One of the major problems with this project is that it sets a statewide precedent with regards to OCS and sends a message to DC that the state considers financial contributions to its general fund a benefit that outweighs the risk of pollution and contamination of its coastline. It would undermine any effort to re-instate the moratorium on OCS in federal waters and therefore result in additional spill risk and damage. Any benefit from the funds would not be sufficient to offset the cost of dealing with the impacts to this State's resources and coastal economy if there were a major spill. Approval of this project without knowing the details of the confidential agreements (3), the enforceability, actual vs claimed benefits, is totally inappropriate.

The deal is unenforceable: In addition to the issues raised by SLC staff it is unenforceable because no one can bind a regulatory agency relative to its future decisions. Any permit condition can always be amended

The project would actually increase and extend drilling in Santa Barbara:
Because the end date is not enforceable, drilling into the State field would extend the life of Platform Irene and result in additional drilling and oil spill risk for the area.

Details of the project: The project would result in allowing the removal and throughput of oil from Platform Irene to on shore facilities increasing that from the current less than 7,000 bpd (7000bpd is from 2005) to 30,000bpd. Irene is expected to cease operations in 2022 without this project. With the project the expected life of Platform Irene would be extended at least 14 years. If the agreement is not enforceable that would mean that approval of the project would result in extending the live of Irene and increasing the throughput and the risk of an oil spill. Since the risk is greatest the greater the throughput, the greatest chance of a spill would occur during the early years of this project, with or without a termination date

EDC enforceability: Since no lawsuit was filed the EDC agreement is not a settlement agreement that would allow EDC to go to the courts to seek to have the court uphold the agreement. This agreement is some sort of agreement by EDC not to take legal action and to receive payment of some sort for its expenses and its advocacy for the agreement. Apparently the payments are conditioned upon the approval of the project. Any lawsuit by EDC would have to be taken in light of whatever the provisions of the agreement are. Since the agreement is confidential we do not know what that basis would be.

PXP does not have the ability to remove existing platforms, only to terminate its own operation and even that is unclear since MMS stated that PXP has an agreement with them to operate Irene and MMS would not approve their removal until all oil had been removed or it was economically infeasible to do so. Although PXP says the other companies have agreed to allow them to shut down their operations, we have not seen anything in writing to that effect and it is hard to understand why other companies operating on 3 of the 4 platforms involved would be interested in terminating their operations prematurely

On-shore facilities: their removal is questionable because PXP does not own the Gaviota facility and the partnership agreements are confidential. PXP contends they can remove them but if there are partnership agreements and contract obligations that is unlikely. They said in the hearing that their partners have agreed to this, but again, we have seen nothing in writing to confirm this or copies of the partnership agreements

New off shore platforms or on shore facilities: The argument was made that although the platforms would not be removed this did not matter since they could not be used if there were no on shore facilities to receive and process the oil. The problem with this, even if the on shore facilities could be removed, is that there is nothing to stop the development of new facilities or even new platforms. The 5 year lease sale just proposed by MMS, including the Pt Arena field, off Mendocino, Santa Maria, Santa Barbara/Ventura and Oceanside/Capistrano fields clearly anticipates new facilities. Mendocino and Oceanside do not have any facilities at present, either on or off shore, so those fields would require new infrastructure. If this project goes forward some of those sales will be in California and there will be platforms built to accommodate that development. In addition there are 35 existing leases that have not been developed, the ones the State took legal action over. Those leases can now be developed because there is no moratorium so the production from those leases would be sufficient to justify new on shore and off shore facilities

Land Deal: Exhibit I to the SLC by PXP specifically states that “the ultimate conveyance of these lands is subject to a number of contingencies” which include, according to the applicant, that some of the land may be rejected due to such things as “insurmountable title issues”. They specifically state that there is no nexus between the lease and the donation of these lands so how can the land donation be a “benefit to the state”? Here again, because the agreement with TPL is confidential there is no way to understand what that deal includes and what the benefits would be. We do not know the details on who would hold the title, how and when the lands might be conveyed, what restrictions are placed on the use or future sale of the land, how it is to be managed and by whom. The statement by PXP states that there is “no nexus between the land donation and the project”. Why then is it being touted as a project benefit? The applicant refused to have the state hold the title? Why? These details are necessary to evaluate the land donation

Proposal by PXP for drilling from Platform Irene in federal waters into Tranquillon Ridge oil field in State waters.