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Historic Overview of the Energy Division
The First Decade (1982-1991)
Historic Setting
Several important historical events and circumstances prefaced
the division's formation in 1982:
- Spilling of an estimated 80,000-to-100,000 barrels (3.4-to-4.2
million gallons) of oil into the Santa Barbara Channel from Union
Oil's Platform A (1969). This major incident, coupled with others
worldwide, led to substantially more regulation of the oil industry.
- Enactment of major Federal environmental law, including
the National Environmental Policy Act (1969), the Clean Air Act
(1970), the Coastal Zone Management Act (1972), the Endangered
Species Act (1973), and the Clean Water Act (1977).
- Enactment of major State environmental law, including
the California Environmental Quality Act (1970) and the California
Coastal Act (1976).
- OPEC's 1973 oil embargo, in the wake of the Yom Kippur War
(i.e., Egypt's invasion of Israel) precipitated a substantial
increase in international oil prices and rationing of gasoline
in oil-importing countries. Although the embargo was short-lived,
it showed the limited responsiveness in demand for oil at the
time to short term changes in its price, giving OPEC considerable
leeway in setting prices. The high prices also slowed growth in
demand for oil considerably - a trend that remains active.
- Unprecedented rate of federal oil and gas leasing offshore
Santa Barbara County, which did not conclude until 1984.
- Announcements by Exxon, Chevron, and ARCO oil companies,
reporting large oil and gas discoveries offshore Santa Barbara
County and announcing plans to file applications to install offshore
platforms and construct major onshore facilities to process and
transport oil and gas produced from these newly discovered fields.
- Unresolved disputes among the County, the State, the
oil industry and U.S. Department of the Interior about the size
and shape of offshore oil and gas leasing and development, control
of air emissions, the preferred mode of transporting crude oil
to regional refineries (i.e., overland pipeline vs. marine tankers),
and reducing industrialization of the scenic rural coastline by
consolidating onshore industrial facilities at no more than two
sites.
- Public expectations that the County take the lead in
protecting community interests and valued natural resources in
the wake of an expected boom in offshore oil development.
Energy Division Functions
By mid-1984, the Energy Division had assembled a full complement
of professional staff and consultants needed to address an anticipated
boom in offshore oil development. It also began functioning as its
own budgetary unit within the County. The division's responsibilities
encompassed five important facets, which shaped its core function
for years to come:
1. Processing permit applications and preparation of environmental
documents for nine proposed projects related to offshore oil and
gas development;
2. Verifying compliance with permit conditions after approval
of projects;
3. Developing coastal policies as directed by the Board of Supervisors;
4. Advocating the County's position on offshore leasing and development
to federal and state lawmakers and regulators; and
5. Providing timely and essential information to County decision-makers,
citizenry, and industry.
Permit Processing
Processing of permit applications for offshore oil and gas projects
occurred in a highly controversial environment. New environmental
laws required detailed analysis of proposed projects to determine
their effects on the environment. The California Coastal Act and
California Environmental Quality Act require elimination or reduction
of all significant impacts to the marine and coastal environments
to the maximum extent feasible. Satisfaction of these requirements
faced close public scrutiny.
Changes in existing permit-processing procedures and, in some cases,
entirely new permitting tools were required to meet this challenge.
Among other things, the Energy Division entered into agreements
with state and federal agencies as a means of processing permit
applications more efficiently within the inter-jurisdictional environment
that characterized these major offshore oil and gas projects. Joint
Review Panels allowed federal, state, and local agencies to coordinate
their efforts and resolve interagency conflicts. Environmental review
required by the National Environmental Policy Act and California
Environmental Quality Act were combined into a joint process under
the direction of the Joint Review Panel.
Environmental documents broke new ground in analyzing environmental
impacts and identifying measures to mitigate such impacts. Newly
evolving methodologies and models were applied to quantify the probability
and consequences of accidents during the operation of oil and gas
projects (including impact of oil spills and releases of toxic and
flammable gases). Other sophisticated models were applied to determine
the amount and impact of air emissions during construction and operation
of such facilities. Yet other complex methods were employed to better
understand potential significant, adverse effects on the environment,
including geology, biology, water quality, archaeological and historical
resources, socioeconomics, commercial fishing, coastal recreation
and tourism, traffic, noise and visual aesthetics. Subsequent permit
approvals contained many conditions designed to mitigate the significant
environmental effects identified in these environmental analyses.
