Trust for Public Land Contributes to Landmark Oil Agreement

Last month, the Environmental Defense Center (EDC), Get Oil Out! (GOO!), and the Citizens Planning Association of Santa Barbara announced a historic and unprecedented agreement allowing PXP Co. to develop the Tranquillon Ridge oil field off Lompoc. Given that those groups have typically blocked any oil exploration deals in the Santa Barbara Channel, what explains this historic agreement?

First, TPL's role is related to one of the four or five benefits that are included in the greater agreement negotiated between Plains Exploration and EDC, GOO!, and Citizens Planning. Throughout the years, oil companies have proposed various new lease exploration opportunities in the Channel. As you know, in 1969, there was a big oil spill, and GOO! was formed out of that catastrophe to generate citizens' regulations around the activities in the Channel. Throughout the years, oil has been trying to get new business. The environmental groups have said no every single time.

What finally happened with PXP is that they approached the groups, Get Oil Out! and Citizens Planning Association, with EDC as their legal representative. They said, "What is it going to take for us to do something that we're almost already doing?" The proposed new state lease is adjacent to a federal lease that PXP already has-the Pt. Pedernales project-and the platform, Platform Irene, already exists.

The new project is called Tranquillon Ridge, and it's toward the inland side of Platform Irene. They were basically drilling up to the state tideland boundary, but they want to go further, into state waters. Therefore, they need this new lease.

Others have tried this before. What's different this time is that Plains went to the environmental groups and said, "What do you want from us? What would it take for us to get your support?" First, everybody shook their heads and said, "Are you kidding? No way. It'll never happen." Then, they started seeing a potential opportunity to negotiate with PXP for multiple benefits, including a finite timeline for this operation and any other operations of PXP in the Santa Barbara Channel. No law-state, federal, or otherwise-mandates that. When you are drilling for oil, you can drill until you're done.

These groups thought, maybe if we were to support this activity, we could put a timeframe on it, which they then successfully negotiated to be the timeline that was consistent with the environmental impact report that was commissioned for the new state lease area. That was the number one benefit that they saw. They thought that they could get rid of oil in the channel, at least PXP's oil, by triggering the date on this new lease and by getting PXP to agree to shut down all their operations, which they did.

Secondly, PXP has 3,700 acres in Lompoc. They had an 800-acre, 1,100-home proposal for a new subdivision on the land that they own there. An additional benefit that they agreed on was to pull that application to build the subdivision.

Number three, they agreed to donate all of their landholdings over a period of years, which includes the 3,700 acres in Lompoc, contiguous to the existing Burton Mesa Preserve, and three major parcels along the Gaviota Coast, totaling almost 200 acres.

Some in the environmental community have suggested that this agreement is a model for how to deal with climate change and carbon emissions and land preservation. In what sense is it a model for those issues?

The group negotiated with PXP to have no net greenhouse gas emissions from the project. As I said, there's an existing platform where they currently conduct their business. PXP has applied to the State Lands Commission for a new state lease, and assuming they get approved, they've agreed to put $1.5 million into a local fund in Santa Barbara County. In addition to that, they have agreed to contribute $10 per ton for all of their carbon emissions that are not mitigated by the project. Any greenhouse gases that can be mitigated for less than $20 per ton will be eliminated. The new proposed business will take what already exists and neutralize all of it.

After the agreement, Linda Krop, chief counsel of EDC, stated, "Never before has an oil company agreed to a date-certain end of production, making this a one-of-a-kind agreement. This guarantee by PXP to end oil production will protect our coast from oil spills, air and water pollution, and hazardous gas releases." Is this a one-of-a-kind agreement, or is this a model?

So far, it's one-of-a-kind, but I think it will be a model. There are other oil companies that operate in the channel, and I think what the groups are saying right now is, "This is your bar. This is the high-water mark. You need to come to us to negotiate something."

PXP has partnered with TPL to convey the 3,900 acres of PXP land to TPL for public protection. What are the details of that part of the deal?

The local groups had been negotiating with PXP for a little over a year. The land came up as a possible benefit. The group then called us in, and we began conversations with PXP about what to do with the property. Through some negotiations, we took a look at the properties. This is everything they own in Santa Barbara County that's related to these oil developments. TPL negotiated with PXP to donate the land in three phases.

The first phase will consist of about 1,000 of the acres in Lompoc and two of the Gaviota Coast parcels, which is approximately 140 acres. That conveyance will occur as soon as PXP establishes initial commercial production. At that point, that first phase will be donated to TPL. Then, after about nine years, the third Gaviota Coast parcel would be conveyed to TPL. That is part of the (existing) oil processing facility, which I think is mostly used for storage at this point. They have an agreement to abandon and clean that up after nine years. The balance of the 2,700 acres in Lompoc will be conveyed at the end date of this overall agreement. The end date for PXP's operations in Santa Barbara is 2022.

As you have mentioned, the agreement grows out of the proposal by PXP to expand its existing production from Platform Irene, located in federal waters, via both offshore and onshore pipelines. What motivate PXP to agree to this landmark transaction?

I can't speak for them, but from what I understand, their position is that when they're taking on a new opportunity, it's always speculative, but they have good reason to believe that there are sufficient oil reserves in this area to be very profitable. According to the EIR, they believe there are 170-200 million barrels of oil there. At today's prices, that is a very worthwhile opportunity.

County officials, the State Planning Commission, the California Coastal Commission, and the Federal Minerals Management Service must approve the agreement. How long will it take to secure their approvals?

The reason we had the press conference last week is that the county has released its staff report for the project, which will be reviewed by the Planning Commission on April 21. If there are no appeals, it will then move onto State Land Commission for review, which should be sometime in May or June. Assuming they pass that hurdle, the California Coastal Commission will review it. I don't know if they will concurrently seek approval from Minerals Management.

It is PXP's intention to begin their business before the end of the calendar year. It is a pretty quick process if there are no appeals to these decisions.

What other conservation work has TPL has done in Santa Barbara County?

TPL conserves land for people, so it's mainly about the landscape. The Gaviota Coast, a 40-mile stretch of coastline that extends from Santa Barbara proper up to Point Conception, is one of California's ten most threatened landscapes, according to the California Wilderness Coalition. This area makes up only 15 percent of Southern California's coast, but contains 50 percent of its open rural coastline.

The coast of California generally traverses north and south. At Point Conception, it transitions to an east-west direction. In that area, there's a convergence of extremely different, rare terrestrial and marine life. The habitat and the species in this area are very important. TPL has been working to conserve land on the Gaviota Coast for about 12 years. We have certainly had our sights on these three pieces in particular, which were owned by Chevron before PXP. We never thought we would have the opportunity to hold these three parcels that are part of this agreement and get them protected for public benefit.

Where they're located is where the highway turns. Gaviota State Park is on one side; there is national forest above this area. These are mainly surrounded by agricultural properties, but it's our plan to get all of this area conserved. We didn't really didn't see a way to get these three pieces into the mix. They are highway frontage, extremely visible coastal bluff properties. Right on the other side of the highway is the coast.

How pleased are environmental groups with this PXP transaction? How significant is it for TPL?

People are ecstatic. We all entered this thinking that we didn't have anything to lose, and PXP had everything to gain by getting together in this kind of partnership. They have been great. They've listened to the groups. In particular, the local groups in Santa Barbara have to be acknowledged for being willing to get out in front and see if there was an opportunity to do something greater than just draw the line in the sand and say "no."

At the end of the day, these groups can oppose these things, but depending on what their favored politics are, it could still be approved in this area. This hasn't happened in a long time, but it could happen. They saw an opportunity to make something greater happen, and everybody's ecstatic.