ECONOMY

California works to contain pollution from Pacific coast oil spill

Clean-up crews worked on Monday to contain the damage from an oil spill off the coast of California that dumped up to 3,000 barrels of oil into the Pacific Ocean and has closed the beach community known as “Surf City”.

The spill on Saturday is thought to have been caused by a broken pipeline connected to an offshore platform owned by Houston-based Amplify Energy.

Shares in Amplify, which closed its production and pipeline operations in the Beta Field where the oil was pumped, fell by 43.8 per cent to $3.23 on Monday.

Huntington Beach, about 40 miles south of Los Angeles and home of the US Open of Surfing, was hit hardest. Mayor Kim Carr said 13 square miles of ocean and coastline were covered in oil and that an “ecological disaster” was unfolding. Dead fish and birds have washed up on the beach, which the mayor warned could be closed for months.

Oil was also threatening to wash ashore further south in Newport Beach and Laguna Beach, some of the most expensive coastline in the country.

Michelle Steel, a Republican congresswoman from the Orange County district that includes Huntington Beach, has asked the Biden administration to issue a disaster declaration. Orange County was once a bedrock of the Republican party but has recently handed important victories to the Democrats.

The spill has cast a spotlight on the risks posed by California’s ageing offshore oil and gas infrastructure. There are 23 oil and gas platforms operating in federally controlled waters more than three miles off the California coast, most of which have been running for more than 40 years, according to the Bureau of Ocean Energy Management, a US agency.

The Beta Field facilities were built in the late 1970s and early 1980s and the area today produces about 3,600 barrels a day of oil.

Amplify has been cited for dozens of environmental infractions over the years, including 72 “incidents of non-compliance” that were serious enough to force the company to shut down equipment on the platform, according to federal regulatory data.

Martyn Willsher, Amplify chief executive, told a press conference on Monday that an anchor from a ship was “one of the distinct possibilities” for the cause of the spill.

He said his company would pay for the clean-up. “Whatever needs to be done, we’ll take care of it . . . We have significant insurance, in addition to our funds on hand,” he said.

New offshore leasing and drilling in state-owned waters was halted after a spill in Santa Barbara, California that was the largest in the country when it took place in 1969.

Willsher told analysts in August that the company planned to drill two new wells at its field in the fourth quarter of this year, saying the “strong commodity price environment” meant the project could yield “significant free cash flow”. US crude hit a seven-year high on Monday.

Amplify is the successor company to Memorial Production Partners, which filed for Chapter 11 bankruptcy in early 2017 after an earlier oil price downturn.

California, home to one of America’s early oil booms in the 1920s, has reported declining crude output for years but remains the seventh-largest producer in the US, according to the US Energy Information Administration. Environmentalists said the spill should accelerate California’s efforts to halt oil production.

Two California lawmakers, US senator Dianne Feinstein and congressman Jared Huffman, introduced legislation this year seeking to ban oil and gas drilling in federal waters such as at the Beta Field.

In April, Gavin Newsom, California governor, asked the state’s Air Resources Board to develop a plan to phase out oil extraction across the state by no later than 2045. His administration has sought to halt issuance of permits for hydraulic fracturing, a technique for extracting oil and gas, by January 2024.

Officials are now looking to California’s waters for their potential to produce wind power. In May, the Biden administration started to push forward plans to lease two large areas off the northern California coast to offshore wind development.

Amplify’s largest shareholder is Avenue Capital Group, an investment firm co-founded by billionaire investor Marc Lasry, which owned a stake of 7 per cent, according to recent regulatory filings.

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California works to contain pollution from Pacific coast oil spill

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