In the mid-1980s, the County approved five major oil and gas projects,
including Exxon's Santa Ynez Unit project, Chevron's Point Arguello
project, Union Oil's Point Pedernales project, Texaco's Gaviota
Marine Terminal, and Celeron's All American Pipeline. In some cases,
these approvals took several years to process due to long-standing
disputes over compliance with State and local measures designed
to protect public health and safety, and the environment. For instance:
- The County sought stronger protection of local air quality when
considering permits for Exxon's Santa Ynez Unit project. The resulting
controversy positioned Santa Barbara County and the State of California
in opposition to Exxon and the U.S. Department of the Interior.
Exxon resisted application of California's air quality standards
to its Platform Hondo, which would be located 3.2 miles offshore,
just outside of local/state air quality jurisdiction. With support
from the Department of the Interior, Exxon instead chose to locate
an offshore oil storage and treatment vessel near its platform
to process the produced oil 0.2 miles beyond the State's jurisdiction
(1981-1993). The oil was then shipped to refineries via marine
tankers. However, the County ultimately won agreement from Exxon
to comply with stronger restrictions on air emissions from Platform
Hondo and to remove the offshore oil storage and treatment vessel
in return for approval of an onshore oil processing facility with
3½(2) times the capacity. The agreement
allowed Exxon to pursue development of the Pescado and Sacate
fields within the offshore Santa Ynez Unit.
- The County delayed final approval of Chevron's Point Arguello
project after discovering potential increased risk to public safety
beyond the level of risk determined by the project's Environmental
Impact Report due to larger than expected concentrations of hydrogen
sulfide - a highly toxic substance - in the natural gas(3).
Chevron agreed to resolve the issue by reducing the operating
pressure of its gas pipeline, removing liquids from the raw gas
stream on its offshore Platform Hermosa, using better pipeline
steel, and installing technologically advanced leak detection
and other operational measures that reduced the hazards of an
accidental pipeline leak or rupture.
The County also denied ARCO's proposed Coal Oil Point Project,
following the project's denial by the California State Lands Commission,
due to the environmentally sensitive character of the proposed location
for three new platforms. ARCO's initial resistance to complying
with the County's South Coast Consolidation Policies also complicated
processing of the permit application.
Permit Compliance
Each project that the County approved carried many permit conditions
designed to eliminate or reduce significant impacts to public health
and safety and the environment during the project's construction
and operations. The number and content of these conditions were
proportionate to the size of these projects and their significant
adverse effects on the environment.
Several innovative processes and tools evolved either to implement
or to monitor and enforce these permit conditions, including:
- The County established a Permit Compliance Program
in 1986 to coordinate monitoring and enforcement of permit conditions
on major oil and gas projects among participating County departments.
The program comprises the Systems Safety and Reliability Review
Committee (SSRRC) and the Permit Compliance Committee (PCC). The
SSRRC takes the lead role on all safety-related engineering and
process issues that typically arise after the County's discretionary
approval of the project and during final design and construction.
The PCC brings various County agencies together to coordinate
their individual efforts on permit compliance. Many of the provisions
of subsequent California legislation in the early 1990s (Assembly
Bill 3180), to enhance enforcement of mitigation required as part
of project permits, were based on the County's success with its
Permit Compliance Program, including onsite monitoring of compliance
as discussed below.
- The Environmental Quality Assurance Program (EQAP)
provides onsite monitoring to enforce full compliance with environmentally
protective permit conditions, particularly during construction
of the major facilities. EQAP monitors are able to anticipate
environmental impacts, including some not identified during the
environmental review of a project, and recommend measures to avoid
or reduce such impacts. Moreover, monitoring during construction
gives added insight as to the effectiveness of measures designed
to mitigate significant adverse effects on the environment.
- The Safety, Inspection, Maintenance Quality Assurance
Program (SIMQAP) brings facility operators and regulators together
to discuss necessary and recommended procedures and practices
for ensuring safe operation of a facility. SIMQAPs address such
safety-related items as: description of facility, description
of hazardous materials, operations staffing and emergency response,
training, safety systems, leak detection, safety inspection and
maintenance, safety procedures, transportation of hazardous materials,
pipeline safety, safety audits, and record keeping. The SIMQAPs
provide County's Planning Commission and Board of Supervisors
with a vehicle to delegate the monitoring and enforcement of safety-related
details to its qualified technical staff.
