MONTEREY, Calif. December 20, 2021 — There is renewed debate in California and other states over whether to ban offshore oil and gas drilling, two months after a ruptured underwater pipeline off Huntington Beach spewed tens of thousands of gallons of crude oil into the ocean.
But banning seabed extraction of fossil fuels would require navigating federal and state jurisdictions, voiding decades-old contracts—which would be expensive for states to break—and embarking on arduous decommissioning processes that could cost billions.
The 25,000-gallon spill (nearly 600 barrels) shuttered beaches in Orange County for a week in October, as tar balls washed ashore and oil slicks seeped into local marshland, killing birds and other wildlife. While the cause of the spill is still under investigation, a federal grand jury last week indicted Amplify Energy, the owner of the platform and pipeline in question, and its subsidiaries for criminal negligence.
After the spill, several California Democratic lawmakers announced they would propose a ban of all existing oil and gas drilling in state-controlled waters, the three miles closest to shore.
Though the legislation likely would invite litigation from oil companies that would have their leases canceled, the state must act to stop future oil spills, argued Democratic state Sen. Dave Min, who is leading the legislative effort. Min, a former professor at the University of California, Irvine School of Law, said he is still figuring out a process to address the legal questions associated with canceling leases.
“We in California identify with our coastlines and beaches, and to have that afflicted with tar balls and birds washing up dead is infuriating,” he told Stateline in an interview. “[Passing the bill] is going to be a messy process, but we’re going to do our damn best. We can’t let the perfect be the enemy of the good.”
California Democrats have long pushed to curtail oil production, and Gov. Gavin Newsom has called on the state to end oil extraction both onshore and off by 2045. But even in a deep blue state, political opposition remains strong. Oil production employs a substantial workforce in California, and some labor unions oppose Newsom’s plans because they would put those jobs in jeopardy. Oil extraction also generates significant tax revenue for the state, which the industry is quick to cite.
“Despite California’s fairly progressive politics on fossil fuels, it is really hard to wean a state that generates billions of dollars of revenue from oil off of it,” said Char Miller, a professor of environmental analysis at Pomona College in Claremont, California.
The oil industry argues that banning offshore drilling in California or elsewhere in the country would harm American consumers and the U.S. economy—and might even hurt the environment.
In an email to Stateline, Kevin O’Scannlain, vice president of upstream policy at the American Petroleum Institute trade group, noted that some tax revenue from offshore drilling revenue pays for conservation efforts.
In the Gulf of Mexico, for example, the federal government this year used $249 million in oil tax revenues to support conservation and coastal restoration efforts in Alabama, Louisiana, Mississippi and Texas. O’Scannlain also said a ban could lead to “higher emissions by increasing U.S. reliance on foreign energy imports from countries with lower environmental standards.”
Even so, state lawmakers from around the country have expressed interest in offshore drilling bans since the Orange County spill, said Ava Ibanez, project manager for ocean policy at the National Caucus of Environmental Legislators, a nonprofit network of state lawmakers.
Democratic and Republican legislators in Connecticut, Florida, Hawaii, Massachusetts and South Carolina introduced bills this year that either would ban offshore drilling in their state waters or would prevent pipelines and other infrastructure from transporting oil from platforms in federal waters through state waters. None of those bills has advanced out of committee, however.
In recent years, Delaware, Maine, New Hampshire, New Jersey, New York, Oregon and Virginia have passed offshore drilling bans in state waters, many in response to former President Donald Trump’s proposed expansion of offshore drilling. Similar bans are unlikely in the Gulf of Mexico region, where state economies are heavily reliant on offshore oil extraction, Ibanez said.
California has not allowed new offshore oil and gas leases in state waters since 1994, after lawmakers passed a ban following a series of catastrophic oil spills, including in 1969 when a rig spilled 3 million gallons of crude into the ocean off Santa Barbara. But the state allows drilling operations that predated the ban, some signed in the 1950s. The pipeline that ruptured in October ferried oil from a rig in federal waters to the shore. Both state and federal agencies are investigating.
While the forthcoming bill would cover state waters, most drilling off California’s coast occurs in federal waters. The state oversees 11 offshore oil leases, which includes four offshore platforms and one human-made island. The federal government manages 23 oil platforms off the California coast.
California is the country’s seventh-largest producer of oil. In 2019, 7 million barrels of oil came from offshore extraction in state waters—a fraction of the 156 million barrels the state produced that year. Each year, the state receives $90 million from offshore drilling leases and earns $21.6 billion in state and local tax revenue off oil overall.
A Future Without Offshore Drilling?
