California’s first plan to ban offshore oil has failed and casts a shadow

The offshore oil derricks that dot the California coastline continue to pump despite a history of catastrophic spills and the wishes of generations of politicians to scrap them. They even survived a modest attempt by state officials over a decade ago to offer incentives to oil companies that chose to abandon their expensive operations.

Today, the failure of California’s “Rigs to Reefs” program, an effort to turn oil rigs into underwater artificial reefs, serves as a warning to those who called for a drilling ban after thousands of gallons of crude washed up on the Orange County shore in October.

“The question we face is how to minimize the risk to taxpayers and maximize the speed at which we can make these things go away,” said Senator Bob Hertzberg (D-Van Nuys). “Nobody wants to deal with the oil companies, but the reality of the situation is that you are going to have to create a structure that works for everyone. Otherwise, we’re going to be in this situation all the time and there will be another spill. “

Fueled by concerns from some conservationists and skepticism about the motives of California’s billion-dollar oil industry, the Rigs to Reefs program that was passed in 2010 was so complicated by a political compromise that the authorization process has become nearly impossible, Hertzberg said.

Not a single oil company has applied in the history of the program, according to the State Lands Commission, which has jurisdiction over state waters.

For years, Hertzberg has tried unsuccessfully to rationalize the program, devised by former Democratic Assembly Speaker John A. Pérez and promulgated by Republican Gov. Arnold Schwarzenegger in 2010. Hertzberg said he did not decided if he would try again. to relaunch the Rigs to Reefs program in 2022, saying he will have to see if the idea has support in the legislature.

“If there is anything positive about coming out of this oil spill, maybe it is to reignite this conversation… we all realize that these oil rigs need to be taken out of service and out,” Garry Brown said. , chairman of the Orange County Coastkeeper drinking water advocacy group has a hearing with state lawmakers on the Orange County oil spill this month. Brown supported the Rigs to Reef Act.

“Oil companies want a clear path to compliance,” he said. “They operate at a loss in many cases, but it is cheaper to operate at a loss than to face millions of dollars for decommissioning.”

In the meantime, calls are being made to completely eliminate offshore drilling.

Just days after a submerged pipeline dumped about 25,000 gallons into the ocean off Huntington Beach in October, State Senator Dave Min (D-Irvine) vowed to introduce a bill in 2022 to end all drilling in California state waters, including existing leased waters.

“We think we can do it. We know the big tankers will come after us when we have a bill with everything they have, ”Min said. “But enough is enough. I don’t want to pick up on this conversation in two years, five years or ten years, when we have had another major oil spill.

But Min, a former business law professor at UC Irvine, agrees that “politics will be tricky.”

California has no authority over the 23 oil rigs in federal waters, which are typically marked by a three-mile buffer zone from the coast. Since offshore oil facilities in state waters have existing leases, shutting them down under the state’s eminent domain powers could cost taxpayers hundreds of millions of dollars, if not more.

Min said he was exploring ways to prevent the state from absorbing the costs of decommissioning rigs, such as legislation that would require oil companies to pay those costs up front.

The cost of decommissioning oil rigs in federal waters off California, including plugging wells, removing rigs, and disposing of contaminated waste and debris on the ocean floor, would add up to more. $ 1.6 billion, according to a 2020 report commissioned by the US Bureau of Environmental Safety and Enforcement.

But that estimate could be low, especially when compared to a current decommissioning project in state waters off the coast of Santa Barbara County.

The state of California took control of Platform Holly in 2017 after its operator, Venoco, filed for bankruptcy and ceased operations, giving state authorities just days to hire a team to maintain the platform. form and ensure that it does not cause any danger to health or the environment. Holly is one of four oil rigs in state waters, which stretch three miles from the coast.

Jennifer Lucchesi, executive director of the State Lands Commission, told state lawmakers that Holly’s original operator, ExxonMobile Corp., was responsible for plugging all wells and removing the rig in its entirety. . The company put the cost at $ 350 million, even though that was before the pandemic, so the price has likely gone up, she said.

The state, however, is responsible for bearing a quarter of the cost, which is expected to be at least $ 132 million. Together, the cost of removing this unique oil rig is quickly approaching half a billion dollars.

