OC Oil Spill Opens Window On Systemic Failures

Beta Operating is in line to get another $11 million to drill four new wells off the coast

SAN PEDRO BAY — Amplify Energy’s 3-1/2 hour delay in shutting down its pipeline after a low pressure alarm was just the first indication of systemic failures contributing to California’s most recent offshore oil spill. Signs of the spill were reported to the Coast Guard even earlier, as numerous residents either smelled the odor, or saw an oil slick as early as 6:30 p.m. on Oct. 1.

But Amplify’s operational failure was enabled by governmental failure at every level, from local to national, as quickly became evident.

On Oct. 6, Capital and Main reported that the City of Long Beach had signed a 20-year lease with Amplify on a pumping station in June 2020 “that could extend the pipeline’s life through 2040,” when it would be more than 60 years old — about double the initial expected lifetime, according to Kristen Monsell, oceans legal director at the Center for Biological Diversity.

“A lot of platforms and pipelines when they were constructed in the ’60s, ’70s and ’80s, the oil companies said their expected lifespans is 30 years, and were already well past that for most of these new platforms and pipelines,” Monsell told Random Lengths News. “It’s high time to shut it all down, and start decommissioning it all.”

In fact, the 1985 environmental impact report for the Plains All American Pipeline that ruptured in 2015 “determined that the risk of a spill more than doubles as the pipeline aged from 20 to 40 years,” Monsel wrote on Oct. 8, when CBD filed a notice of intent to sue the Joe Biden administration if it fails to “reexamine the offshore oil industry’s threat to California’s endangered species and their habitats,” in light of the oil spill as well as well new information not previously considered, as called for in the Endangered Species Act.

This was but one of a series of actions CBD has been involved in trying to hold the Biden administration to his campaign promises of vigorous action to combat catastrophic climate change. The Biden administration’s inconsistent actions reflect a deeper pattern of systemic failures, primarily with respect to flawed environmental analyses under the Donald Trump administration, and the Biden administration’s failure to re-examine them.

Two leading examples are the Willow Master Development Plan in the Western Arctic, which would have resulted in up to 250 wells producing an estimated 590 million barrels of oil over 30 years, and Lease Sale 257, the largest off-shore lease sale in history, covering 80 million acres of the Gulf of Mexico, projected to produce up to 1.1 billion barrels of oil and 4 trillion cubic feet of natural gas over the next 50 years. Both were approved under Trump, using a modeling approach that ludicrously concluded that not drilling for massive quantities of oil would result in more greenhouse gases. After a court rejected this approach in the Arctic case in mid-August, the Biden administration announced it would reexamine the Trump plan. But it has since scheduled Lease Sale 257 for Nov. 17, despite being sued to stop by CBD and others.

California’s off-shore oil fields are far smaller, but more high-profile, making long-term costs more visible and questionable decisions more obvious, even as the underlying arguments are virtually identical. Flawed climate costs modeling and inadequate endangered species analyses are common threads.

“The Endangered Species Act requires federal agencies to evaluate the impact of their actions on threatened and endangered species and their habitats,” Monsel explained. “But when new information comes to light that reveals effects … they haven’t previously considered, that triggers a duty to re-initiate consultation to reevaluate what those impacts are.”

The sheer size of the oil spill was an example of such new information — initially reported “more than 17 times larger than what the agencies considered in their existing ESA analyses,” the letter noted. It was later revised downward, but “It’s still significantly larger than what was analyzed in the existing opinion,” Monsel said, which is unfortunately not unusual.

“It’s pretty common across the board for the federal government to blow off the possibility of an oil spill, relying on things like inspections and existing regulations to find that an oil spill is unlikely, and in the event that it happens it will be small and not have any significant impact,” she said, adding, “We see time and time again that that’s simply not the case, that these oil spills are part of the inevitable result of this dirty dangerous industry, and I think that a lot of those risks are heightened off California because of how old a lot of the infrastructure is.”

The letter was sent the day after CBD released an analysis finding that “since 1986, nearly 1,400 oil and gas pipeline leaks, spills and other incidents in the Golden State have caused at least $1.2 billion in damages, as well as 230 injuries and 53 deaths.”

Off-shore incidents are a relatively small percentage, but their visibility and impact looms large, both for endangered species and their habitats, and for neighboring communities, as highlighted in a congressional field hearing held in Irvine on Oct. 18, chaired by Irvine’s own representative Katie Porter, and co-chaired by Long Beach Rep.  Alan Lowenthal.

