February 25, 2003
The Honorable Hannah-Beth Jackson
California State Assembly
State Capitol
Sacramento, CA 95814
RE:AB 16 – Oppose
Dear Assemblywoman Jackson:
We are writing on behalf of the members of the California Independent Petroleum Association (CIPA) and the California Natural Gas Producers Association (CNGPA) to express our organization’s strong opposition to your bill AB 16.
AB 16 appears to be a re-introduction of previous legislation you have offered over the last several years (AB 1280 – 1999, AB 556 – 2001, and AB 2723 – 2002). We opposed each of these earlier measures on the basis that they were unnecessary. While the intent of the bill is reportedly designed to ensure that all offshore production is transported to shore by pipeline, we continue to believe these provisions are unnecessary. Currently, 100% of all the oil produced from the 27 platforms off California’s coast is already being transported to shore by pipelines. As such, we are puzzled as to the true intent or need for this measure.
As drafted, AB 16 would impose a series of inflexible regulations and standards on California oil and gas producers that would be difficult to meet or implement. Of particular concern to us are the provisions in the bill that seek to establish a definition of “Best Available Technology” (BAT) that would require producers to implement technology that hasn’t even been developed yet. As drafted, the bill would assign the Coastal Commission the authority to make a determination as to whether the BAT standard has been met, despite the fact that the commission is not structured or staffed with experts in the energy and pipeline industry.
We also continue to be concerned with the lack of flexibility the bill would impose on California companies and their ability to properly operate their facilities. While the bill allows for the transportation of petroleum products by waterborne vessel, it limits the use of such methods to times of “emergency” and then only by a declaration of the Governor. Such a narrow exception essentially eliminates the ability of a company to properly move oil between their facilities in the case of an operational interruption. The bill would
The Honorable Hannah-Beth Jackson
February 25, 2003
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also require the Governor to essentially micromanage the daily operations of the state’s refineries in an effort to determine whether any sort of operational problem constitutes an “emergency”.
As you may be aware, California is the fourth largest oil and gas producing state in the nation. According to the California Energy Commission (CEC), 49% of all the state’s refined petroleum needs are met with in-state production. Because California does not currently receive any oil from interstate or international pipelines, tankers from Alaska, Venezuela, and the Middle East import the remaining 51% of the state’s needs. 80% of the oil produced in California is refined into transportation fuels (gasoline, diesel, and jet fuels).
If anything, the energy crisis of 2000 and 2001 demonstrated that California should be encouraging the development of more in-state energy resources rather than less. California continues to have sufficient energy reserves we believe can and should be utilized to meet our state’s long-term needs. If enacted, AB 16 would have exactly the opposite effect and make California more dependent on out of state oil shipments brought in by tanker and natural gas resources brought in by interstate pipelines.
Thank you in advance for your consideration of our thoughts in this regard. We stand ready to discuss our concerns with you and your staff and at any time. Please do not hesitate to call upon either of us should you have any questions or need more information concerning our position.
Sincerely,
John C. MartiniRock Zierman
Chief Executive OfficerExecutive Director
CIPACNGPA
cc:Members, Assembly Natural Resources Committee
Mr. Scott Valor, Chief Consultant, Assembly Natural Resources Committee
Mr. David Nunenkamp, Minority Consultant, Assembly Natural Resources Committee
Ms. Linda Adams, Chief Deputy Legislative Secretary, Governor’s Office