- The "B-2 condition effectiveness provision"
in each discretionary permit instituted a process to evaluate
the effectiveness of permit conditions in mitigating adverse impacts
to the environment over a project's life and the extent to which
a permittee has complied with all requirements. The County may
impose additional reasonable conditions to mitigate impacts if
existing permit conditions are inadequate or recently proven technological
advances provide substantial additional mitigation not available
when the project was initially approved. "B-2" evaluations
differ in level of effort, depending upon the complexity of a
project and the extent to which permittees have complied with
conditions.
Oil and gas producers, pipeline operators, and terminal operators
accepted their discretionary permits and agreed to all conditions
therein on the premise that oil prices would reach as high as $50
per barrel in the mid-1990s. However, market forces changed considerably
beginning in late 1985. Internationally, demand for oil stagnated,
OPEC's control over world oil prices substantially diminished, and
other discoveries in non-OPEC regions, such as the North Sea, came
into production. Regionally, a prolonged overabundance of crude
oil available to the West-Coast market set in, making for more competition
between Alaska's North Slope crude oil, California's new offshore
discoveries, and California's conventional onshore sources of oil.
The ensuing years witnessed oil prices that were considerably lower
than projected, as low as $8 per barrel. As a result, the County's
permit compliance program was not as routine as was initially anticipated.
Disputes often arose over interpretation of and compliance with
permit conditions as operators attempted to reduce their operating
costs. Perhaps the most significant dispute revolved around the
preferred mode of transporting crude oil to refineries in the San
Francisco Bay area and the Los Angeles Basin as summarized in the
text box below.
Mitigation Programs
New, innovative programs also evolved to mitigate significant impacts
of offshore oil and gas development to the maximum extent feasible.
- The Coastal Resources Enhancement Fund (CREF), launched
in 1987, provides a source of revenue to enhance specific types
of coastal resources that are significantly and unavoidably impacted
by offshore oil and gas development and its onshore support facilities.
The types of coastal resources include ecology, visual aesthetics,
recreation and tourism. The fund is supported through mitigation
fees exacted from offshore oil and gas projects permitted in the
mid-1980s. The Board of Supervisors allocates these funds through
an annual grant program.
- The Fisheries Enhancement Fund (FEF), established in 1987,
provides a source of revenue to enhance commercial fisheries and
the local commercial fishing industry as a means of mitigating
significant and unavoidable conflicts of offshore oil and gas
development with commercial fishing. Among other things, offshore
oil and gas development precludes use of traditional fishing grounds.
The mitigation fees collected through this program are allocated
to fund projects such as a bulk ice machine at the Santa Barbara
Harbor, which helps commercial fishers to keep their catch fresh.
Previously, the closest ice machine was situated at Ventura Harbor.
- The Local Fishermen's Contingency Fund (LFCF), also
established in 1987, complements the Federal Fishermen's Contingency
Fund by assisting commercial fishers who lose or incur damage
to gear as a result of snagging on obstructions related to offshore
oil and gas development. The fund provides quick and effective
compensation to commercial fishers for lost or damaged gear, thereby
allowing them to resume business as soon as possible.
- The Socioeconomic Mitigation Program (SEMP) was developed to
address regional impacts of offshore oil and gas development on
available affordable housing and on public services such as public
schools, sewers and water resources. Several studies projected
a boom in the rate of population growth in the tri-county region
of Ventura, Santa Barbara, and San Luis Obispo, due to the projected
overlap in construction of several offshore oil and gas projects.
However, the projections were not sufficiently precise to define
the extent to which such impacts would ultimately occur. SEMP
provided a model to monitor the occurrence of such impacts and
mitigate them by assessing mitigation fees from the applicable
oil and gas projects.
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Overland Oil Pipeline vs. Marine Oil
Tanker - I
An ongoing public policy and permit compliance dispute that
continued for years focused on the preferred mode of transporting
crude oil from processing facilities in the County to California's
refining centers, such as the Los Angeles Basin. Substantial
evidence shows that shipment of crude oil via overland pipeline
is generally a superior alternative to shipment of crude oil
via marine tankers with regard to environmental protection.
Accordingly, County regulations required producers of offshore
oil to transport their oil via overland pipeline unless they
could effectively demonstrate a lack of sufficient pipeline
capacity.
