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Archive for the ‘California’ Category

Speculation about the 5 Year Oil & Gas Leasing Plan

Posted in California, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , on October 31, 2025| Leave a Comment »

A leaked Dept. of the Interior (DOI) document will likely have little in common with the Draft Proposed Program (DPP, step 2 above). The DPP decisions will be made by the President, not by DOI staffers or managers.

According to media reports, the leaked document includes lease sales offshore New England, the Carolina’s and California.  Unless the President revokes his own 2020 withdrawals, the Carolina’s are off-limits until 2032. Ditto for the Eastern Gulf within 125 miles from Florida. (See the map below.)

Including North Atlantic and offshore California in the DPP would unleash a firestorm of opposition. In the case of the North Atlantic, the acreage may not be sufficiently prospective to justify the fight.

To the extent that marine sanctuary determinations do not preclude California offshore leasing, the litigation and legislative battles probably would. In the unlikely event that a sale could be held, who would bid? Who wants to be the next Sable?

The Beaufort Sea is the most likely frontier area to be included in the DPP given plans to open ANWR, operational history, resource potential, and State support.

Assuming the South Atlantic withdrawal could be partially lifted, a small, targeted lease sale would be of great interest to petroleum geologists and could have significant economic and national security implications. The late Paul Post, the foremost expert on the petroleum geology of the US Atlantic, saw great potential in the paleo deep- and ultra-deepwater areas. He advocated exploration concepts proven successful in analogous West African and South American settings where massive discoveries have been made. Samuel Epstein, another prominent petroleum geologist, also believes the deepwater Atlantic has great resource potential.

Finally, the extent of the Florida buffer needs to be considered given the high resource potential of the Eastern Gulf. Be it 75, 100, or 125 miles, leasing beyond that buffer should be a priority.

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Sable’s permitting gauntlet updated

Posted in Offshore Energy - General, California, Regulation, tagged , , , , , , on October 27, 2025| Leave a Comment »

John Smith shared the attached Santa Ynez Unit regulatory update for the 8 state agencies that have oversight roles (see regulatory fragmentation).

John notes that Exxon’s March 26 contractual deadline for Sable to have the SYU up and running is fast approaching.  What will Exxon do in the likely event that Sable fails to meet that deadline? Does Exxon want to re-enter the SYU legal and regulatory quagmire?

The SYU’s 500+ million barrels of oil, 3 deepwater platforms, and onshore processing facilities are an enormous prize, but is that prize attainable?

Meanwhile, the latest skirmish between Sable and the Office of the State Fire Marshal (OFSM) pertains to metal loss anomalies and inspection tool tolerances. The dispute is summarized in the linked filing.

Sable contends that the Fire Marshal’s letter contradicts guidance from OSFM staff and provides examples. Sable goes a step further at the end of their response by calling for the FIre Marshal to coordinate better with the experts on his staff:

“We respectfully request that, given this background, you coordinate further with the expert team at OSFM and revisit the statements in your October 22nd letter.”

It’s not looking good for a quick resolution of these issues.

102225 NNRA Permitting SummaryDownload

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By a 3-2 vote, Supervisors cancel Santa Barbara County’s 130 year old oil industry

Posted in California, climate, energy policy, pipelines, Regulation, tagged , , , , on October 24, 2025| 1 Comment »

Board of Supervisors Image (PNG)

The Santa Barbara County Board of Supervisors voted 3-2 to proceed with developing a new ordinance that will ban new and operating oil and gas wells in the County.

In essence, the 3 Supervisors from South County (Districts 1-3) voted to euthanize an industry that is largely in North County (Districts 4 and 5). Those 3 supervisors, not the marketplace, are terminating a historically important industry. See the maps below.

District Boundaries
Oil Wells

Supervisors Laura Capps of the Second District, Joan Hartmann of the Third District and Roy Lee of the First District voted for the ordinance.

Supervisor Steve Lavagnino of the Fifth District, where I once lived, correctly noted that the North County only has two industries that allow people to support themselves well after high school: agriculture, and oil and gas.

Ah, but it’s the industry’s fault according to Supervisor Hartmann. She asserted that companies have known since the 1950s about the dangers of climate change, and could have led the way to be part of the solution. How dare they respond to market forces instead of climate ideologues!

Of course, this is the same three vote coalition that is aligned with the Coastal Commission in opposition to the restart of the Santa Ynez Unit, which would benefit the County significantly.

Finally, note that the three supervisors voting for the ordinance represent the districts with the highest income levels and lowest poverty rates. Those opposing the ordinance represent the districts that will be most affected, and have the lowest income levels and highest poverty rates. (See the table below; Information courtesy of Grok AI.)

DistrictApprox. Median Household Income (2022)Key Areas IncludedNotes
1$120,000–$140,000Carpinteria, Summerland, Montecito, parts of Santa BarbaraAffluent coastal communities; high home values (~$1.5M+ median)
2$95,000–$115,000Santa Barbara city, Goleta, Isla Vista
Mix of urban professionals, students, and tech; university influence lowers median slightly.
3$80,000-$95,000Santa Ynez Valley, Buellton, Solvang, Lompoc
Rural/agricultural with tourism; moderate incomes from wine industry and military base
4$70,000–$85,000Lompoc, Vandenberg area, parts of Santa Mariaindustrial and defense-related; higher poverty rates (~15–20%).
5
$60,000–$75,000		Santa Maria, Guadalupe
Agricultural North County; majority Latino population; lowest incomes due to farm labor.

