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Chevron seeks 30-year off-shore lease extension

Environmentalists are pushing the state for no more than a 10-year lease on the Santa Monica Bay oil terminal.

December 10, 2010|By Tony Barboza, Los Angeles Times

For nearly a century, oil tankers from around the globe have docked just off the shore of El Segundo to pump crude into one of the largest refineries on the West Coast.

Now, the Chevron Corp. is asking the state for an additional 30 years.

The California State Lands Commission is expected to vote Friday on an agreement that would charge the oil company a base rent of $1.3 million a year to lease the state-controlled tidelands for its El Segundo Offshore Marine Oil Terminal through 2040.

But in a year when the Deepwater Horizon disaster dominated headlines for months and raised awareness about oil spills, environmental groups are asking state officials to cut the lease back to no more than 10 years.

Environmental groups also want some of the tanker traffic to be rerouted from off El Segundo, where oil is pumped through underwater pipelines to a refinery on shore, to the Port of Los Angeles to lower the risk of a significant spill in Santa Monica Bay. An average of 28 vessels a month dock at the terminal, which can accommodate two ships at a time.

"If a spill were to happen on a large scale, it would be catastrophic to our sensitive marine resources and thriving coastal economy," said Sarah Sikich, coastal resources director for the Santa Monica environmental group Heal the Bay.

An environmental review conducted for the lease proposal found "a reasonable possibility that operation of the Marine Terminal offshore loading facilities during the 30-year lease period will cause an oil spill."

Chevron officials say they have exhaustive safeguards against oil spills and defend the long-term lease as key to the business model of the refinery, a major supplier of fuel to the region that processes about 275,000 barrels of crude a day into gasoline, diesel and jet fuel.

"Clearly, Santa Monica Bay is an important asset for the region, and we understand that in the same way that the environmental community does," said Chevron public affairs manager Rod Spackman. "But that shouldn't mean that we should not be able to continue to operate there under the most rigorous standards.... That would be unfair, given our track record."

Spills, most involving just a few gallons of oil, have occurred periodically over the last few decades at the El Segundo terminal. In 1980, an oil tanker's hull fractured, spilling 105,000 gallons near the offshore facility.

Oil industry advances since then, including mandatory double-hulled ships and a corps of spill response workers, boats and containment booms at the ready at all times, makes it unlikely that history will repeat itself, Spackman said.

The lease proposal also includes dozens of new measures that would reduce the frequency and size of spills, including enhanced oil spill plans for sensitive habitat, training for dealing with marine mammals and more robust leak detection, testing and repair of the underwater pipelines, he said.

Spackman said the 30-year lease is consistent with other refineries along the coast. Last year the State Lands Commission granted Chevron's oil refinery in Richmond a 30-year lease.

Environmentalists, however, say a shorter, 10-year lease would make it easier in the future to consider directing tankers to a new crude oil terminal planned for the Port of Los Angeles or replacing it with renewable energy sources that would pose less of a risk to marine habitat, wetlands and beaches.

"The hope is that we can get away from open ocean terminals, which are more susceptible to spills and harder to clean up than facilities confined to the port," said Brian Meux, marine programs manager for the nonprofit conservation group Santa Monica Baykeeper.

Moving some of the operations to the Port of Los Angeles, Spackman countered, would be unthinkable because it would require building from scratch a new pipeline through 11 cities in Los Angeles County — an expensive, complicated endeavor that would have a slim chance of gaining approval. It would also cut back an alternate oil supply line that could be vital if a natural disaster or terrorist attack were to strike the port, he said.

The three-member State Lands Commission, made up of Lt. Gov. Abel Maldonado, State Controller John Chiang and state Director of Finance Ana J. Matosantos, has the discretion to make changes to the terms of the lease before it votes Friday in San Diego.

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