For supporters of a ban, the age of the drilling equipment in California waters has added a sense of urgency. A lot of the platforms, pipes and other infrastructure are decades old and past their expected lifespans. Metal on the platforms has been corroded by harsh seawater and battered by waves and wind, environmental activists argue.
“All of the platforms off of California should be completely shut down and decommissioned,” said Miyoko Sakashita, director of the oceans program at the Center for Biological Diversity. The environmental advocacy group is suing the federal government over its alleged failure to review and require revisions for leasing agreements written in the 1970s and 80s for the platform linked to the October oil spill.
“The risk of oil spills increases significantly as infrastructure gets older,” Sakashita added. The oil industry, however, claims development is safe because of investments it has made, as well as regulations from government agencies.
As California state lawmakers prepare to debate a ban on drilling in state waters, U.S. Sen. Dianne Feinstein earlier this year introduced legislation that would permanently ban new oil and gas drilling in federal waters off the coasts of California, Oregon and Washington. The bill would not affect current leases. It has not yet received a committee hearing.
The California State Lands Commission, which oversees the offshore oil production in state waters, earlier this year publicly backed Feinstein’s legislation. The commission has not taken a position on a potential state ban.
More than 70% of Californians oppose more oil drilling off the state’s coast, according to a July survey by the Public Policy Institute of California.
The U.S. House-passed Build Back Better Act also includes a provision that would permanently ban issuing new offshore oil and gas leases in federal waters along the Atlantic, Pacific and Florida’s Gulf of Mexico coasts. A draft of the Senate version of the bill removed that provision, however.
Offshore drilling not only threatens ocean life, but also delays the country’s transition from fossil fuels to renewable energy, said Irene Gutierrez, a senior attorney at the Natural Resources Defense Council, a national environmental advocacy group.
“In a time when ecosystems are so stressed from climate change and overfishing, oil and gas drilling is just another threat to these already stressed environments,” she said. “There isn’t a lot of wiggle room in supporting new risks.”
But cutting off a domestic source of oil at a time when gas prices are rising and statewide demand for gas is still high would mean importing more oil from foreign countries on tankers that are at a higher risk of spills than offshore rigs, said Mike Umbro, founder of FieldView Capital Advisors, an investment banking firm that has an oil lease in Kern County, California.
“Effectively what we’re doing is outsourcing all of our oil production,” he said.
Foreign tankers could continue to sit offshore because of port backups, emitting pollutants. This, he argued, is far more harmful than the oil production from offshore rigs.
A Massive Decommissioning Challenge
Even if California Democrats were successful in their quest to ban offshore drilling, dismantling those operations would take years and might cost billions of dollars.
Platform Holly, a rusted structure that sits off the coast of Santa Barbara, is currently being decommissioned at great cost to the state. The platform’s owner, Venoco, filed for bankruptcy in 2017, leaving California and the developer of the wells, Exxon Mobil, to foot the bill for decommissioning and staffing the platform while they plug and abandon the platform’s 30 wells.
Decommissioning will cost the state $132 million and Exxon Mobil at least $350 million. This process could take up to 18 months.
“It’s an enormous undertaking,” said Jennifer Lucchesi, executive officer for the California State Lands Commission, in an interview.
Some lawmakers and ocean experts have suggested a “Rigs to Reef” program, leaving the deeper parts of the infrastructure to become ocean habitats for fish and other wildlife.
A decade ago, California enacted a law that would allow oil companies to use such a program, but because the measure did not include any implementation rules, no company has used it. Some Democratic state lawmakers have recently said they want to explore new legislation to jumpstart the program.
Similar programs have been used only in the Gulf of Mexico, where shallower waters make the reefing process easier than it would be in California, where some rigs reach more than 1,000 feet deep.
These programs have gained the support of sport fishers and conservationists, who appreciate the habitat-forming qualities of the oil platforms.
“Our high priority is to ensure good habitats and good fish populations,” said Tom Raftican, president of the Sportfishing Conservancy, a Long Beach, California-based nonprofit. “These reefs are important for that.”
But not all environmentalists are sold on these programs. Lease agreements with oil companies specified that when production ended, companies would have to remove all equipment and return the area to its natural state.
“All of this infrastructure is incredibly dirty and dangerous and damaging our oceans,” said Laura Deehan, state director of Environment California, a nonprofit that advocates against offshore drilling. “We need to force the polluters to fix the damage they’ve made.”
Stateline, an initiative of The Pew Charitable Trusts, provides daily reporting and analysis on trends in state policy. Stateline content is published daily at pewtrusts.org/stateline.