Oil demand, climate change clash in California pipeline plan

Nov 30, 2021, 10:05 PM | Updated: Dec 1, 2021, 3:20 pm
FILE - Shoreline Cleanup Assessment Technique team members, left, evaluate oil coverage as a hand c...

FILE - Shoreline Cleanup Assessment Technique team members, left, evaluate oil coverage as a hand crew worker scraps areas affected by an oil spill at Refugio State Beach, north of Goleta, Calif., on Wednesday, June 10, 2015. A proposal to replace a pipeline near Santa Barbara that was shut down in 2015 after causing California's worst coastal oil spill in 25 years is inching through a government review, even as the state moves toward banning gas-powered vehicles and oil drilling. (AP Photo/Damian Dovarganes, File)

(AP Photo/Damian Dovarganes, File)

LOS ANGELES (AP) — A proposal to replace an oil pipeline that was shut down in 2015 after causing California’s worst coastal spill in 25 years is inching though a government review, even as the state moves toward banning gas-powered vehicles and oil drilling.

Consideration of the $300 million proposal by Houston-based Plains All American Pipeline is expected to enter a critical phase next year at a time when new scrutiny is being placed on the state’s oil industry after an offshore pipeline break in October near Huntington Beach. That rupture released at least 25,000 gallons (94,635 liters) of crude that closed beaches and took a deadly toll on sea life along one of the world’s fabled surf breaks.

Farther north, the 123-mile (198 kilometer) Plains pipeline travels along the coastline near Santa Barbara before turning inland. It’s buried and nearly invisible for much of its length to Kern County, in the state’s midsection. For decades it was a vital link between oil platforms off the coast and processing plants on shore, with shipments averaging 1.8 million gallons (6.9 million liters) a day.

California Democratic U.S. Sen. Alex Padilla opposes the proposal, bluntly warning of future risks.

“We’ve seen time and time again how damaging offshore oil spills are to our coastal ecosystems as well as to our outdoor recreation and tourism economies,” Padilla said in a statement. “We should not risk repeating history by rebuilding or restarting the Plains pipeline.”

Plains spokesman Brad Leone said the company safely transported 90 billion gallons (341 billion liters) last year throughout North America. “Plains is committed to designing, constructing and maintaining these lines in a safe, reliable manner,” he said.

The project faces numerous hurdles, including a federal class-action lawsuit from property owners who say Plains lacks the right to use existing easements for a new pipeline. Lead trial counsel Barry Cappello said the project would rip up vineyards and coastal ranches and “our clients never signed up for that.”

Shon Hiatt, an associate professor at the University of Southern California’s Marshall School of Business, said the company’s motivation to revive the pipeline is obvious.

“They make money on that,” Hiatt said. “The price of oil is not going to be going down.”

He said the cost of a barrel of oil could top $100 next year. It’s about $77 now.

Documents filed by Plains with Santa Barbara County say the replaced pipeline, though smaller than its predecessor, could move up to nearly 1.7 million gallons (6.3 million liters) a day. At current prices, that much oil would be valued at more than $3 million daily, or potentially over $1 billion a year, though pipelines often do not run at full capacity.

Oil has been drilled in California since the 19th century, but the project is being debated as the state reckons with its fraught history with fossil fuels. Climate change is expanding the threat of wildfires, drought and tidal surges, and the state has positioned itself as a global leader in renewable energy and pioneering policies intended to slow the planet’s warming.

California — by itself the world’s fifth-largest economy — plans to ban the sale of new gas-powered cars and trucks by 2035 and end oil production a decade later. The recent spill in Huntington Beach renewed calls to halt all drilling off the coast.

The Plains pipeline inevitably will be a symbol of that conflict: the desire for oil to fuel cars, heat buildings and make plastics versus growing political pressure to reduce greenhouse gas emissions. The Biden administration — which recently auctioned vast oil and gas reserves in the Gulf of Mexico — faces the same dilemma.

California’s oil and gas industry directly and indirectly supports over 365,000 jobs and has an annual output of over $150 billion, one study of 2017 data estimated. Nationally, the industry supported nearly 17 million jobs in 2020, according to a report from the Texas Independent Producers and Royalty Owners Association, a trade group. California ranked second in direct industry employment, with about 75,000 jobs, though it was far behind Texas, the nation’s leading producer with nearly 350,000 jobs.

Democratic Gov. Gavin Newsom has spoken about the economic challenges of retiring the industry even as he promotes a greener future for the state. His office declined to comment on the Plains project, noting it was under review by government agencies.

Environmentalists have pointed to the risk of spills — as well as earthquake threats — in arguing against a new line.

California is known as a birthplace of the modern environmental movement, and a watershed event was a massive 1969 spill off the coast of Santa Barbara. Despite that history and the move toward green energies, the Newsom administration has resisted taking a strong stance against new fossil-fuel projects, said Julie Teel Simmonds, a senior attorney with the Center for Biological Diversity, an environmental group that opposes the Plains pipeline.

The state’s decision on the project “is an opportunity for California to walk the talk” on weaning itself from oil, she said.

The Plains pipeline was last in service on May 19, 2015, when a corroded section above ground and running west of Santa Barbara ruptured, sending 140,000 gallons (529,957 liters) of oil onto a state beach and into the ocean.

Federal inspectors found Plains operators working from a Texas control room more than 1,000 miles (1,609 kilometers) away had turned off an alarm that would have signaled a leak and, unaware a spill occurred, restarted the hemorrhaging line after it shut down.

Plains apologized for the spill and paid for the cleanup. Plains later was fined over $3 million. The cleanup cost $100 million, and a 2017 company report estimated costs from the spill at $335 million, not including lost revenues.

A key step in the review of the proposed pipeline — a complex environmental study conducted by Santa Barbara County — is expected by spring. Roughly a dozen federal, state and local agencies have a hand in considering the project, first proposed in 2017.

It largely would snake along the existing route. The new line — technically two connected pipelines, like its predecessor — crosses environmentally sensitive areas, including slices of the Carrizo Plains National Monument and Los Padres National Forest.

Three ExxonMobil platforms that relied on the line have been closed since the spill. ExxonMobil proposed establishing interim trucking routes to transport oil, which would allow the dormant offshore platforms to resume production. In a divided vote in early November, the Santa Barbara County Planning Commission urged county supervisors to deny the company’s proposal.

“Trucking remains the only option to transport crude to markets until a pipeline is available,” ExxonMobil spokeswoman Julie L. King said in a statement.

Environmental groups warn the decades-old platforms pose a separate risk from aging equipment; ExxonMobil says the platforms, while shut down, have been maintained in a “safe, preserved state.”

Also at issue: The existing line and its replacement would run through numerous areas with earthquake risks. According to a consultant’s study conducted for Plains, the pipeline would cross 10 potentially active faults, as well as a dozen fingers of the active San Andreas Fault Zone.

“Portions of the pipeline could be subject to intense seismic shaking, and some areas could experience ground rupture in the event of a significant earthquake,” the study found, recommending safety steps that include covering the line with protective foam.

Bob Nelson, who chairs the Santa Barbara County Board of Supervisors, said he would wait for detailed environmental reports next year before making a decision but was encouraged by what he has seen so far. He noted Plains could have sought to repair the existing pipeline but instead wants a new line built to modern safety standards.

“What it means is jobs,” Nelson said. With a continuing demand for oil, even as the state transitions away from fossil fuels, “I think that we should find a way to safely deliver it in an environmentally friendly … fashion.”

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Oil demand, climate change clash in California pipeline plan