1.0 INTRODUCTION. 1.1 Overview of the Proposed Project

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1 1.0 INTRODUCTION This Draft Environmental Impact Report (EIR) assesses the environmental impacts associated with the Tranquillon Ridge Oil and Gas Development Project (proposed project). Plains Exploration and Production Company (PXP) is the Applicant. The location of the proposed project is shown in Figure 1-1. Santa Barbara County (SBC), as lead agency under the California Environmental Quality Act (CEQA), prepared a Scoping Document for the proposed project and determined that an EIR would be required as part of the permitting process for the proposed project. In compliance with CEQA Guidelines, SBC solicited public and agency comments through distribution of a Notice of Preparation (NOP). A public workshop was held on March 29, 2006 in Lompoc to provide an opportunity for the public to comment on the scope of the EIR. The Scoping Document and comments received in response to the NOP are included as Appendix K, and were used to help direct the scope of the analysis and the technical studies in this EIR. This section is organized as follows: 1.1 Overview of the Proposed Project 1.2 Objectives of the Proposed Project 1.3 Agency Use of the EIR 1.4 EIR Contents 1.1 Overview of the Proposed Project In January 2000, Torch Operating Company, as Operator of the Point Pedernales Project, submitted an application to the County of Santa Barbara (and other permitting agencies) for development of the Tranquillon Ridge Field. In June 2002, a proposed Final EIR was released for that proposal. In August 2002, the project (then owned by Nuevo Energy Company) was denied by the County Board of Supervisors. While the Torch/Nuevo project was the same in most aspects to the proposal evaluated in the EIR, the Board of Supervisors denial was based on the inability to find that the project impacts would be mitigated to the maximum extent feasible due to Nuevo s then-pending appeal as to whether County permit conditions that relate to the operation of the platform and the oil pipeline were preempted by federal law. PXP has not carried forward this challenge to the County permit conditions that were the subject of the Nuevo appeal. The proposed Tranquillon Ridge Project would involve the development of oil and gas wells in a proposed State Tidelands lease from Platform Irene. This platform is currently used to develop and produce the Point Pedernales Field, existing within Federal waters. Under the proposed project, the produced oil and gas from the Tranquillon Ridge Field would be commingled with the Point Pedernales oil and gas and sent ashore via pipelines from Platform Irene to PXP s onshore processing facility, the Lompoc Oil and Gas Plant (LOGP), located just north of Lompoc. Based on PXP s data, the proposed project will have an expected total life of approximately 30 years once the first well is drilled. April Final EIR

