California Budget: Is Off-shore Drilling Part of the Solution?

When the topic of off-shore drilling comes up, it’s difficult to forget Cosco Busan and the disastrous global spills which followed.  However, new technology has significantly decreased the risks of off-shore drilling allowing for more ENERGY: OIL [ENE:OIL]efficient extraction of the resource with little risk.  Now California’s budget deficit has once again ignited talks of off-shore drilling.

An estimated 18 billion barrels of oil are believed to lie below off-limits coastal waters within 50 miles of land. In fact approximately 95% of the known reserves off the coast of California are less than 50 miles out – but currently off limits. In addition to these massive oil reserves, there lies an estimated 10 trillion cubic feet of natural gas just off shoreline.

“The Schwarzenegger administration has not given up hopes of renewing off-shore oil drilling as part of the budget deal . Capitol Weekly’s John Howard reports, “An attempt to make an end-run around the three-member State Lands Commission and place authority over offshore oil leasing in the hands of the governor’s budget-writing office is being pushed by the Schwarzenegger administration over the opposition of many environmentalists, the commission itself and Democrats who represent coastal areas.

“This project is good for California,” Tom Sheehy, a ranking official of the state Department of Finance, said at a recent Lands Commission hearing about the lease sought by Plains Exploration & Production, or PXP, a Texas-based independent oil and natural gas producer. The company wants to drill slant wells through from a federal platform just outside state waters off Santa Barbara County.

The plan, which would be in effect through 2022, is known as the Tranquillon Ridge project.  And according to the governor’s office in May, allowing the project would bring $100 million in revenue in 2009-2010 and $1.8 billion over the next 14 years. 

The State Lands commission rejected the proposal on a partisan, 2-1 vote earlier this year.

“In the wake of the Commission’s decision, a new effort has emerged in the Capitol to get the project approved. A draft of bill language is circulating before the budget conference committee that would take authority over the lease away from the State Lands Commission – which has handled offshore oil leases since 1938 – and give it instead to Schwarzenegger’s Department of Finance.”

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