This article provides information on the history of OCS Lease P-0166 and updates the decommissioning status of California OCS Platforms Hogan and Houchin which are in federal waters offshore Santa Barbara County, California. Listed below are key events in the history of the OCS Lease P-0166. More details are provided in the attachment which was prepared by John Smith who before retiring from BOEM in 2017 was actively involved in the long-running supplemental bond dispute between MMS/BOEM and Signal Hill Services, Inc., which began shortly after MMS approved the assignment of OCS Lease (P-0166) held by Phillps Petroleum Corporation (now ConocoPhillips Corp.) and two other companies to Signal Hill Services Inc. (Signal) in 1991.
| Year/Month | Lease Activity |
| 1967 | U.S. Bureau of Land Management grants OCS Lease P-0166 to Phillips Petroleum Corp., Continental Oil Company, and Cities Service Company. |
| 1967 – 1968 | Hogan and Houchin platforms are installed. |
| 1967 – 2010 | 75 wells were drilled from the platforms, the majority in 1967-1968 and 1970s. |
| February 1991 | MMS approves assignment of the lease to Signal. |
| September 2019 | Production is terminated at platforms. |
| October 2020 | Signal relinquishes the lease to BOEM. |
| November 2020 | BSEE orders ConocoPhillips Corp. (COP) and other predecessor lessees to decommission the Hogan and Houchin platforms. |
| January 2021 | COP and other predecessor lessees file an appeal with IBLA contesting BSEE/BOEM determination they held decommissioning obligations. |
| February 2021 | IBLA grants approval of Partial Stay Agreement between BSEE/BOEM and appellants to maintain and monitor the platforms. |
| November 2024 | Signal files for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. |
| 2021 – 2026 | Monitoring, maintenance and major refurbishment of the platforms are ongoing to support safety of offshore personnel involved in well plugging and abandonment operations. |
Since OCS lease P-0166 was relinquished in 2020, removal of Hogan/Houchin platforms has been stalled by a prolonged dispute over decommissioning obligations between BSEE/BOEM and predecessor OCS lessees (ConocoPhillips Corp., OXY USA Inc., Devon Energy Resources Inc.). The IBLA case has now been ongoing for more than 5 years and has the potential to set a precedent based on the arguments of the appellants who assert:
- They had no accrued decommissioning obligations at the time of the 1991 assignment of the lease because pursuant to their 1961 OCS lease agreement decommissioning obligations did not accrue until the lease was relinquished, which occurred in 2020 when Signal quitclaimed the lease to BOEM.
- The OCS rules changes promulgated in 1997, which stated a lessee’s decommissioning obligation “accrues to the lessee when a well is drilled, the platform or other facility is installed, or the obstruction is created.” (30 CFR 250.110), cannot be applied retroactively.
- The 1961 OCS lease did not include a term by which the lessee agrees to be bound by “future” OCS regulations, which later became a standard provision in OCS lease agreements.
The IBLA case is very concerning because there is currently no financial security available to cover the costs of decommissioning the Hogan and Houchin platforms which were very conservatively estimated by BSEE to total $85 million in 2020. If the IBLA or judicial courts eventually rule COP and former lease owners did not accrue decommissioning obligations, either in whole or in part, the federal government and American taxpayers will be responsible for covering the unfunded decommissioning obligations.
Bud's Offshore Energy (BOE) 