inherent risk of some sort of spill. And if it’s a spill in the ocean, those tend to be pretty bad—bad for the environment, bad for the economy.”

Cunningham added that he did not support the Trump administration’s proposal with respect to California, but there may be other places in the country where offshore is a good, acceptable investment.

“I think existing leases should be left alone because there’s platforms that have been operating and those are doing fine,” he said, “but I don’t think we need any new ones.”

The assemblyman, who in the past has voted in favor of bills adding safety and transparency regulations to the industry, as well as cleanup teams for spills and other accidents, said he could not comment on whether he would vote for Limón’s Assembly Bill 1775 because it had yet to reach the floor from the Natural Resources Committee.

“I tend to not take an official position until I’ve got a final product to vote on,” he said.

Cunningham’s moderate approach to the oil and gas development is in sharp contrast with hardliners on Santa Barbara County’s Board of Supervisors. For years, the board has split on the issue by a 3-2 vote, usually against the fossil fuel industry, with the south part of the county leaning more liberal and sympathetic to environmental issues while the north votes in the opposite direction.

On Jan. 10, Sen. Dianne Feinstein (D-California) sent a letter to all 58 county boards of supervisors in California, imploring the governing bodies to pass formal resolutions opposing new offshore drilling and development and to “object to any new oil and gas leases off the California coast.” Feinstein referenced both the 1969 and Refugio State Beach spills as reasons to support her requests.

First District Supervisor Das Williams of Carpinteria told the Sun he would “vehemently resist any increase in leasing of offshore oil,” and said Zinke’s proposal was “bad business for Santa Barbara County.” Meanwhile, 4th District Supervisor Peter Adam responded to the Sun’s questions about offshore oil development with a three word statement: “Drill, baby, drill.”

Supervisors Steve Lavagnino and Janet Wolf did not respond to multiple requests for comment, while Supervisor Joan Hartmann declined to comment.

On Jan. 30, the supervisors approved a resolution opposing offshore development by a 3-2 vote, with Adams and Lavagnino dissenting. 

Economic drivers 

Controversy aside, the energy sector continues to play a vital role on California’s coastline.

“I think you can’t deny that the energy industry is really important to the Santa Barbara County economy, and to the economy of the entire Central Coast,” Cunningham told the Sun. “It provides a lot of jobs and they are very good quality ‘head-of-household’ jobs.”

In 2015, the Western States Petroleum Association commissioned the Los Angeles County Economic Development Corporation to study the economic contribution of the oil and gas industry in California. It found that the industry had a direct output of more than $111 billion and generated more than $148 billion in direct economic activity—a combined contribution that accounts for 2.7 percent of the state’s GDP and supports 368,100 jobs, or roughly 1.6 percent of California’s employment.

Moreover, the petroleum association noted the industry generated some $26.4 billion in state and local tax revenues, with an additional $28.5 billion in sales and excise taxes. The study also identified what it called “vulnerable user industries” of refined petroleum products, like transportation, warehousing, manufacturing, and agriculture, and lumped the sectors into one data set that represented 1.7 million jobs in California with an associated $111 billion in labor income and account for 8.4 percent of the state’s GDP.

Oil production from offshore wells accounts for roughly 15 percent of California’s total oil production, according to DOGGR.

In 2010, offshore oil generated $2.6 billion, according to the National Ocean Economics Program, which accounted for 15.8 percent of California’s production. The state’s federal outer continental shelf waters, meanwhile, produced $1.5 billion in oil and $8.6 million in gas. Oil production in state waters declined from 79 million barrels in 1970 to 13 million barrels in 2010. While outer continental shelf oil output peaked in 1995 with 72 million barrels, before dropping to 22 million by 2010. Much of the dip in production can be attributed to the moratorium that California placed on offshore oil and gas leases following the 1969 Santa Barbara spill.

Kristen Hislop, marine conservation program director for the Environmental Defense Center—a nonprofit environmental law firm born out of the 1969 spill—said the economic argument from the oil and gas industry is somewhat misleading.

“Of course you are going to have different sides with economic benefits, but the goal is to have an overall benefit rather than an overall cost,” Hislop told the Sun. “The California coastal economy is very dependent on tourism and recreation, much more so than it is on mineral extraction.”