Poverty rates: ~8–10% in Districts 1–2 vs. 18–25% in Districts 4–5

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Chris Wright comments on Sable SYU production

Posted in California, energy policy, Offshore Energy - General, tagged , , , , , , , on October 22, 2025| 3 Comments »

Energy Secretary Chris Wright

In a post on X, Chris Wright commented:

“Only in California! Newsom is blocking oil production off California’s coast from reaching their own refineries, driving gasoline prices even higher for Californians! Now, this oil production will have to be shipped elsewhere, lowering gas prices for other areas— just not for California! This is the opposite of common sense!”

BOE was a fan of Chris Wright long before he became Energy Secretary, and I agree that the resumption of Santa Ynez Unit production is economically desirable for California and the nation. However, his comment implies that OS&T processing and tanker transport is a realistic option, and I do not believe that is the case.

John Smith and I have discussed Sable’s OS&T announcement on a number of occasions, and we don’t see a reasonable path forward for this option. In addition to the significantly higher capital and operational costs and the need to acquire and retrofit a suitable floating production, storage, and offloading vessel (FPSO), the legal and permitting challenges could be even more complex than for the pipeline option (as daunting as that may sound).

The OS&T option would require a revised development and production plan, and the associated environmental review (almost certainly an EIS).  An EIS would not favor this option, and the California Coastal Commission would surely rule that the OS&T/tanker alternative was inconsistent with their CZM plan. (Keep in mind that the SYU/OS&T production in the early 1980’s was approved prior to the passage of the Coastal Zone Management Act.) The Secretary of Commerce could overrule the Commission’s consistency determination, but legal objections to the override would likely delay the project for years and have a good chance of success.

Onshore processing and pipeline transportation using existing facilities is clearly the environmentally and economically preferable option. The only reasonable path forward for Sable or Exxon is to continue to pursue the onshore pipeline approvals. Federal attention should focus on jurisdiction over that pipeline, which is inherently an interstate line because it transports OCS production, and State actions that are blocking interstate commerce.

Finally, keep in mind that the SYU would still be producing today were it not for the entirely preventable pipeline rupture and the resulting Refugio oil spill. Plains Pipeline, the party responsible for this ugly incident, is no longer the owner, but that doesn’t comfort coastal residents; nor does it absolve the companies that transported their oil through the line from all responsibility.

The Refugio spill will be discussed further in an upcoming post.

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Santa Barbara court rules against Sable in favor of Coastal Commission

Posted in California, Offshore Energy - General, Regulation, tagged , , , , on October 15, 2025| Leave a Comment »

John Smith shared the linked ruling against Sable Offshore and in favor of the California Coastal Commission. On February 18, 2025, Sable had filed a petition against the Commission requesting, among other things, declaratory relief for impairment of vested rights.

Today, Judge Thomas Anderle concluded:

As the above discussion demonstrates, the issue before the Court is not whether the specific work conducted by Sable was or is ultimately necessary or appropriate for pipeline safety. The issue before the Court is whether the Commission abused its discretion in issuing the April 10 Orders under the standards for review by petition for administrative writ of mandate.

Based on the foregoing analysis and a review of all of the arguments of the parties and the AR, the Court finds the Commission’s factual findings are supported by substantial evidence and that Sable has not met its burden to show an abuse of discretion by the Commission in issuing the April 10 Orders.

Accordingly, the petition for administrative mandate as set forth in the first cause of action of Sable’s FAP will be denied.

The road ahead for Sable continues to get rockier, and their share price took a major hit today.

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Sable seeks court determination that pipeline provisions in “Newsom’s Drill Bill” don’t apply to their pipeline

Posted in California, energy policy, Offshore Energy - General, pipelines, Regulation, tagged , , , , , on October 9, 2025| Leave a Comment »

California Senate Bill 237 — disapprovingly dubbed by some environmental groups as Newsom’s “Drill Bill” —  is meant to ease environmental regulations hampering onshore oil development in Kern County. However, the bill also includes language that heightens Sable’s regulatory hurdles.

As a result, on Sept. 29 Sable Offshore filed a declaratory judgement action against the State of California in Kern County. Sable is asking the court to confirm that the objectionable permitting provisions of SB 237 do not apply to their Las Flores Pipeline System. 

Also, on Oct. 6 Sable filed a motion increasing the monetary damages in its ongoing case against the California Coastal Commission to $347 million. Sable asserts that their pipeline repair program was authorized by existing permits issued by the County of Santa Barbara under its Local Coastal Program and delegated Coastal Act authority.

These seem like good tactical moves on the part of Sable.

More on Sable and the Santa Ynez Unit.