Most pipelines serving the area at the time were proprietary
lines that served only one or two producers until the late
1980s when the Celeron Pipeline Company built a 30-inch diameter,
common-carrier oil pipeline. Originating in Santa Barbara
County, the All American Pipeline traversed through California's
largest onshore oil producing region, the San Joaquin Valley
and terminated in Texas, where its contents could be transferred
to other pipeline systems that move crude oil to the Gulf
coast for refining.
Another partnership of oil companies-the Southern California
Pipeline System - proposed and sought permits to install a
pipeline link from the All American Pipeline's terminal near
Bakersfield to refiners in the Los Angeles Basin. But this
partnership subsequently dropped the project in face of opposition
from communities along the proposed pipeline route and continued
low prices of crude oil. Commencing in 1987, Chevron sought
approval to ship its Point Arguello oil production to its
El Segundo refinery via marine tanker on three occasions and
to the Pacific Northwest and Hawaii on one occasion. When
Chevron finally commenced production of Point Arguello oil,
it shipped it via the All American Pipeline to Pentland, near
Bakersfield. From that point the oil was shipped via a Texaco
pipeline to the Bay Area or a Four Corners pipeline to the
Los Angeles Basin (small volumes were also shipped to Texas
via the All American Pipeline). Due to constrained pipeline
capacities, Chevron ultimately secured State and local approval
to ship restricted amounts of Point Arguello crude oil to
Los Angeles via marine tankers. Chevron ultimately shipped
crude oil via marine tankers between August 1993 and January
1994 (a total of 17 tanker trips to west-coast refineries).
The marine terminal was abandoned in 1998. Its tanks remain
for storage of Point Arguello crude oil prior to shipment
via the All American Pipeline.
Chevron's marine tanker Oregon loading crude oil at the
Gaviota Interim Marine Terminal in 1994
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- The Oak Mitigation Plan was developed to replace nearly
2,300 oak trees lost during construction of the All American Pipeline
(mainline) through Santa Barbara County, including 878 blue oaks,
1,303 mature coastal live oaks, and 82 mature valley oaks. The
Plan stipulated planting ratios to enhance re-establishment of
the lost oaks, including a one-time planting of 8,000 to 10,000
blue oak acorns, one-for-one replacement of coastal live oaks
with 1303 seedlings (nursery-grown from acorns), and planting
of 400 valley oak seedlings (nursery-grown from acorns).
Policy & Rulemaking
Several important coastal policies emerged as part of the division's
work in the 1980s. These policies contained measures to cope with
the high rate of offshore oil and gas leasing, combined with widely
accepted projections that local offshore oil would be produced at
a rate of 500,000 barrels a day by the mid-1990s, driven by increasingly
high oil prices.
- Project-filing criteria, adopted in 1985, served to
encourage prospective applicants for offshore oil/gas projects
with onshore components to submit a project that is designed to
achieve the lowest feasible emissions of nitrogen oxides and reactive
organic compounds for the entire project, including both offshore
and onshore components. Regulations administered at the time by
the Santa Barbara County Air Pollution Control District, were
not enforceable for project components situated in federal waters,
even though the air emissions from those components detrimentally
impacts the County's air quality and diminished its ability to
meet federal and state air quality standards. Among other things,
the project-filing criteria sought to distribute the responsibilty
of meeting these air quality standards so that new onshore economic
development was not inequitably burdened with mitigating air emissions
caused by offshore oil and gas development. The criteria helped
to plugged a regulatory gap in meeting federal and state air quality
regulations until they were replaced by comprehensive New Source
Review rules in 1990.
- The County's Oil Transportation Policies, adopted in
1985, expanded existing County preference for pipeline transportation
to require offshore producers to ship crude oil to refining centers
via overland pipeline when feasible, and restrict the number and
location of marine oil terminals. These policies are based on
risk analyses that show overland pipeline to be the environmentally
superior mode of transporting of crude oil, compared to marine
tankers and barges that substantially impact marine, visual, recreational
and air resources. Since 1985, pipeline has become the predominant
mode of transportation for crude oil produced offshore Santa Barbara
County.
- The County's Tank Farm Siting Policies, adopted in
1985, provide criteria for locating new oil storage facilities
for crude oil terminals in the coastal zone. These policies provide
criteria for minimizing impacts to coastal resources during construction
and operation of such terminals, consistent with policies of the
California Coastal Act.
