More Questions Than Answers on Offshore Drilling Agreement

Posted on 20 January 2010

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By Robert Cruickshank

Calbuzz had a holiday exclusive on the previously secret agreement reached between PXP, the company promoting the Tranquillon Ridge offshore drilling project, and Environmental Defense Center, which made the agreement with PXP in support of their drilling plan back in 2008. While the "exclusive" doesn't reveal much more than we already knew about a year ago, and while it would be particularly useful if Calbuzz would post the agreement in its entirety for the rest of us to peruse, it does have some interesting elements, including the amount EDC is going to get paid by PXP as part of the deal:

EDC legally represents in the matter two other Santa Barbara non-profits, Citizens Planning Association (CPA) and Get Oil Out! (GOO). Amid the bitter debate within California's environmental community, one of the charges leveled by T-Ridge foes is the suggestion that the non-profit EDC benefits financially from the agreement, and from its public support of PXP.

On this point, Section 1.6 of the agreement ("Reimbursement of Expenses of Environmental Parties") states that:

Upon all Parties' execution of this Agreement, PXP shall pay $50,000, and upon the State Lands Commission' approval and PXP's written acceptance of all the leases necessary for the Tranquillon Ridge Project, PXP shall pay an additional $50,000, for a total of $100,000, to the Environmental Defense Center, as reasonable compensation for work performed by EDC on behalf of GOO! and CPA pertaining to the environmental and permitting review for the Tranquillon Ridge Project, and the negotiations leading up to and implementation of this Agreement....

The company further agreed to a pay a maximum of $298,507, at a rate of $20 per ton, to offset any new greenhouse gas commissions from the T-Ridge project, to the Santa Barbara County Air Pollution Control District. PXP also promised to pay the air quality district $1.5 million, over 14 years, to "administer a transit bus technology program" within the county to help reduce greenhouse emissions.

PXP's potential royalty payments to the state are estimated at several billion dollars, according to Winters, who said the county of Santa Barbara could receive several hundred million in property tax revenue on oil produced from new T-Ridge operations.

In exchange for this money, EDC promises to support the Tranquillon Ridge deal, and PXP promises to end drilling by the early 2020s. But is that promise legally enforceable? That's been one of the key questions in this whole deal, and according to Calbuzz, the answer appears to be "not really". John Chiang explained a year ago that the state can't interfere in an agreement between PXP and the feds. While EDC claims that provisions in the deal with PXP that would have PXP forfeit 100% of post-2022 profits, and that onshore processing facilities would be undone, there would remain big loopholes. And ultimately, the only way this deal could be enforced is if EDC takes PXP to court over the terms of this deal.

Calbuzz's article leaves me with more questions than answers. Why exactly did EDC cut this deal? It's hard to escape the conclusion their support was bought, and there remains plenty of reason to believe the deal isn't watertight. So why should Californians support it?

In particular, the timing is quite concerning. The right-wing "drill baby drill" push did not begin until the summer of 2008. Yet this deal was signed in April 2008, and was presumably being negotiated for some time before then. While EDC could defend itself by saying that offshore drilling was going to happen anyway any they were making the best of it, not only were they in fact ahead of the right-wing effort, but now face the fact that the Obama Administration has indicated it's not interested in offshore drilling. "Drill baby drill" doesn't have much political power these days.

So what justifies EDC's deal? As far as I can tell, it's money. EDC is implicitly saying to California that offshore drilling is OK, if it comes at the right price. In 2009 Arnold Schwarzenegger and Chuck DeVore drove a truck through that loophole, coming oh-so-close to getting Tranquillon Ridge approved, only to be blocked by Pedro Nava, Bill Monning, and others in the Assembly who refused to play along.

California is indeed hard up for money. But that doesn't mean we should do stupid things to get that money. "Like a junkie looking for veins in his toes so he can get one last fix," as Al Gore described it here in Monterey last year, offshore drilling is a reckless way to fund our schools and health care needs. We ought to instead levy an oil severance tax on the drilling already taking place in the state, but continue to resist opening the door to new drilling, especially offshore, where the environmental and economic costs of a spill would far outstrip whatever money PXP pays to state and local governments.

More importantly, EDC is setting a precedent that absolutely will lead to widespread drilling on the coast. Instead of maintaining a strict opposition to offshore drilling on the merits, they've indicated that such opposition has a price, and once met, opposition will go away. If Tranquillon Ridge is approved, what's to stop others who want to drill to show up at county Board of Supervisors' meetings and the state capitol with suitcases full of money - for public programs of course, not for politicians - and demand to get approval for their own projects?

Oil prices are going to rise above $100/bbl before long, and when they do, the wingnut "drill baby drill" chant will start again. We can beat that back again, as we did in 2008-9. But if they see that environmentalists are willing to sell their opposition, it discredits the entire effort and the entire coastal protection movement, and makes it much more difficult to maintain the longtime offshore drilling ban.

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Robert Cruickshank is a historian, activist, and teacher living in Monterey. He is contributing editor at and works for the Courage Campaign, in addition to teaching political science at Monterey Peninsula College. Currently he is completing his Ph.D. dissertation in US history, on progressive politics in San Francisco in the 1960s and 1970s. This article was originally published in Calitics.

Wow. I guess the democrats are as good as the republicans when it comes to propaganda.

I didn't realize that ending offshore oil drilling in California would twist so many arms, but at least we know who owns the State democrats. Surprise, BIG OIL.

The State Lands Commission members showed us the State Democratic party doesn't want to end active drilling leases. State Controller John Chiang and Congressman Garamendi were under tremendous pressure to maintain current, long-term tax revenues for the State. They're the professional politicians who made the decision to let BIG OIL survive in California. Actually ending offshore oil drilling in California has been the work of EDC-GOO. They have done all the heavy lifting and they know the issues better than Robert Cruickshank.

State politicians don't want "new drilling" but they also don't want an end to current drilling. They want to have their cake and eat it too. They like to claim they're against offshore drilling but they also make sure current drilling continues indefinely. End dates for drilling disrupt this two-sided position. Development and Production Plans, once approved, have no termination date.

Politicians invested in the democratic party will try to convince you that the ideology and the political reality that controls the democractic party are the same. They're not.

Why has the democratic controlled legislature kept active oil drilling leases alive and well since 1969?

Why did the democratically controlled California Air Resources Board kill the electric car?

Why does the democratically controlled U.S. Congress allow the health insurance companies to write a majority of the new health care legislation?

I'm not saying this to promote the dysfunctional republican party either. The truth is more important than progressive propaganda.

Wake up environmentalists. Do your own homework. The democrats want power, and they're willing to compromise to get it. End Offshore Oil Drilling Now!!!

I got to read lots of articles on your blog. Its amazing how interesting it is for me to visit you very often.I was very pleased to find this site.

There are some great things on here and other pages. Although in regards to the above, what is your now opinion following the massive oil disaster following drilling?

I hope everything went well with your Ph.D. because I really like your blog Mr. Cruickshank