Platform Holly / Venoco, LLC Bankruptcy
The public may access the bankruptcy filings for Venoco through Prime Clerk.
In April 2017, Venoco quitclaimed its interests in the South Ellwood Field leases, including Platform Holly and the Ellwood Beach pier leases near the City of Goleta. The quitclaim ends commercial oil and gas production in state waters in the Santa Barbara Channel and returns operational control of these assets to the Commission. California’s Coastal Sanctuary Act prohibits the Commission from issuing new offshore oil and gas leases.
The Commission selected Beacon West Energy Group, LLC as its contractor to operate and maintain Platform Holly and the Ellwood Onshore Facility. Beacon West, under the Commission’s oversight, began ensuring the security and safe daily operations and maintenance at Platform Holly and the Ellwood Onshore Facility in September 2017.
ExxonMobil, the successor in interest to prior operator Mobil Oil Corporation, agreed to fulfill its obligation to abandon the 30 wells, seven of which were Venoco re-drilled and are state obligations, and the two near shore wells on what was Oil & Gas Lease PRC 421.
The process for plugging and abandoning the wells and the eventual decommissioning is expensive, complex, and lengthy. The Commission understands that the community and others are interested in this process. Staff will continue to outreach with state and local regulatory agencies over the course of the work and host local town halls to facilitate public engagement.
As of January 2019, extensive work has been done (considerably more than originally thought) to get the platform and the near shore wells prepared for safe operations. The Commission’s highest priority is to complete the work with no impact to the community or the environment. ExxonMobil is committed to the same standards and has been instrumental in the intensive risk analyses done to date. Virtually all the platform facilities needed repair or replacement, including the office quarters, the drilling rig and its ancillary equipment needed for the abandonment work, and the production and electrical equipment. This work is ongoing and is scheduled to continue into the summer of 2019 before the Platform Holly well abandonment program can begin. Once underway, the plugging and abandonment is estimated to take from 18 to 36 months to complete.
The delay in plugging and abandoning the near shore wells means that the work window is squarely within the winter storm period. The exposed wellheads, however, needed to be surveyed and repaired and, after excavating the fill inside the caissons, it was discovered that critical repairs were required for the stability of the rig that will be used for the abandonments. The preparation work should be complete shortly and it’s envisioned that the abandonment of both wells, weather permitting, should begin by the beginning of February 2019 and end by the end of March 2019. Once the wells are abandoned, the planning and required CEQA review can start, which is necessary to remove the caissons and piers that service the wells.
The Commission is sensitive to the impact this situation has on the local economies of the City of Goleta and Santa Barbara County, and the community recipients of Venoco’s philanthropy. Venoco had operated the South Ellwood Field since 1997 when it acquired the leases from ExxonMobil. Venoco has generated approximately $160 million in state revenue from royalties and rent, without any significant oil spills on state property.
Leases, Amendments & Quitclaims
- Memorandum of Understanding – CSLC / City of Goleta
- Phase 1 Agreement – CSLC / Exxon
- Beacon West Energy Group, LLC contract
- ExxonMobil letter of intent
- Reimbursement Agreement extension request
- Request for payment to Aspen Insurance
- Default letter to Venoco
- Reimbursement Agreement
- Assignment Agreement – Mobil Oil Corp. agrees to retain responsibility for the Leases
- Division of Oil, Gas and Geothermal Resources Orders