UPDATE - California nixes project; California's State Assembly fails to approve legistlation authorizing a path forward for PXP's T-Ridge Project, which would have been the first offshore oil lease approved since 1969.
California's senate voted on Friday to approve the first new offshore oil drilling lease since 1969. However, state officials underscored that California's policy on offshore drilling would not be changed and that the proposal would have been a one-time exemption to the state's otherwise long-term moratorium on new leases on the Outer Continental Shelf.
Narrowly passing in the state senate by a 21-18 vote, the bill was one of 30 that the state government took into consideration as a means to boost revenues and help close the state's $26 billion deficit.
The bill was unable to pass in the California State Assembly.
Championed by Gov. Arnold Schwarzenegger, the bill would have allowed Plains Exploration & Production, a Houston-based independent oil and natural gas producer, to contribute revenues to the state garnered by its offshore Tranquillon Ridge Project, which accesses oil in state waters using slant drilling off the coast of Santa Barbara. The "T-Ridge Project" utilizes an existing platform and facilities already in operation.
As part of an agreement with environmentalists who support the measure, the producer agreed to shut down four oil platforms and two onshore processing facilities in Santa Barbara by 2024 if the bill was carried out. Additionally, PXP would have provided $1.5 million to the county for low-carbon bus technology, as well as a donation of 4,000 acres of land for public use.
The Tranquillon Ridge project is expected to garner an estimated $1.8 billion in royalties over the span of 15 years.
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