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Schwarzenegger Drops Support for Calif. Offshore Oil Wells

California Governor Arnold Schwarzenegger no longer supports a plan to allow limited drilling for oil off the state’s coast because of the Gulf of Mexico spill, said Aaron McLear, his spokesman.

Schwarzenegger had advocated letting Plains Exploration & Production Co., operator of four California offshore oil platforms, to expand into waters near Santa Barbara, generating much-needed state revenue. In his fiscal 2011 budget, the governor estimated $120 million for the state from drilling in the first year and as much as $1.8 billion in the next 14 years.

An oil slick from a damaged well on the floor of the Gulf of Mexico is threatening coastlines and fishing industries. An explosion April 20 on a drilling rig leased by BP Plc in the Gulf of Mexico killed 11 workers and sank the platform, owned by Transocean Ltd. Crude is gushing from the damaged well at an estimated rate of 5,000 barrels a day. The disaster may rival the 1989 Exxon Valdez incident as the worst U.S. spill.

“If I have a choice between the $100 million and what I see in the Gulf of Mexico, I’d rather just figure out how to make up for that $100 million,” the governor, a Republican, told reporters today. “The risk is much greater than the money.”

Virginia Governor Bob McDonnell said the Gulf spill will delay his state’s efforts to open coastal waters to drilling by at least a year. The Republican said the incident hasn’t diminished his support for offshore oil exploration.

“In the short term, there will be a diminution in popular support,” McDonnell said today at a drilling industry convention in Houston. “Some people are going to pause and say what do we need to do to make sure this never happens again, and others are going to seize on it as a reason why we shouldn’t drill at all.”

A call to Plains Exploration for a comment wasn’t immediately returned.

To contact the reporter on this story: Michael Marois in Sacramento at mmarois@bloomberg.net

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