Porter drew attention to the substantial subsidies Amplify and its subsidiary, Beta Operating, had received, noting that Amplify “received $5.5 million in pandemic relief last year, only one year after they purchased massive stock buybacks to line the pockets of their shareholders,” in addition to two subsidies for Beta Operating. First, Porter noted, “They got nearly $20 million from the federal government specifically because the oil wells are at the end of their lives and are not producing much oil, which makes them less profitable so taxpayers are being asked to pay to encourage oil production in the Pacific Ocean by giving oil companies millions of dollars to do it.” Second, “Beta Operating is in line to get another $11 million to drill four new wells off the coast because that $11 million dollars is needed in their words to make production economic. So taxpayers are being asked to pay Beta to drill new wells.”

These subsidies hearken back to the 1970s oil crisis, when they might have seemed to make sense to panicked politicians, but the fossil fuel lobby has kept them in place long after public support has evaporated. Provisions to end them are part of the Build Back Better package, specifically crafted by Porter.

But, “The witnesses here with us today will reveal a different kind of subsidy for oil and gas companies,” Porter said, “An involuntary subsidy that occurs when the community bears the cost of oil drilling’s pollution. When a locally-owned business like [West Caught Fish Company owner] Mr. [Scott] Breneman’s that has been in the family for four generations loses tens of thousands of dollars because of the leak, that’s his subsidy to oil and gas. When a hotel loses its bookings overnight that’s its subsidy for oil and gas. When the fragile decades-long effort to recover a species under the endangered species act is finally showing progress but an oil spill puts it all at risk, that’s a cost of oil and gas too.”

Globally, fossil fuel subsidies were $5.9 trillion in 2020

These kinds of subsidy — what economists call the “externalized costs” of fossil fuels — are far larger than the direct subsidies from government, whether they’re deadly serious, such as premature deaths from pollution, or based on sheer misperception, as is the case with Breneman, who catches his fish 60 to 100 miles beyond the oil spill, in pristine, 3,000-foot deep water.

“In the ’90s my dad went through the oil spill that was off Seal Beach,” Breneman testified, “In our fish market the same exact response from the public — scared, worried the product’s contaminated all the way up — the huge ripple effect — all the way up to the wholesalers I deal with outside of Orange County. They had concerns from their customers, their restaurants,” he said. “In the ’90s, I watched my dad struggle for months to get it back to back to where it was. And I’m seeing the same exact thing happen here.”

According to a recent working paper from the International Monetary Fund, “Globally, fossil fuel subsidies were $5.9 trillion in 2020 or about 6.8% of GDP and are expected to rise to 7.4% of GDP in 2025.” However, “Just 8% of the 2020 subsidy reflects undercharging for supply costs (explicit subsidies) and 92 percent for undercharging for environmental costs and foregone consumption taxes (implicit subsidies).” Eliminating government subsidies in the Build Back Better plan would go a long way toward cutting that 8% down to zero. But to protect Scott Breneman and the rest of us in that 92%, nothing short of ending the drilling will do.

“This is not a novel threat to us. Time and again Californians have suffered at the hands of offshore dwelling drilling,” Lowenthal said. “Preventing new offshore drilling is a crucial first step. … But we also must work together to wind down the current productions and demand that companies decommission their platforms, their wells, and their pipelines and clean up the mess they have left behind.”

Prevailing currents keep the immediate dangers of off-shore oil away from San Pedro and Wilmington. But the underlying logic threatens us in another way: The same oil crisis rush that led to the questionable decisions about Amplify’s pipeline was also responsible for the Rancho LPG facility, now owned by Plains All American, the same company responsible for the 2015 Santa Barbara oil spill. As Random Lengths has previously documented, that facility has a three-mile blast radius, putting tens of thousands of residents’ lives at risk.

“Like the disregarded pipeline safety concerns pertaining to the ocean pipelines, exemptions to compliance were also awarded to this LPG site,” activist Janet Schaaf-Gunter noted in comments to the Harbor Commission on Oct. 21. “The regulatory exemptions included were from the LA Fire Dept., the American Petroleum Institute, the Dept. of LA Building and Safety, etc. Meaning that the facility never even met the lower regulatory threshold of that time!”

So far, we’ve been lucky. But how much longer can our luck last?

In related news: California Secures Assistance for Businesses Impacted by Southern California Oil Spill

Gov. Gavin Newsom Oct. 27, announced that the U.S. Small Business Administration or SBA has approved federal disaster assistance for businesses in the region impacted by the recent oil spill. The administrator of the Small Business Administration declared Orange County a disaster area, which makes available disaster assistance in the form of low interest loans. The declaration includes Orange County and the adjacent counties of Los Angeles, Riverside, San Bernardino and San Diego.

Gov. Newsom earlier this month proclaimed a state of emergency in Orange County to support the work underway to protect public health and the environment.

Details: https://disasterloanassistance.sba.gov/; 800-659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance.