Sable Offshore is attempting to restart the same pipeline that caused the Refugio Oil Spill in 2015. | Credit: Paul Wellman File Photo
Sable Offshore oil believes the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) , not the California Fire Marshal, should have jurisdiction over the company’s onshore pipeline.
I once had the same opinion as Sable. Their pipeline is, by definition, an interstate line because it carries OCS production. Then I read Appendix D of the court approved Consent Decree that was executed following the 2015 Refugio pipeline spill. That Decree is quite clear regarding regulatory jurisdiction, and would have to be overturned to transfer authority to PHMSA.
The full Consent Decree is attached. Pasted below is an excerpt from Appendix D:
The press release and full program are linked. It looks like the most recent leaks were accurate. See the maps below with the locations and dates. This will stir the pot!
The pipeline spill just north of Refugio State Beach on May 19, 2015, coated miles of shoreline and marine habitat, and dolphins, elephant seals, sea lions, pelicans and other birds. | Santa Barbara Independent
We can scream all we want (with some justification) about the California Coastal Commission, Santa Barbara County, and intractable environmental organizations, but the Santa Ynez Unit would still be producing today were it not for an ugly, preventable pipeline spill.
At approximately 10:55 a.m. Pacific Daylight Time (PDT) on May 19, 2015, the Plains Pipeline, LP (Plains), Line 901 pipeline in Santa Barbara County, CA, ruptured, resulting in the release of approximately 2,934 barrels (bbl) of heavy crude oil. An estimated 500 bbl of crude oil entered the Pacific Ocean.
1) Ineffective protection against external corrosion of the pipeline The condition of the pipeline’s coating and insulation system fostered an environment that led to the external corrosion. The pipeline’s cathodic protection (CP) system was not effective in preventing corrosion from occurring beneath the pipeline’s coating/insulation system. 2) Failure by Plains to detect and mitigate the corrosion The in-line inspection (ILI) tool and subsequent analysis of ILI data did not characterize the extent and depth of the external corrosion accurately. 3) Lack of timely detection of and response to the rupture The pipeline supervisory control and data acquisition (SCADA) system did not have safety-related alarms established at values sufficient to alert the control room staff to the release at this location. Control room staff did not detect the abnormal conditions in regards to the release as they occurred. This resulted in a delayed shutdown of the pipeline. The pipeline controller restarted the Line 901 pipeline after the release occurred. The pipeline’s leak detection system lacked instrumentation and associated calculations to monitor line pack (the total volume of liquid present in a pipeline section) along all portions of the pipeline when it was operating or shut down. Control room staff training lacked formalized and succinct requirements, including emergency shutdown and leak detection system functions such as alarms.
Plains Pipeline was the responsible party, but that doesn’t absolve the companies that were dependent on Plains to transport their production. Given the organized opposition that emerged following the Santa Barbara blowout in 1969 (the result of a reckless well plan), the integrity of that pipeline was critical to their business strategy and they should have exercised some oversight.
Offshore disasters have had enormous consequences for the oil and gas industry in terms of lost opportunities. Think about this: prior to the Macondo blowout, the Obama administration had proposed an oil and gas lease sale in the Atlantic and the Florida Senate was holding hearings about leasing in Florida State waters. Such lease sales are now completely out of the question.
Regulations and standards are not enough. We need open discussion about incidents, large and small, and a willingness to be critical of the responsible parties.
SEC filing reveals Sable entered October about a month from potential bankruptcy. The company had $41.6 million as of September 30, with $39.7 million in average monthly burn in 3Q25.
When Sable announced its $250 million financing on November 10 at $5.50 per share, the company likely had single digit millions in the bank based on its reported burn, against over $163 million in accounts payable and accrued liabilities. Sable does not generate any revenue.
Sable needs to raise significantly more money: According to leaked audio of Sable’s CEO briefing for select investors, the company will require $2.3 billion to achieve commercial production of oil and gas from its three platforms off the coast of Santa Barbara.
