Did You Know?
• California has 27 offshore platforms, including 21 in the Santa Barbara Channel. Each weighs from 1,500 to 70,000 tons.	• The 36 approved but undeveloped federal leases offshore of Santa Barbara County could yield 1 billion barrels of crude oil and 900 million cubic feet of natural gas.	• Offshore production of crude oil decreased 3.6 percent in 2000 to 33.1 million barrels, well below the peak production of 66.2 million barrels in 1995. Offshore natural gas production dropped 2.7 percent to 44.2 billion cubic feet, according to the California Resources Agency.

Wild swings in the price of gasoline, which ranged from more than $2 a gallon to below $1, grabbed consumers' attention last year. But beyond the pump, there was significant activity in the local oil and natural gas industry as well.

Fully 63 percent of California's offshore oil and 85 percent of its offshore natural gas is extracted from beneath the ocean along Santa Barbara and Ventura counties. While production is far lower than in peak years, about 30 million barrels of oil and 40 billion cubic feet of natural gas should be extracted this year.

Offshore sources account for almost all of Santa Barbara County's oil and gas production. Companies operating locally range from huge to small. They include ExxonMobil, Unocal, Nuevo Energy Co., Venoco Inc., Benton Oil, Arguello Partners Inc., Samedan, Greka Energy, Carone Petroleum Corp. and Pacific Operators Offshore Inc.

And of course, Santa Barbara's well-known anti-oil groups will continue this year to scrutinize any oil expansion plans while pushing the industry to remove more equipment.

California lawmakers — including local politicians — are also expected to continue calling on President Bush and Congress to ban any new oil drilling off California's coastline.

That said, all eyes will be watching for a landmark decision. By this fall, a settlement could be reached in a longstanding legal showdown over 36 approved but undeveloped leases off the Santa Barbara County shoreline.

Oil companies paid $1.3 billion for the 36 leases, where 1 billion barrels of oil and 900 million cubic feet of natural gas are deposited, and are battling environmentalists for judicial approval to drill.

California, Santa Barbara and San Luis Obispo counties and 10 environmental groups are suing the U.S. Interior Department over the development of the federal leases. The state Coastal Commission, counties and environmental groups are demanding the right to review the impacts of development to determine whether offshore drilling in federal waters is consistent with the state's coastal plan.

The case is now headed to the U.S. Ninth Circuit Court of Appeals. On Jan. 9, over the objections of Rep. Lois Capps, D-Santa Barbara, and other politicians, Secretary of the Interior Gale Norton appealed a June 2001 U.S. District Court ruling that had blocked new drilling.

In other battles, one local oil company that will have its hands full this year is Carpinteria-based Venoco Inc.

Venoco is proposing to restart two shoreline wells at Ellwood, route a new undersea pipe from Ellwood to the Rincon, and continue fighting the county's proposal to amortize the company's Ellwood operation.

The amortization process would set a deadline to close the facility after Venoco receives what the county determines to be an appropriate return on its investment. County supervisors received their staff's amortization report late last year but forwarded it to the new city of Goleta, whose boundaries include the plant.

While the fate of the amortization plan remains unclear, Venoco has proposed an alternative. The company has offered, in exchange for expanding drilling rights, to remove its Ellwood plant and move gas processing offshore as part of a $50 million to $70 million project.

In the North County, one of the largest offshore proposals in years may advance this year. Nuevo Energy Co. is pressing to drill into an oil-rich field in state-controlled waters, by crossing from its federal lease about 4.5 miles off Vandenberg Air Force Base.

Also expected this year is further review of a proposal to increase undersea oil drilling off the Carpinteria coast. Up to 25 new wells are proposed from Platform Hogan.

The owners, Carone Petroleum Corp. and Pacific Operators Offshore Inc., would send the oil through a subsea pipeline to a processing plant at La Conchita, in Ventura County. The project is being reviewed by the state Lands Commission.

Nearby, environmentalists will continue pressing Chevron to remove four large mounds of shells offshore of Carpinteria and Summerland — the underwater debris from 40 years of oil development. Last year, a state agency ordered Chevron to begin studying how to do the cleanup.

The shell mounds, about 200 feet across and 25 feet high, are made up of barnacles and mussels that were sloughed off the legs of four Chevron oil platforms that operated from the 1960s to 1992. A state report said the mounds contain heavy metals and hydrocarbons.

Environmentalists and some local politicians want a swift cleanup, noting this would set a precedent for other offshore platforms that someday will be abandoned.

"We want those out," said Linda Krop, chief attorney for the Environmental Defense Center in Santa Barbara. "An environmental impact report is beginning."

The trend in local offshore oil production has been downward. The recent peak was 65 million barrels in 1995, according to the federal Minerals Management Service, but output has since dropped to about 30 million barrels.

"The trend will continue down because of the useful life of proven reserves," said Steve Chase, director of the county's energy division.

Developed fields are yielding oil and gas, but the material extracted contains very high amounts of water that must be separated at great cost. Companies are eager to drill further, to tap more oil and gas.

"The future production really depends on industry re-drill projects and success with extended-reach drilling," Mr. Chase said.

Also this year, oil companies will continue appealing the county's tax assessments of their properties. In recent years, Mobil, Chevron and Exxon have won their appeals, resulting in millions of dollars of tax money being refunded.

More regulations are planned, too. County energy planners are assembling proposed ordinances aimed at requiring cleanup and accountability when operations change owners or shut down. A change of ownership ordinance is expected to go to the Board of Supervisors early this year. Following that would be an abandonment ordinance, then a financial responsibility ordinance.

"There's a lot of changes that have occurred in the last five years, from multinationals and corporations to smaller companies who are investing money in old fields," Mr. Chase said. "No matter what size the company, they are obligated to clean up what is left behind."

Finally, although local oil industry employment has steadily dropped from 1,183 employees in 1996 to about 800 last year, more jobs should be created this year by fast-growing Greka Energy Corp. Last summer, it paid $17.75 million in cash to buy all of Vintage Petroleum Inc.'s oil and gas properties and facilities in the Santa Maria Valley, including 110 producing wells. This acquisition will help boost production and employment at Greka's Santa Maria Asphalt Refining Co. west of Santa Maria.

Employment at the plant has doubled in the past year to approximately 90, said Randeep S. Grewal, Greka's chairman, chief executive officer and president. He said the company is continuing to hire, and he anticipates the work force could reach 150 by the end of this year.