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Obstacles stunt Calif. offshore drilling

USAF thwarts access to tract, citing launches

By Patrice Hill (Contact) | Monday, September 15, 2008

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The Bush administration and oil companies say they want to open up the nation's coastal areas to new drilling, but in two cases - involving some of California's most promising oil fields - they are doing little to make that happen.

The U.S. Air Force is standing in the way of a project to tap into fields containing as much as 300 million barrels of crude - the biggest new oil find in California in 40 years - despite strenuous attempts to accommodate the military's concerns by oil companies seeking access to the offshore fields using a 25-acre parcel of land on Vandenberg Air Force Base.

Meanwhile, the major oil companies - including Exxon Mobil and Shell - have abandoned hopes of tapping into an even larger treasure trove of oil fields off the central California coast that could yield 200,000 barrels a day. Unmoved by this year's major shift in public opinion in favor of drilling, even in environmentally conscious California, they are demanding reimbursement of the more than $1 billion that they paid the federal government to lease the fields decades ago.

"We want our money back, clear and simple," said Edward Bruce, a Covington & Burling lawyer representing the oil companies in a long-running case against the Interior Department over the leases. "You need a tremendous change in the law" to consider drilling there again. A federal appeals court upheld the oil companies' claim late last month.

Second look

Revived public interest in drilling prompted President Bush in July to lift a moratorium on leases for offshore oil exploration that his father, former President George H.W. Bush, put into place two decades ago, declaring that now is the time to reconsider the drilling ban as Americans buckle under the burden of oil prices that went as high as $147 a barrel this summer, sending gasoline prices well over $4 a gallon and as high as $5 at many West Coast stations.

Sentiment has changed even in Santa Barbara County, where a major spill of 88,000 barrels of crude off the coast in 1969 became a seminal event that not only led to today's restrictions on drilling, but also helped to start the modern environmental movement in the United States.

Late last month, the county council voted 3 to 2 to ask the state to open up drilling again, citing the lack of major oil spills in the past 40 years made possible by new and safer drilling technologies, as well as the need for potentially billions of dollars that could be raised in oil revenues for the financially strapped state and county.

But while the political obstacles to drilling are falling rapidly, getting to the point where oil starts flowing again from the continental shelf promises to be a long slog requiring proponents to overcome monumental legal, institutional and bureaucratic obstacles.

"It's just mind-boggling. We have tried everything under the sun" to get the Air Force to approve the Vandenberg drilling project, said Bob Nunn, president of Sunset Exploration, a small California oil company that teamed up with Exxon Mobil to propose the innovative drilling plan. "We are stopped at every turn."