That includes at least $900 million to buy out Exxon, to which Sable must pay 15% interest on debt due by March 31, 2027. By then, the loan would be about $1.1 billion, accruing $200 million in added debt.
One of Sable’s only known assets other than the oil and gas project is a private plane the company purchased from its CEO, Jim Flores. The plane recently flew round-trip from Houston, where Flores lives, to Louisiana, in time for a football game at the CEO’s alma mater.
Comments from Santa Barbara County Supervisor Steve Lavagnino, an oil industry supporter, that explain his opposition to the transfer of Exxon’s pipeline permit to Sable:
“The final straw for me was a Hunterbrook article, which was as disturbing as anything I’ve read. I have many friends in the oil industry and I will continue to support efforts to access our natural resources, but it has to be done responsibly by operators who put safety above profits.”
Sable’s limited response to the Hunterbrook report includes information on decommissioning financial assurance:
Sable’s original SYU Purchase and Sales Agreement (PSA) with Exxon required Sable to post a $350 million decommissioning bond “150 days following the resumption of production from the wells.”
According to Sable, production resumed on May 15, 2025. The bond would have thus been required in October. (SYU production was halted by court order on June 6, so that “resumption date” may be irrelevant. Regardless, the Oct. financial assurance deadline is immaterial given the recent update to the PSA.)
The PSA update extended the date for posting the decommissioning bond to three business days following the new Exxon Loan Maturity Date of March 31, 2027 or 90 days after first sales of hydrocarbons, whichever comes first. (Note the change in language from “resumption of production” to “first sales.” Brief well test production does not trigger posting of the decommissioning bond.)
Under certain circumstances after the bonding is in place Exxon may seek an increase in the bonding amount to $500 million.
The decommissioning obligations are moot if Sable runs out of funds or is unable to resume SYU production prior to the 3/31/2027 PSA deadline.Exxon would remain fully responsible for SYU decommissioning.
Is it time for a public statement from Exxon on the SYU and Sable?
International Bird Rescue photo: seabirds coated in oil off the Santa Barbara coast
Noozhawk: “A natural oil seep off the Santa Barbara coast has coated more than 100 seabirds in oil, leaving them in a life-threatening state, according to the nonprofit International Bird Rescue.”
For more about natural seeps, see “Slick Talk About Seeps.” The attached Oil Spill Fact Sheet (2002) by Cheryl Anderson, the world’s foremost authority on oil spill occurrence rates, and a 2012 update, may also be of interest.
Attached is John Smith’s comprehensive summary of lawsuits related to Sable Offshore’s attempts to restart Santa Ynez Unit production.
If you are keeping score, there are 10 separate cases including a class action lawsuit filed by investors. New legal battles are sure to follow given Sable’s OS&T strategy. Per John:
“The combined legal challenges, injunctions, and restraining orders have significantly delayed Sable’s restart plans and prompted the company to pursue an Offshore Storage and Treatment Vessel (OS&T) strategy, which was utilized to process SYU production in federal waters from 1981 – 1994, and transport oil to markets using tankers.“
Tyler Priest, the leading historian on US offshore oil and gas operations, has published another gem. His book, Offshore Oildom, is a fascinating account of the history of the technologically innovative and economically important, yet highly controversial, OCS Oil and Gas program. His bookis highly recommended.
Consider this recommendation by Daniel Yergin:
“Tyler Priest, a preeminent historian of energy and the environment, explores how a single well drilled off a pier near Santa Barbara in 1898 gave rise to a major American industry—offshore oil and gas. In spirited prose, Priest demonstrates how this U.S. industry was created not only by innovation, creative engineering, and complex execution; it was also the result of fierce political battles.” ~Daniel Yergin, Pulitzer Prize–winning author of The Prize: The Epic Quest for Oil, Money, and Power and The New Map: Energy, Climate, and the Clash of Nations
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.
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.
Bud's Offshore Energy (BOE) 