2 The Point Pedernales Final Development Plan (FDP) permits the production and processing of up to 36,000 barrels per day (bpd) of dry oil and 15 million standard cubic feet per day (mmscfd) of gas from four lease blocks on the Outer Continental Shelf (OCS) and onshore Lompoc Oil Field (gas only). PXP has estimated that the combined oil and gas production from the Tranquillon Ridge and the Point Pedernales Fields would peak at around 30,000 bpd of dry oil and 6 mmscfd of gas, and is below the limits specified in the FDP. However, the proposed project would introduce oil and gas from a new source (State Tidelands lease) which is not currently permitted under the FDP, nor was it evaluated in the 1985 Point Pedernales Field EIR/EIS. Therefore, an FDP modification is required for the development of the Tranquillon Ridge Field. The development of the Tranquillon Ridge Field would result in a number of changes to the existing Point Pedernales Project, which include the following: The drilling of 22 to 30 new wells for oil and gas production and utility use such as water injection and redrills. An increase in the total oil and gas throughput at the existing Point Pedernales facilities over what is occurring today. As discussed in Section 3.0, Project Description, the proposed project would increase dry oil production from an average of 7,000 barrels per day (bpd) in 2005 to a peak level of 30,000 bpd, and gas production would increase from a current average of 2.6 mmscfd to 6.0 mmscfd. PXP has estimated the ultimate recovery of the Tranquillon Ridge Field to be approximately 170 to 200 million barrels of dry oil and 40 to 50 billion standard cubic feet of gas. An increase in oil throughput in portions of the existing ConocoPhillips pipeline system from the Lompoc Oil and Gas Plant (LOGP) to the Summit Pump Station where the oil is can be either transported to the Santa Maria Refinery for initial processing. Semi-refined products are then transported or continue north to refineries in the Bay Area for further processing. The PXP Point Pedernales FDP allows 36,000 bpd of dry oil to be processed at the LOGP. From the LOGP, the oil is placed in the ConocoPhillips pipeline system for transport to the Summit Pump Station for transport to the eventual refinery destination. The ConocoPhillips pipeline system is a permitted common carrier and transports not only Point Pedernales production, but also transports Lompoc, Orcutt Hill, and Cat Canyon productions, as well as oil brought into the system via the Sisquoc Pipeline. A possible 15 to 30 year extension in the life of the Point Pedernales facilities from what was assumed in the 1985 Point Pedernales Field EIR/EIS. As discussed in Section 5.0, Analysis of Environmental Issues, the Point Pedernales facilities are evaluated as part of the environmental setting (i.e., the baseline). The impacts associated with these facilities and their operation at current production levels is are also considered part of the environmental setting. Numerous mitigation measures/permit conditions of approval are in place to address the impacts associated with the current operations. This EIR focuses on the new construction and new operational impacts that would occur with the development of the Tranquillon Ridge Field. In addition, the EIR addresses the effect the proposed project would have on the existing Point Pedernales Project impacts due to the projected increase in the oil and gas production levels and the extension of life of the Point Pedernales facilities. All of the impacts associated with increased oil and gas production are impacts that exist for the current Point Pedernales Project, but the severity is increased over what exists for the current operations. The impacts identified due to the extension of life of the Point April Final EIR

3 Pedernales facilities are existing impacts that would continue for longer periods of time than what was assumed during the permitting of the Point Pedernales Project. The majority of the FDP conditions would continue to apply to the proposed project. Where the EIR has identified new impacts, existing impacts that have increased in severity, or extension of life related impacts, modifications to the existing FDP conditions may be required to incorporate any identified mitigation measures. The relationship between the recommended mitigation measures and the existing Point Pedernales FDP conditions can be grouped into the following categories. 1. The mitigation measure is already addressed by an existing FDP condition, so no changes to the condition are needed to implement the mitigation measure. 2. The mitigation measure is partially implemented by an existing FDP condition, so modifications are needed to the condition to fully implement the mitigation measure. 3. The mitigation measure is not covered by an existing FDP condition, so a new condition needs to be added to implement the mitigation measure. The remaining existing FDP conditions would continue to be applicable to the Point Pedernales facilities, which would serve both the Point Pedernales and Tranquillon Ridge projects. 1.2 Objectives of the Project Section 15124(b) of the CEQA Guidelines requires that the EIR discuss the objectives sought by the proposed project. The applicant s main objective of the proposed Tranquillon Ridge Project is to efficiently and effectively develop oil and gas reserves from the Tranquillon Ridge Field, and to sell the oil and gas production to help meet the energy demands of the State of California. If implemented, the proposed project would provide an additional supply of crude oil and natural gas to California. It is also PXP s objective to develop the State portion of the Tranquillon Ridge Field from an existing platform in Federal waters using extended reach drilling to maximize the development of the field, since PXP has expressed concern that the current method of developing the Tranquillon Ridge Field (utilizing bottomhole locations on Federal lands to drain reserves from the State Tidelands) could result in a loss of the reserves and State resources. Further, PXP has stated that it would be in the best interests of the State to grant the lease, allowing for the proper development of the reservoir. PXP has also stated that one of the objectives of the project is to provide increased royalty and tax revenue to the State and local community, and to provide a reasonable rate of return to investors. It should be noted that California has no stated objective or policy that State royalties and revenues should be increased and energy demand met specifically by leasing new areas of the submerged and tidal lands offshore California. That determination in the context of the Tranquillon Ridge project would be considered by the State Lands Commission at the end of the permitting process. 1.3 Agency Use of the EIR A number of State and local governmental agencies require an environmental analysis of the proposed project consistent with the requirements of CEQA in order to act on the project. These agencies include the SBC, the California State Lands Commission (CSLC), and the California Coastal Commission (CCC). These governmental agencies formed a Joint Review Panel (JRP) to oversee the environmental review process. The Minerals Management Service (MMS), April Final EIR

4 Vandenberg Air Force Base (VAFB), and the Santa Barbara County Air Pollution Control District (SBCAPCD) are advisory members of the JRP. Each agency will use the document as part of its respective decision-making process. The permitting requirements for each of these agencies are summarized below. Table 1.1 provides a list of permits and other approvals that will be needed for the proposed project. Table 1.1. Permits or Other Actions Required for Implementation of the Proposed Project Agency Jurisdiction Permit/Action JRP Members Santa Barbara County CEQA Lead Agency Certification of EIR Revisions to the PXP Point Pedernales FDP Compliance review and construction permits Operations compliance State Lands Commission State lands and waters a Lease and Drilling Permits Changes to existing right-of-way leases PRC 6923 or 6911 b California coastal zone California Coastal Commission Advisory JRP Members c Minerals Management Service Santa Barbara County Air Pollution Control District Vandenberg Air Force Base Manage development of mineral, oil, and gas resources in Federal waters. Santa Barbara County Within VAFB Other Possible Permitting Agencies U.S. Fish and Wildlife Federal Listed, Threatened, and Endangered Service Species U.S. Army Corps of Engineers California Department of Fish and Game State Historic Preservation Office Regional Water Quality Control Board, Central Coast Construction or operation of facilities which may result in any discharge into U.S. navigable waters Manage fish, wildlife, plant resources and habitats Any archaeological or paleontological resource recovery work Clean Water Act, Section 401 Possible Consistency Determination Coastal Development Permit for activities proposed in State waters (e.g. wells) Possible revisions to the Point Pedernales Development and Production Plan (DPP) or a Right of Use and Easement c Authority to Construct Permit to Operate Oversight of private facilities located within the Base. Review and authorization of PXP pipeline repair and maintenance activities Discretionary regulatory authority for VAFB Onshore Alternative. Consultation for Section 7 of the Endangered Species Act (if required) Section 401/404 Permit streambed alteration/crossing ( if required) Streambed Alteration 1602 Permit (if required) Cultural Resources Use Permit, Field Use Authorization, or an ARPA Permit (if required) Consultation for Section 106 of the National Historic Preservation Act 401 Certification (if required) Storm Water Construction General Permit National Pollutant Discharge and Elimination System (NPDES) Permit Waste Discharge Requirements (WDRs) April Final EIR

5 Table 1.1. Permits or Other Actions Required for Implementation of the Proposed Project Agency Jurisdiction Permit/Action California Division of Oil, Manage development of oil, gas, and Oil and Gas Production Well Permits Gas, and Geothermal geothermal resources with the State Onshore Injection Well Permits Resources (California Offshore Injection Well Permits (if bottomhole located Department of in State water) d Conservation) a. State waters include ocean waters from the mean high tide line to three miles out. b. Changes to the existing right-of-way leases would only be needed if there are changes to the offshore pipelines or power cables. c. While VAFB is an advisory agency to the JRP, VAFB only has regulatory authority over the VAFB Onshore Alternative. VAFB has oversight of private facilities located within the Base. cd. The MMS will require the DPP to be revised if the State, MMS and the operator enter into a joint Right of Use and Easement grant from the MMS. The MMS will not take any action on the project until after the State lease is issued and the proposed Tranquillon Ridge Project has been approved by Santa Barbara County and the CSLC. de. Offshore injection well permits would cover both produced water, and muds and cuttings. Santa Barbara County (SBC) In order to implement this project, PXP, owner of the Point Pedernales Project, is requesting modifications to the SBC Point Pedernales Project FDP to include development (drilling and production operations) of a proposed California State lease (Tranquillon Ridge Field). SBC, as the CEQA Lead Agency, will need to certify the EIR in order to approve consider PXP s request for revisions to its the variousfdps. The County, as the CEQA Lead Agency, will act first on the project before any of the responsible agencies take action on the project. SBC will use the document for decision-making regarding the proposed project. If the proposed project is approved by all required permitting agencies, SBC would be responsible for reviewing and approving all pre-construction compliance plans, and ensuring that the proposed project modifications and operations are conducted in accordance with the modified FDP, mitigation measures, and other permit conditions. California State Lands Commission (CSLC) PXP has applied to the CSLC for the issuance of a lease of State Tidelands for the purposes of oil and gas development. A lease from the CSLC is required to drill into the portions of the Tranquillon Ridge Field that lie within the State Tidelands. The results of the EIR, if certified by SBC, and following action by SBC on the revised FDP, will be used by the CSLC in determining whether or not to issue a lease and to approve the project. The CSLC may also need to use the EIR to address any proposed changes to the existing State right-of-way leases for the offshore pipelines and/or power cable (PRC 6923 and 6911). Minerals Management Service (MMS) In May March of 20050, PXP submitted to the MMS a Revisedrevisions to the Development and Production Plan (DPP) for the Point Pedernales Field to include the Tranquillon Ridge Development. The MMS determined that revisions to the DPP were not ripe for consideration because the State lease for the proposed development did not exist, and the development would be in State Waters with no development or production activities in the submerged lands of the Federal OCS. The MMS has decided to wait until the final State lease and the project have been approved before making a determination if a revised DPP or other Federal action is needed. The MMS will take action if the revised FDP is approved by SBC and the State lease is granted by April Final EIR

6 CSLC. The MMS will require that the Point Pedernales Unit DPP be revised if the Tranquillon Ridge becomes a joint Federal/State unit as development of the joint unit proposes an activity that was not previously identified and evaluated. Without the joint Federal/State unit, it would be a State project, and the MMS would only need to grant a Right-of-Use and Easement. PXP, the CSLC, and the MMS are considering the formation of a joint Federal/State unit as a means of ensuring the efficient and prudent development of the Federal and State reserves of the Tranquillon Ridge Field. In joint Federal/State units, the State leases are considered to be extensions of the OCS leases. In the case of the Tranquillon Ridge Project, development of these extended OCS leases proposes an activity that was not previously identified and evaluated, and will therefore result in a revision to the Point Pedernales DPP. Without the joint Federal/State unit, it would be considered strictly a State project, and the MMS would only need to grant a Right-of-Use and Easement. California Coastal Commission (CCC) For activities proposed in State waters (e.g., wells), PXP must apply to the CCC for a Coastal Development Permit. In addition, if the MMS requires a revised DPP for the Tranquillon Ridge Project, and determines that the revisions will likely result in a significant change in the impacts previously identified and evaluated, then the CCC must determine if the amendment (or project change) will cause an effect on any coastal use or resource substantially different than those originally approved by the CCC when it concurred with the consistency certification for the original DPP. In the event of a consistency determination by the CCC, they will rely in part on information in the EIR to assess the impacts to land or water uses or natural resources of the coastal zone. If the MMS grants a Right-of-Use and Easement (instead of a revised DPP), the CCC would need to seek authorization from the National Oceanic and Atmospheric Administration (NOAA) to do a Federal Consistency Review. Santa Barbara County Air Pollution Control District (SBCAPCD) The SBCAPCD will need to issue an Authority to Construct (ATC) and Permit to Operate (PTO) for a number of the proposed project changes. To fulfill its obligations as a Responsible Agency, the SBCAPCD will rely on information contained in this EIR. California Division of Oil, Gas and Geothermal Resources (DOGGR) The DOGGR will need to issue permits for the oil and gas development wells that have bottomhole locations within the State Tidelands. They would also have to issue well permits for any injection wells that have bottom-hole locations within State lands. This would include injection wells for produced water and/or drill muds and cuttings. 1.4 EIR Contents This EIR was prepared in accordance with State and SBC administrative guidelines established to comply with the CEQA. Section of the State CEQA Guidelines provides the following standards for EIR adequacy: "An EIR should be prepared with a sufficient degree of analysis to provide decision makers with information which enables them to make a decision which intelligently takes account of environmental consequences. An evaluation of the April Final EIR

7 environmental effects of a proposed project need not be exhaustive, but the sufficiency of an EIR is to be reviewed in light of what is reasonably feasible. Disagreement among experts does not make an EIR inadequate, but the EIR should summarize the main points of disagreement among the experts. The courts have looked not for perfection; but for adequacy, completeness, and a good faith effort at full disclosure. The EIR is divided into the following major sections: Referenced figures in each section are provided at the end of the respective section. Executive Summary. Provides an overview of the project, and a summary of the significant impacts identified in the analysis and associated mitigation measures. A summary of the alternatives and environmentally superior alternative is also provided. Impact Summary Tables. Provides a summary of the identified impacts by significance class for the proposed project and each alternative. The tables also provide a summary of proposed and/or recommended mitigation measures for the impacts. 1. Introduction. Provides an overview on the proposed project evaluated in the EIR and a summary of the objectives for the project. The section also discusses agency use of the document, and provides a summary of the contents of the EIR. 2. Background and Project Description. Provides a detailed description of the proposed project, as well as the detailed project background, including current operations. 3. Alternatives. Provides descriptions of the alternatives that were evaluated in this document. The section also presents an alternatives screening analysis that was used to identify alternatives that could reduce significant impacts associated with the proposed project. The alternatives that made it through the screening analysis were evaluated in detail throughout the document. 4. Cumulative Projects Descriptions. This Section provides a description of the projects that have been included in the cumulative analysis. The cumulative analysis contained in this document covers the cumulative impacts of reasonably foreseeable projects located in the vicinity of the proposed project that have either been proposed or are in various stages of permitting. 5. Analysis of Environmental Issues. Describes the existing conditions found on the project site and vicinity, and assesses the potential environmental impacts that may be generated by implementation of the proposed project. These potential project impacts are compared to various "Thresholds of Significance" in order to determine the severity of the impacts. Mitigation measures intended to reduce significant impacts are proposed where feasible. This Section also assesses the potential environmental impacts associated with the alternatives that passed the screening analysis presented in Section 3.0. In addition, cumulative impacts are assessed for the proposed project together with the other reasonably foreseeable projects listed in Chapter 4.0. This Section also presents the Mitigation Monitoring Plan. April Final EIR

8 6. Environmentally Superior Alternative. Compares the environmental advantages and disadvantages associated with the proposed project and the alternatives. Based on this discussion, the environmental preferability of the alternatives relative to the proposed project is discussed. 7. Growth Inducing Impacts. Identifies the spatial, economic, and/or population growth impacts that may result from development of the proposed project. 8. Significant Irreversible Environmental Changes. Describes any changes to the existing environment which are irreversible in nature, such as use of nonrenewable resources or commitment of future generations to similar land uses. The EIR also contains a number of appendices that support the environmental analysis. These appendices are included in Volume II of the EIR, which has been bound separately from this Volume I. April Final EIR

9 SUMMIT PUMP STATION SAN LUIS OBISPO COUNTY SANTA MARIA REFINERY SANTA BARBARA COUNTY SANTA MARIA ter Wa State s 3- Mi le Li m it VANDENBERG AIR FORCE BASE LOMPOC OIL AND GAS PLANT LOMPOC VANDENBERG AIR FORCE BASE Irene Tranquillon Ridge Lease Application 1 Legend 446 Existing PXP Pipelines (emulsion, gas, & produced water) Existing ConocoPhillips Pipelines 445 Hildalgo N Off-Shore Oil Platform Harvest 0 Hermosa PREPARED BY Scale in Miles Figure 1-1 Proposed Project Location Aspen Environmental Group April Final EIR