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:
Exxon’s Santa Ynez Unit facilities are now owned by Sable Offshore, a company headed by offshore production veteran Jim Flores. Apparently Exxon had suffered enough, and Flores accepted the challenge. Sable hopes to restart production in July, but has some big permitting hurdles to clear before that can happen.
Flores and his company are indeed the underdogs in this story. Pending are the pipeline CBAT (coastal best available technology) plan being reviewed by the Office of the State FIre Marshall and approvals by Santa Barbara County. Administrative and legal appeals are a given.
Flores is saying the right things and seems undaunted by the massive challenge. He may just pull this off. We’ll be watching.
Sable Offshore Corp. is going to do it right!
Our proven track record of responsible operations in Santa Barbara County at Point Arguello and Point Pedernales fields over the past couple of decades reflects our commitment to safe, reliable operations at SYU.
When Exxon was unable to get approval for an onshore oil processing facility, the company installed this offshore storage and treatment (OS&T) vessel and single anchor leg mooring (SALM) 3.5 miles from shore, just seaward of the State-Federal boundary. The OS&T, a converted tanker, operated from 1981 to 1994. By 1994, the onshore gas processing facility in Las Flores Canyon had been expanded to process Santa Ynez crude, eliminating the need for the OS&T. While the OS&T had a very good performance record, the highly visible vessel was less than endearing to most Santa Barbara County residents, and there was no apparent sadness when the OS&T and SALM were decommissioned in 1995.
With this deal, Exxon is essentially lending Flame, Sable’s management team and PIPE investors the money to buy the facilities from itself. If they are able to get them back online, great, Exxon gets its $623 million loan paid back with 10% interest. If not, it presumably repossesses the facilities and their associated headaches.
HOUSTON, Nov 6 (Reuters) – Exxon Mobil Corp will take up to a $2 billion loss on the highly leveraged sale of a troubled California offshore oil and gas field that have been idled since a 2015 pipeline spill.
Sable Offshore, a blank check company founded by industry veteran James Flores, will borrow 97% of the $643 million purchase price from Exxon under a five-year loan. Blank check companies raise money to acquire operating businesses. If Flores fails to restart production at the Santa Ynez field by the start of 2026, Exxon could take back the entire operation, Sable disclosed in a filing.Flores will seek permits to restart Santa Ynez and expects to pump about 28,100 barrels of oil and gas per day beginning in 2024, according to a Sable investor presentation. The field has 112 wells and the potential for at least another 100 wells, its presentation showed.
Jim Flores is well known in the offshore industry dating back to his days as CEO of Flores & Rucks, a Gulf of Mexico exploration and production company, in the 1990’s.
And Exxon is no doubt still on the hook for decommissioning these massive platforms.
Offshore California, the best that most facility operators and their predecessors (to the extent they continue to hold decommissioning liabilities) can hope for is a graceful exit with manageable financial losses. (The situation is a bit different for Exxon’s Santa Ynez Unit, which has been shut-in since 2015 while the company seeks to resolve oil transportation issues resulting from an onshore pipeline rupture. Here is the latest episode of that amazing saga.)
California’s Federal offshore, where 9 mobile drilling units (MODUs) were operating concurrently in the early 1980s, hasn’t seen a MODU in over 30 years. However, 23 production platforms, some of which are massive structures, remain (see the presentation below). At this point, these platforms are expensive monuments given that their combined production (per EIA) is only 7000 BOPD.
Regardless of their production status, the California offshore platforms continue to be ecologically significant. Dr. Jerry Schubel is among the many marine scientists who understand the importance of the life that has grown on and around these structures. The scientific community also sees other research, educational, and recreational uses for these platforms as per our Rigs-to-Reefs +++ page.
To their credit, State and Federal agencies, trade organizations, and interested third parties continue to discuss the issues and consider alternatives. A recent workshop was helpful in that regard. Attached is the excellent presentation by Bob Byrd and John Smith, who have been at the vanguard in addressing California decommissioning issues. Embedded below is the YouTube video of the presentations from their session. These are excellent updates for those who have an interest in decommissioning issues.
Bud's Offshore Energy (BOE) 