http://www.vcstar.com/news/2010/may/18/state-lands-commissions-reaffirms-opposition-to/
Ventura County Star
By Timm Herdt
Posted May 18, 2010 at 6:56 p.m.
SACRAMENTO – Delivering what could be the knockout punch to a Texas-based oil company’s plans to drill for oil in state waters off Santa Barbara County, the State Lands Commission on Tuesday said the proposal remains fatally flawed.
The Plains Exploration and Production Co. and its environmental supporters in Santa Barbara had hoped that a revised agreement, under which the company pledges a long-term cessation of all oil activities in the area in exchange for short-term permission to tap into state reserves, would lead state regulators to remove their opposition.
But in a memo to commissioners on Tuesday, Executive Director Paul Thayer concluded, “The new agreement does not cure the factors that led the commission to determine the proposed leases were not in the best interests of the state.”
That opinion, coming on the heels of Gov. Arnold Schwarzenegger’s decision earlier this month to abandon his support for the Tranquillon Ridge project, makes it unlikely the company will ask the commission to reconsider its January 2009 decision to reject the project.
“I really think this is the final nail,” said Susan Jordan, founder of the nonprofit Coastal Protection Network and a leading opponent of the plan. “Given the staff’s very thorough analysis, I don’t know how PXP moves forward at this point.”
Last month the Santa Barbara-based Environmental Defense Center released its revised agreement with PXP in the hope it would satisfactorily address concerns previously expressed by the commission.
EDC attorney Linda Krop said she was disappointed with Thayer’s analysis.
“We responded to specific complaints,” she said. “Now they say that’s not good enough.”
A key point of contention is whether the federal Minerals Management Service – the agency now under intense national scrutiny in the wake of the ongoing Deepwater Horizon oil spill in the Gulf of Mexico – would be obliged to accept a decision by PXP to walk away from its federal oil leases as it promises to do under the agreement.
Krop said that after discussions with MMS officials she determined the federal government’s only recourse if it felt PXP prematurely abandoned a lease would be to impose fines to recapture any lost royalty payments.
“The MMS confirmed to us that PXP has the right to relinquish its lease at any time,” she said. “They cannot force them to continue to drill. If they decide there are still recoverable reserves, their remedy would be monetary.”
The Lands Commission memo, however, said federal regulations allow the MMS to take more severe steps. “Money damages may not be sufficient for the service, as it sees energy supply as an important aspect of offshore oil development,” the memo says.
In an interview, Thayer said it would not be possible for the federal government to commit in advance to accept the drilling end dates called for in the agreement.
“When she says she has a definitive answer from MMS, I disagree with that,” Thayer said, referring to Krop’s assurances.
“The fundamental problem is that the unbound partner to the agreement is the MMS. The federal government controls those leases.”
Thayer said that although PXP pledges under the agreement to abandon three platforms and ask the owners to take them down, the incentive to keep them in place would be strong because there are an estimated 150 million barrels in unleased federal reserves that could be accessed in the future by slant-drilling from those platforms.