According to the National Ocean Economics Program, California’s ocean economy generated $44.8 billion, or 2.1 percent of the state’s GDP, in 2012. Tourism and recreation contributed more than $17.6 billion—or 39.3 percent—to the state’s ocean economy GDP in 2012. That number is significantly higher than mineral extraction, which accounted for nearly $11 billion—or 24 percent—to the ocean GDP. Transportation largely filled out the rest of the sector, with contributions of $14.1 billion, or around 32 percent.  

“Tourism and recreation are the biggest drivers of the coastal economy in California,” Hislop said. “You can imagine oil spills and development have a huge impact on that.”

The monies generated from California’s tourism alone were enough to bring pause to some parties skeptical of the Trump administration’s intent with the lease proposal, especially once it exempted Florida from consideration. Florida Gov. Scott wrote to the Department of Interior, saying the state’s coastal economy would take a massive hit. It is thus far the only state to be exempted from the proposed leasing program.

Assemblymember Limón told the Sun that Zinke’s move to take Florida out of consideration was “concerning” because California’s coastal counties generate three times the revenue as the same counties in Florida.

“The message sent to me is it’s a decision that’s not based on facts or evidence that are of the best interest to the country,” she said. “I think it’s a decision that’s based on [the Trump administration’s] personal preference.” 

Opportunity cost 

Beyond such opposition, fossil fuel companies still face the basic economic question of opportunity cost—or to put it simply, is the juice worth the squeeze?

Bjurstrøm, the product portfolio manager for Rystad Energy, told the Sun that his firm’s estimates for the entire Pacific Coast’s capacity for oil was somewhere around 8 billion barrels, a slightly more conservative projection than the 10-plus billion estimated by the U.S. Department of the Interior’s Bureau of Ocean Energy Management.

“The challenge for oil companies is that these areas like the Pacific Coast, if they’re opened, there’s very little infrastructure, so if they find oil, one problem they will face is how to get rid of [the oil] directly to the market,” he said, adding that the entire U.S. coastal areas opened under Zinke’s proposal contained an estimated 65 billion barrels of oil. “Looking at [the entire U.S. coastline compared to the West Coast] it’s not a lot—it’s not a high list area.”

Bjurstrøm said that exploration had also seen spikes in cost in recent years and that there was limited geological mapping on the western seaboard. Moreover, adding infrastructure for extracting and transporting offshore oil to onshore production facilities is equally expensive to develop.


WELL ON THE HORIZON
The Trump administration’s and Secretary of Interior Ryan Zinke’s plan to open up federal waters to offshore oil exploration and development has drawn criticism from many politicians in California, who say the move does not take the state’s long-term priorities into consideration.
PHOTO COURTESY OF DOC SEARLS

In September 2015, Royal Dutch Shell abandoned an exploration project off the northern Alaskan coast after failing to find enough oil worth the $7 billion the company spent searching for it.

“Exploration and conventional offshore exploration in general particularly has taken a major hit after the oil price crisis in 2014 globally, and it’s the same picture you see offshore in the U.S., so the activity is down more than 60 percent compared to 2014,”  Bjurstrøm explained. “That means that the oil companies really have to believe that they will find substantial—really big—fields to get paid back for building the infrastructure or exploration in that area.”

According to Bjurstrøm, a lot of offshore-focused companies have accepted other development already.

“They might start developing an already discovered field rather than going and looking for more,” he said. “It depends on a detailed assessment—the fact that a lot of offshore development projects have been postponed might actually inhibit exploration further.”

Bjurstrøm and his firm project flattish development in terms of exploration over the next couple of years, despite “more activity in general.”

One area to keep an eye on in particular he said, was the Santa Maria basin and the Channel Islands.

“It would probably be of high interest purely from a resource development prospective,” he said.

There is an estimated 250 million barrels of oil and 519 billion cubic feet of gas in the Ventura Basin Province, which includes the Channel Islands, according to the U.S. Geological Survey. The agency labels the estimates as “technically recoverable resources,” and notes that the Ventura Basin is well explored, with no large conventional discoveries for many decades except in the adjacent outer continental shelf.

Hislop with the Environmental Defense Center said that even if the offshore projects were able to be approved and generate the amount of resources and capital that oil companies claim, there are still other unknown costs on the horizon.

“I don’t think anyone can quantify the amount we are going to be spending because of climate change,” she added.

Assemblymember Limón noted the current debate was somewhat uncharted territory.

“This is really a new conversation,” she said. “This is a new era we are in, in California, if it moves forward.”

Staff Writer Spencer Cole can be reached at scole@santamariasun.com.
Cover and "Well on the Horizon" photos courtesy of Doc Searls via Creative Commons.




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