California's legislature might vote soon to authorize the first new oil activity off Santa Barbara in 40 years as a way to help resolve the state's budget crisis. The proposal reportedly was part of an agreement Gov. Arnold Schwarzenegger reached on July 20 with majority and minority leaders of the state's senate and assembly to eliminate California's $26.3 billion budget deficit. It includes $15.5 billion in cuts, defers other costs, and takes funds from cities and counties, several news reports said.

The proposal also could clear the way for Plains Exploration & Production Co. to directionally drill into state waters from an existing platform in federal waters, generating $1.8 billion of revenue for the state by 2022. "We await final legislative action on the bill, and remain committed to work with the state leaders to ensure the legislation allows the benefits of the historic agreement [Plains E&P] reached with the environmental community to come to fruition," a company spokesman said on July 22.

The Houston independent producer won support earlier this year from Get Oil Out and other local environmental groups for the Tranquillon Ridge project, but the state land commission denied the application in January. The legislature essentially would be voting on whether to overturn that decision.

A spokeswoman for Schwarzenegger would not confirm whether the proposal was part of the budget agreement with the legislature's leaders. "The governor and legislative leaders have come to an agreement to solve California's budget deficit. Details will be made available as the legislature drafts language to be voted on later this week," she told OGJ on July 2 1 .

Schwarzenegger has said, however, that while he continues to oppose new oil and gas activity off California's coast in general, he favors the Tranquillon Ridge project because it would be from an existing structure, Platform Irene, and extend into state waters without disturbing them.

'Revenue and jobs'

Joe Sparano, president of the Western States Petroleum Association in Sacramento, said, "It would be new revenue. It would not require new taxes. It would generate state and local revenue and jobs, all of which would help in a state suffering a severe economic downturn and a very severe deficit."

In Washington, US Rep. Doc Hastings (R-Wash.), the House Natural Resources Committee's ranking minority, called the apparent agreement a responsible bipartisan response to California's 1 1.6% unemployment rate and $26.2 billion budget shortfall.