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Posts Tagged ‘production restart’

Pragmatic decision by Santa Barbara County in dispute over Santa Ynez Unit production restart

Posted in California, Offshore Energy - General, tagged , , , , on September 13, 2024| Leave a Comment »

As previously posted, Santa Barbara County reached an agreement with current SYU operator Sable Offshore that will allow the installation of pipeline shutdown valves. Given that the valves are required by the State Fire Marshall, the County was not likely to win this dispute. The County wisely decided that the financial risks were too high:

“If we continued to fight this out in court, [Sable] likely would have sought to recover lost revenue from the pipeline not being in operation,” said Supervisor Steve Lavagnino. “That could amount to millions of dollars the County would be on the hook for.”

The Environmental Defense Center and others are calling for the County to retract their agreement with Sable and hold a public hearing on the matter. That appears to be unlikely.

Remaining hurdles for Sable include approval by the State Fire Marshall after the valves are installed and operational, State Lands Commission approval of lease assignments from Exxon to Sable, and approval of the oil spill contingency plan by the State Dept. of Fish and Wildlife.

Sable believes they can resume production this year. That seems unlikely, but a 2025 restart is now a distinct possibility.

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Santa Ynez Unit: 500+ million barrels, 3 major platforms, and zero production since 2015. Is production restart a “pipe dream?”

Posted in California, Offshore Energy - General, pipelines, tagged , , , , , on August 26, 2024| 2 Comments »

Earlier this year John Smith correctly commented that a Santa Ynez Unit (SYU) production restart in 2024 was not possible. Last month, BOE reported on the regulatory “catch 22” facing Sable Offshore, the current operator under an agreement with Exxon.

An assessment prepared for Hunterbrook Capital draws the same conclusions regarding the prospects for production, calling the restart “a pipe dream” (presumably the pun was intended given the pipeline permitting quagmire). Hunterbrook’s chart (pasted below) illustrates the regulatory labyrinth facing Sable.

Hunterbrook has also flagged Sable’s ability to continue as a “going concern.” That may be a valid concern, but Sable’s success is very much in Exxon’s best interest. Exxon must have evaluated Sable and been comfortable with their management. Otherwise, they wouldn’t have made the deal.

Does Exxon want the massive SYU headache to revert back to their portfolio, as provided for in their agreement with Sable, if production doesn’t restart by January 1, 2026? Unless Exxon thinks they have a better option than Sable, they will presumably be flexible about the deadline.

Meanwhile, a judge denied the temporary restraining order requested by Sable to prohibit release of redacted portions of their oil spill contingency plan. Sable had argued that revealing “trade secrets” and specific locations and vulnerabilities of the pipelines could pose a “threat to national security.”

The Santa Barbara Independent also alludes to “pending litigation with Santa Barbara County over automatic shut-off valve permits.” Although litigation would seem likely if the County continues to deny permits for valves required by the Fire Marshall, BOE was unable to confirm any such litigation plans.

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Santa Ynez Unit update: production in 2024 unlikely

Posted in California, Offshore Energy - General, tagged , , , , on June 24, 2024| Leave a Comment »

Sable Offshore is still planning to resume Santa Ynez Unit production by October. However, according to John Smith, production in 2024 is not a possibility. The following permitting gauntlet remains:

  • State Fire Marshal permit for onshore pipeline.
  • Santa Barbara Planning and Development permit.
  • California State Lands Commission decision on the pipeline right of ways (ROWs) in state waters. (Those ROWs had expired.)
  • Transfer of leases to Sable – Environmental groups, the California Coastal Commission and/or other parties could file suit challenging the transfer of the leases to Sable.

According to John, the question is not whether production will resume in 2024, but whether it will ever resume. And John reminds us that as of 1/1/2026, the SYU and all of the headaches revert to Exxon. See the SYU overview below:

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