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Phil Mickelson, Sable, natural seeps, and SYU options

Posted in California, energy policy, Offshore Energy - General, Regulation, tagged , , , , , , , , on October 2, 2025| Leave a Comment »

Thumbs up to Santa Ynez Unit production from Phil Mickelson!

Phil also believes SYU production would reduce natural seepage: “UCSB and State Lands Commission studies (Quigley, Luyendyk, Hornafius, Peltonen, and others) have shown that when oil production is active, reservoir pressure is reduced and natural seepage declines by up to 50%. That means: •Cleaner beaches (less tar and oil) •Cleaner ocean surface (fewer sheens) •Healthier marine life with reduced chronic stress“

Note that those studies are specific to Platform Holly and the Coal Oil Point area. To the best of my knowledge, no studies have associated SYU production with a reduction in natural seepage.

From a related 2010 BOE post entitled “Slick Talk About Seeps” (note that production at Platform Holly has since been terminated):

While Platform Holly may be a negative spillage facility (i.e. Holly’s seep reduction may significantly exceed the platform’s production spillage), this type of seepage reduction has not been demonstrated at other platforms.  Decisions on offshore exploration and development should be driven by the economic, energy security, and environmental benefits.  To the extent that production reduces natural seepage, all the better.  However, seepage reduction is not a primary reason for producing offshore oil and gas.

Thoughts on Sable’s production options:

Option 1 (use of existing onshore infrastructure) is preferable from cost, air emissions, spill risk, State and local revenue, and regional energy supply standpoints. This is the only option that makes sense despite the enormous permitting challenges.

Option 2 (floating processing facility and tankers) would literally be an “in your face” act of defiance given the coastal visibility of the offshore facilities. Supporters of this option should be aware that there was no Coastal Zone Management Act when Exxon produced from Platform Hondo (the only SYU platform at the time) to the Offshore Storage and Treatment (OS&T) vessel in the 1980s. An EIS would not favor this option, and the California Coastal Commission would surely rule that this option was inconsistent with their CZM plan. The Secretary of Commerce could overrule the Commission’s decision, but legal objections to the override would seem to have a good chance of success.

The only reasonable path forward is to do the right thing and continue to pursue the State pipeline/onshore approvals. Although these approvals are substantively warranted, more litigation is probably inevitable. It will be far better to defend a good project (option 1) than a contrived workaround (option 2).

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Back to the Future – Sable plays the OS&T card!

Posted in California, energy policy, Offshore Energy - General, pipelines, Regulation, tagged , , , , on September 30, 2025| Leave a Comment »

Those of us who were involved with OCS oil and gas operations in the 1970s remember the heated battles between Exxon and Santa Barbara County that led to the installation of the infamous Offshore Storage & Treatment (OS&T) facility in Federal waters. This was the first floating production, storage, and offloading facility (FPSO) in US waters by 3 decades!

In light of Sable’s difficult (bordering on impossible) onshore permitting challenges, the company resurrected the OS&T option in a recent presentation to investors (pertinent slide pasted above). The extent to which this is purely a tactical maneuver remains to be seen, but this option would be very difficult to execute, even with a supportive Federal regulatory environment.

Stay tuned!

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Was MOU with California prudent for Denmark?

Posted in California, climate, energy policy, tagged , , , , , on September 19, 2025| Leave a Comment »

Gov. Newsom and Danish Foreign Minister Lars Løkke Rasmussen

As is the case for most MOUs, the attached 8/22/2025 agreement between California and Denmark is long on promotion and short on substance. No funds are obligated and there are no work commitments.

The MOU made sense for Gov. Newsom in that he strengthened his green credentials by aligning with the country that is the spiritual leader for climate activists.

The benefits for Denmark were unclear, but the risks should have been apparent. The White House is fundamentally opposed to the climate and energy objectives identified in the MOU. Ørsted (50.1% govt owned) and other Danish business interests are very much dependent on decisions made by the US Federal govt.

Work on Ørsted’s Revolution Wind project has been halted by Interior Secretary Burgum. His decision is being challenged in court, but no matter what the outcome, offshore wind development will be difficult for Ørsted and other foreign companies going forward. The Secretary has broad regulatory authority under the OCS Lands Act, under which there is no such thing as “a fully permitted project.”

Meanwhile, California’s green status has taken a hit with the passage of S 237, which pragmatically authorizes new onshore drilling.

Lastly, as the chart below illustrates, Orsted’s problems didn’t begin in 2025.

CA Denmark MOUDownload

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California delegation challenges BSEE’s SYU production announcement

Posted in California, energy policy, Offshore Energy - General, Regulation, tagged , , , on September 17, 2025| Leave a Comment »

John Smith shared the attached letter from Senators Adam Schiff and Alex Padilla, and members of the California congressional delegation. The letter questions BSEE’s inexplicable announcement about the resumption of Santa Ynez Unit (SYU) production. That announcement boasted:

“This is a significant achievement for the Interior Department and aligns with the Administration’s Energy Dominance initiative, as it successfully resumed production in just five months.“

BSEE’s announcement, which has not been explained and is still featured on their homepage, served only to further complicate the resumption of production from the SYU, which has reserves in excess of 500 million barrels.

Schiff-BSEE-Sable-letter-final 091525Download

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