Paul Wellman (file)
Thursday, April 20, 2017
The same day Interior Secretary Ryan Zinke took to the Reagan Ranch Center stage to extol the virtues of damming and drilling, Venoco — the Colorado-based oil company that originated in Carpinteria more than 20 years ago — announced it was officially pulling the plug on itself. Venoco issued a press release Monday declaring bankruptcy while “quitclaiming” the Ellwood oil lease off of which it had proposed to expand drilling from Platform Holly. That means Venoco is giving its offshore oil lease back to the State of California, which controls all coastal property for three miles out.
This move effectively shuts the door to any further drilling from Platform Holly, installed in 1966, and initiates the long and complicated process of decommissioning the oil platform. Venoco’s lease will now become covered by the state’s offshore sanctuary, which bans offshore oil production. While environmentalists were quick to celebrate Venoco’s withdrawal from Santa Barbara’s coastal waters — “Our clients are both relieved and thrilled,” stated attorney Linda Krop, who has been fighting Venoco and its predecessors, Mobil and ARCO, since the 1980s — Venoco was done in, however indirectly, by Donald Trump and his vows to expand coastal oil production.
Venoco was most immediately laid low by Plains All American Pipeline company, whose spill two years ago effectively stopped any production at Platform Holly. Last year, Venoco sued Plains for letting its pipeline get so corroded it sprung a serious leak along the Gaviota Coast, during which thousands of gallons of crude made their way into the ocean. In that litigation, Venoco cited losses in excess of $20 million. If and when that stretch of pipeline ever operates again is a matter of intense speculation, calibrated in terms of years, not months.
In the face of such losses, Venoco’s only hope for financial survival was approval from the State Lands Commission for a controversial proposal to “adjust” — “expand” is the term used by critics — its lease boundaries to better reach more bountiful oil reserves. Such a proposal, no matter how laden with concessions, would and did generate heated environmental opposition. And Donald Trump’s pro-oil development rhetoric raised the hackles of not just California’s environmental establishment but two members of the State Lands Commission.
This February, both Betty Yee — state controller — and Gavin Newsom — lieutenant governor — came out loudly against Venoco’s plans. Making this unusual in the extreme, no project proposal was before the State Lands Commission, no date for a hearing set, and no environmental document completed. Two months before, in December, Yee won passage for a resolution calling on outgoing President Barack Obama to issue an executive order declaring California’s coast off-limits to new oil development. With that general resolution unanimously endorsed by the commissioners, Venoco’s days were numbered. Once Yee and Newsom came out specifically against Venoco’s project, the company’s goose was effectively cooked.
At issue now is what happens to the company’s oil and gas processing facility in Goleta, which city officials there have declared — via a host of general plan and zoning amendments — has to go. Though the two parties have reached a temporary truce, the issue gained traction in last November’s city council race with two candidates who advocated a more vigorous stance against Venoco winning election.
Decommissioning an oil platform is no simple task and will require years of technical and environmental review. What happens if the $22 million bond Venoco set aside for this purpose proves insufficient? That, no doubt, would become the focus of additional litigation, both consuming and expensive. Four platforms were decommissioned off the cost of Summerland in the 1990s. With Platform Holly shut down and Venoco out of business, the company estimates about 100 area jobs will be lost as well as up to $8 million a year in property tax revenues. County officials indicate the loss will be one-tenth that amount.