Lucchesi, who testified in two recent Orange County oil spill legislative hearings, said the State Lands Commission currently oversees 11 oil and gas leases in state waters, which were issued between 1938 and 1968. These leases have no end date and will continue as long as it is “economical” for the oil companies to continue production, she said.

During the hearings, Hertzberg, Min and others expressed concern that the current operators of these offshore facilities could abandon the platforms once the oil fields disappear. If they do so and then file for bankruptcy, state taxpayers may have to pay the cost of removing the platforms.

This very scenario unfolds off the coast of Ventura County, where the state faces what could be an extremely expensive clean-up of Rincon Island, a 2.3-acre man-made island built in the 1950s by Atlantic Richfield Co., known as ARCO.

In 2016, the tenant of the oil production facility, Rincon Island Limited Partnership, filed for bankruptcy while facing state regulatory action for posing a significant risk to the environment in the event of a petroleum spill. uncontrolled oil.

A spokesperson for the State Lands Commission said there was no estimate of the total cost of the cleanup.

To qualify for California’s Rigs to Reefs program, oil companies must prove that the partial removal of oil rigs would benefit the marine environment, including marine life. The tops of structures, some of which extend over 1,000 feet to the seabed, must be removed to 85 feet below the surface to allow ships to pass overhead.

Oil companies would remain responsible for plugging all their wells.

This can save oil companies millions of dollars, providing an incentive to stop offshore oil production which may be declining. This program, available to operators in state and federal waters, remains active although it has not been used.

The financial benefits under the 2010 program are on a sliding scale, and the savings from converting an oil rig to a reef, rather than removing it entirely, are shared with the state. Initially, a company could have pocketed 45% of these savings, with the state receiving 55%, most of which would go to ocean conservation efforts. The percentages change over time, with oil operators receiving fewer benefits. Until 2023, oil operators would receive 35%, then 20%.

The federal government has a similar Rigs to Reefs program, established in 1984, which works in coordination with the states bordering the Gulf of Mexico. Under this program, oil companies are allowed to dump the remains of oil rigs into designated “reef areas” in the Gulf, providing habitat for marine life and a benefit for recreational fishermen and people. commercial seafood industry.

The California schedule is different, however, as the bottom portion of oil rigs converted to reefs would remain in place and the tops of the rigs would be hauled ashore for disposal.

Linda Krop, senior advisor at the Environmental Defense Center in Santa Barbara, wondered if the California program would bring much benefit to marine life, especially for creatures that thrive near the surface of the water, because the platforms would be cut 85 feet below sea level.

Krop also expressed concern that the oil companies would not do an adequate job of cleaning up pollution and damage to the seabed. In the past, oil company dismantling platforms off the coast of California have left mounds of contaminated debris on the ocean floor, including pipes, heavy metals and toxins, she said.

Richard Charter of the Ocean Foundation, a group that advocates for the protection of ocean environments, said oil companies should not be allowed to shirk their responsibility to clean up their own mess.

All oil producers, when signing a lease, commit to removing their derricks and restoring the ocean floor to its natural state. After extracting millions of dollars of oil from state or federal lands, he said, why should they be off the hook?

“In California, all we’re asking the oil industry to do is what they’ve promised to do, which is take the rig out, restore the seabed and recover, and the do it in a safe manner, ”Charter said. “You can’t leave a time bomb of partially disused platforms off the coast of California when the original companies have already taken away a huge amount of money. Rigs to Reefs are simply giving them tax dollars. “

Although relics of California’s burgeoning oil industry, offshore platforms have endured thanks to generous leases granted by state and federal governments at a time when oil was seen as a coveted engine of economic prosperity. .

Char Miller, professor of environmental analysis at Pomona College, said the momentum to reduce oil production and the transition to a renewable, carbon-free economy is growing. But that won’t happen overnight, and offshore oil is unlikely to disappear as quickly as people want it to be, he said.

“The days of oil are numbered,” Miller said. “But the reality is that human beings are currently ready to accept the climate change that is already happening so that we can continue to drive our cars. What we need is more and more people saying, ‘You know what, this balance just isn’t working anymore.’ “

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