No oil, no LNG


Coastal Commission and federal judge rule against extending oil leases off coast near Malibu, and a lawsuit is filed to overturn a California Public Utilities Commission ruling that would open up the state’s energy market to imported liquefied natural gas.

By Hans Laetz / Special to The Malibu Times

Offshore oil permits in California waters were attacked on two fronts last week, with environmentalists winning a major battle over possible renewal of oil platform leases located up the coast from Malibu.

Also this week, a statewide coalition sued to overturn a little noticed California Public Utilities Commission ruling that opened up the state’s energy markets to imported foreign liquefied natural gas. The CPUC decision paved the way for an Australian energy company to choose the Malibu coast for its proposed liquefied natural gas terminal.

On Friday, a federal judge in Oakland ruled that an environmental impact report conducted by the Mineral Management Service to allow oil companies to prospect for new offshore oil in the Santa Barbara Channel, around Point Conception and as far north as Pismo Beach, was incomplete.

District Court Judge Claudia Wilken took the unusual step of issuing an oral order that took effect immediately, blocking possible Mineral Management Service plans to renew 36 oil drilling leases as early as this week.

The court ruling came a day after the California Coastal Commission voted unanimously to demand the Minerals Management Service yield to state environmental review for the same oil leases. In a 2002 ruling by the U.S. 9th Circuit Court of Appeals, the commission won the right to review extension of the leases.

“It’s really good news,” said attorney Linda Krop of the Santa Barbara-based Environmental Defense Center, which brought the suit of behalf of 10 environmental groups. “Now the federal government has to go back and do a full review of what this oil development would entail.”

Environmentalists say new oil drilling would harm animals such as sea otters, whales and other endangered species. Many of the approximately 30 existing offshore oil platforms in the same area have nearly exhausted their oil reserves, and are slated for removal.

The untapped oil leases were granted to three energy firms between 1960 and 1982, and have been routinely renewed by the Interior Department even though more recent environmental laws require new assessments. Those laws were enacted after one oil platform near Santa Barbara blew out in 1969, coating beaches as far south as Tijuana with oil.

One of the three oil companies has also sued the federal government, asking for either a green light to drill or a federal buyout of their leases. A similar federal buyout occurred in 2001 in Florida, but environmentalists have been unable to persuade the Bush administration to similarly retire the offshore California leases.

“These oil leases, if developed, would have significant coastal impacts for 25 years, but the benefits would be less than one month’s supply of oil for the nation,” Krop said.

Her lawsuit was argued on behalf of a group of several environmental groups including Get Oil Out, which was founded amidst the ecological disaster of the 1969 oil spill.

Spokespersons for all three oil companies told The Malibu Times they could not comment on the legal case.

Suit against CPUC over LNG

On the LNG front, a statewide consumer group said it would sue the California Public Utilities Commission to overturn its little publicized decision to allow the parent of the Southern California Gas Company to replace relatively inexpensive domestic natural gas with imported LNG, which is more expensive.

Ratepayers for Affordable Clean Energy, or RACE, said it would file suit Wednesday against the CPUC for refusing to call for public hearings on its decision, which the activists say will dramatically increase costs for natural gas and electricity in the state.

BHP Billiton, which is proposing a floating LNG terminal for a site 13.8 miles off the Malibu coast, hopes to sell gas from Australia to California utilities. The CPUC last year allowed the Southern California Gas company and its sister companies to cancel long-term contracts for domestic gas, opening the market to imports of foreign LNG.

RACE notes that imported natural gas is much more expensive, and variably priced, than domestic supplies, even at this current time of high prices.

Sempra Energy, the nation’s largest LNG trading group, also owns Southern California Gas, San Diego Gas and Electric, and several electric generating stations that burn natural gas. It is building a large LNG import terminal in Ensenada, Baja California and has entered into LNG production in several Asian nations.

A Sempra spokesman said the company had not heard of the suit and was preparing a response.