U.S. Calls California’s Oil Vital, Vows to Pursue It

Despite plummeting oil prices, Interior Department officials said Thursday that California’s offshore oil potential is of “paramount importance” to the nation’s future energy needs and therefore the government will pursue plans to open the coast to development.

J. Steven Griles, the Interior Department’s assistant secretary for land and minerals management, said at a news briefing that the oil industry has assured the department of continued interest in exploring off California’s coast.

“Its significance is that (California) is one of the few basins left that we have not in fact explored to determine what the resources are,” he said.

Griles, citing estimates that the nation will depend on imports for 55% of its energy needs in the year 2000, said exploration off California must be pursued now because it generally takes up to 15 years after an offshore lease is signed before oil can be produced. Industry has failed to make new discoveries in Alaska, and Interior officials will cancel lease sales in some areas there, Griles said.

The oil industry has fought furiously in past years to open California’s coast to more development. California congressmen, backed by environmentalists and coastal communities, won annual moratoriums for four years to prevent development.

The most recent moratorium expired in December and an 18-member congressional panel was established to negotiate with Interior officials over the scope of future exploration. Griles said the department hopes to reach a compromise with the panel by late May, although there are still no specific offers on the table to negotiate.

The next offshore sale is scheduled for early 1988 on tracts off the coasts of Mendocino and Humboldt counties. A second sale that year will be held on unspecified tracts in Southern California. An oil industry official here said companies will be politically obligated to bid on California leases, no matter what the oil market conditions are.

“My betting is we would indeed bid on California, but only on the better tracts,” said the official, who asked not to be identified. “. . . Even if the oil industry cuts back sharply on exploration, California is a must. If we don’t come up with any bids after fighting about this for so long, we’re going to have a hard time convincing anybody in Congress to carry our water for us.”

But the official acknowledged that the price companies would be willing to pay the federal government for offshore leases may indeed be small, a factor that opponents hope will bolster their case against development.

“Even the pro-development members of Congress are asking if it makes sense to hold a fire sale on the outer continental shelf when the oil prices are so low,” said Peter Teague, an aide to U.S. Rep. Leon E. Panetta (D-Monterey). “The industry would get them (leases) for below-market value and then hang unto them until the price rose.”

Interior Department officials are to host public hearings on Tuesday in Los Angeles and San Francisco on offshore development in California. The Los Angeles hearing will be held at 8:30 a.m. at the Convention Center.