- The South Coast Consolidation Policies, adopted in
1987, restrict the number of oil and gas processing facilities
and sites on the County's south coast, designating two sites for
use as consolidated oil and gas processing sites: Las Flores Canyon
and Gaviota. Expansion of processing capacity within the two consolidated
sites is considered only when shared use of existing capacity
is infeasible. These policies withstood legal challenge by the
oil industry in 1989. In, 1991, the County rezoned all non-consolidated
processing sites on its south coast to non-industrial uses. Five
non-consolidated processing facilities have been abandoned or
are undergoing abandonment. Only one remains operative - Venoco's
Ellwood processing facility.
- The Pipeline and Pipeline Corridor Consolidation Policies,
adopted in 1986, minimize the number of pipelines and pipeline
corridors required to support offshore development by requiring
shared use of existing and new pipelines and corridors. Similarly,
the Supply Base, Pier, and Staging Area Policies, adopted in 1985
when local crew-boat and supply-boat port proposals were active,
require shared use of existing and new supply bases, piers, and
staging areas necessary to support construction and operation
of offshore platforms. They also protect against industrializing
existing piers that primarily serve recreational uses.
- The Air Pollution Control District and the Energy Division
participated in a 2-year attempt to negotiate rulemaking for addressing
air emissions from oil and gas projects in federal waters offshore
Santa Barbara County. The rulemaking effort, which the U.S. Department
of the Interior sponsored, sought to formulate regulations for
offshore zone pre-cursor emissions, which would be acceptable
to governmental agencies, the oil industry, and environmental
groups. Although this attempt failed in achieving such regulations,
it laid the foundation for later adoption of the 1990 Clean Air
Act Amendments that combined offshore with onshore regulations
and shifted jurisdiction from the U.S. Department of the Interior
to the U.S. Environmental Protection Agency.
- Chapter 25A of the County Code, titled Evidence of
Financial Responsibility to Clean Up Oil Spills, was enacted in
1990 to require County certification of financial assurances that
guarantee payment of costs to clean up oil spilled into the marine
environment from marine tankers and terminals. This regulation
provided a precedent for subsequent legislation, including the
California Oil Spill Prevention and Response Act and the federal
Oil Pollution Act of 1990.
- Siting Gas Processing Facilities: Screening & Siting
Criteria, adopted in 1991, address aging gas processing capacity
in the northern portion of the County to provide criteria for
locating any new such processing facilities based on potential
oil and gas development offshore the County's western coast.
- The Marine Emergency Management Study, published in 1989, assessed
the types of marine accidents likely to occur offshore Santa Barbara
County, including oil spills from offshore platform and pipelines,
marine tanker and barges, and onshore tank farms and pipelines
with potential for marine oil spills. The study also assessed
local capability to respond to marine accidents off its coast,
and measures to prevent and minimize the adverse environmental
impacts of accidents. This study provided the basis to prepare
an extensive inventory of the shoreline for purposes of developing
a baseline of marine biota and habitat should an oil spill occur
and damage these natural resources.
- The County successfully resisted attempts by the U.S.
Department of the Interior to lease additional oil and gas tracts
offshore its coast, commenting on the 1987-1992 Five-Year Leasing
Program and opposing proposed Lease Sale 95 involving 87 tracts
offshore Santa Barbara and San Luis Obispo counties. The County
also resisted attempts for new oil and gas leasing of eight State
Tideland parcels between Point Conception and Point Arguello.
The county's position was (and is) that no additional leasing
should be considered until the full effects of developing existing
leases is known. The fate of 36 undeveloped federal leases, located
offshore Santa Barbara County and issued between 1968 and 1984,
is still unknown.
(2)The Federal government later shifted jurisdiction
to regulate air emissions from oil and gas projects on the Outer
Continental Shelf from the Department of the Interior to the Environmental
Protection Agency, which delegates enforcement to the California
Air Resources Board and its regional air quality districts.
(3)Initial well tests suggested lower concentrations of hydrogen
sulfide, which were analyzed in the Environmental Impact Report
for the project and served as the basis for preliminary project
approval by the County. However, subsequent, more comprehensive
well testing after the offshore platforms were installed revealed
substantially higher levels of hydrogen sulfide, which meant a potentially
unacceptable level of risk to residents along the onshore pipeline
corridor between Point Conception and Gaviota.
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