ExxonMobil Sells Santa Ynez Unit Offshore Oil Rigs, Las Flores Canyon Processing Facility | Local News

ExxonMobil sells its Santa Ynez Unit offshore oil rigs, onshore processing facility and former Plainsto a newly created company, and it’s unclear what the future holds for production.

The Santa Ynez Unit includes the Hondo, Harmony and Heritage platform, and the Las Flores Canyon processing plant on the Gaviota coast.

Production halted in 2015 when the crude oil transmission pipeline ruptured and caused the Refugio oil spill.

Santa Barbara County rejected ExxonMobil’s proposal to restart rig production and temporarily truck oil to refineries. Other oil rigs that depended on the ruptured pipeline are being dismantled.

sand and Flame Acquisition Corp.a Texas-based special purpose acquisition company, will merge in an $883 million deal to create Sable Offshore Corp., the new owner of the Santa Ynez unit and transmission pipeline.

“The sale is expected to close in the first quarter of 2023, pending regulatory and other approvals,” ExxonMobil spokeswoman Meghan Macdonald said. Noozhawk. “The sale advances ExxonMobil’s focused investment strategy and underscores our focus on disposing of assets to those who can derive greater value from them.”

Fewer people work at the Santa Ynez unit now because it is not functioning, but there are still employees doing maintenance and other work for the facilities.

“Employees will be transferred to positions at Sable,” Macdonald said.

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A map of Santa Barbara County offshore oil and gas facilities as of 2019. Most South County rigs are in the process of being decommissioned. (Santa Barbara County photo)

The management team of Sable Offshore Corp. is led by Jim Flores, who previously worked at FreePort-McMoRan and Plains Exploration & Production Co., according to company filings with the Securities and Exchange Commission.

Most of the $643 million purchase price is funded by a $623 million loan from ExxonMobil, according to an investor presentation filed with the SEC.

The risks listed in the transaction documents include the possibility of not meeting all permit requirements and restarting production in a timely manner. The new owner is targeting oil and gas production in January 2024.

“We may not be able to restart production by January 1, 2026, which would allow ExxonMobil to exercise a reassignment option and take possession of SYU without any compensation or reimbursement,” according to documents filed with of the SEC.

ExxonMobil’s Santa Ynez unit paid more than $45 million in taxes to Santa Barbara County in the 10 years before the oil spill and pipeline shutdown, according to the company. He also became involved with local chambers of commerce and sponsored local community events.

ExxonMobil's Santa Ynez unit includes Platform Hondo, Platform Harmony, Platform Heritage in federal waters off southern Santa Barbara County.
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ExxonMobil’s Santa Ynez unit includes Platform Hondo, Platform Harmony and Platform Heritage in federal waters off southern Santa Barbara County. (photo Giana Magnoli / Noozhawk)

Reuters reported that ExxonMobil suffers a $2 billion loss on the sale.

ExxonMobil and Shell recently sold about 43,000 oil wells in California, leaving questions about future liability for costly environmental cleanup and decommissioning facilities.

“Some industry experts, lawmakers and environmentalists are concerned about recent agreements, noting that the sales shift environmental responsibility from big companies to less capitalized companies, increasing the risk that aging wells will remain orphaned, disconnected and leaking oil, the brine and the climate. -warming of methane”, Los Angeles Times reported in a news article about the sale of the ExxonMobil and Shell wells.

The state and its taxpayers are responsible for decommissioning wells when no other financially responsible party can be found. Companies can be held liable for assets they previously owned, such as ExxonMobil foots the bill for dismantling Venoco’s Holly platform off Goleta.

ExxonMobil’s Santa Ynez unit rigs are in federal waters.

Pending pipeline plans

News of the sale of the Santa Ynez unit comes shortly after ExxonMobil bought Plains All American’s oil transmission pipelines which pass through Santa Barbara, San Luis Obispo and Kern counties.

“A team from ExxonMobil Pipeline Co. will conduct a thorough inspection of the pipelines to determine how to safely and responsibly return them to service,” ExxonMobil spokeswoman Julie King said at the time.

Plains, which was found criminally and civilly responsible for the Refugio oil spill, has pending applications to replace the pipeline and install valves in existing pipelines.

The ruptured portion of the Plains' Line 901 oil transmission pipeline along the Gaviota coast was replaced after the 2015 Refugio oil spill.
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The ruptured section of the Plains’ Line 901 oil transmission pipeline along the Gaviota coast was replaced after the Refugio oil spill in 2015. (photo Giana Magnoli/Noozhawk)

Line 901 runs from Las Flores Canyon to the Gaviota Pump Station in southern Santa Barbara County, and line 903 connects this line to the Sisquoc Pump Station in northern Santa Barbara County and then to the Pentland Station in Kern County.

In 2019, Plains announced plans to build a 123.4-mile replacement pipeline, and the project has been in the environmental review process for several years.

Last year, Plains filed an application to install 16 shutoff valves in existing pipelines. Eleven of the valves would be motorized and five would be check valves, which close automatically when the liquid pushes them back.

The project was proposed to fulfill the obligations of Assembly Bill 864, according to Plains. This legislation, passed in response to the Refugio oil spill, requires pipeline operators in coastal areas to use “best available technologies to reduce the amount of oil released during an oil spill to protect waters from the ‘State and Wildlife’.

The valve installation project would fulfill that obligation, according to Steve Greig, director of government affairs for Plains.

“The California State Office of the Fire Marshal (OSFM)the agency overseeing the implementation of AB 864, has found that the plan and schedule submitted by Plains to install these safety valves meets the requirements of AB 864,” Greig wrote in an August letter. to the county answering questions from a July review hearing on the project.

“Although the pipelines are currently drained of oil and Plains has applied to replace them, the lines are considered active and remain subject to OSFM regulations, including the requirements of AB 864. Approvals have already issued by OSFM, Kern County and San Luis Obispo County,” Greig wrote.

The county zoning administrator approved the valve installation project on August 22, and it was appealed by three parties. An appeal hearing has not yet been scheduled, according to the Department of Planning and Development.

The pipeline replacement project and the valve installation project are “progressing separately through the county permitting process,” according to Errin Briggs, permitting supervisor for the Energy, Minerals and Compliance Division of the Departmental Directorate of Planning and Development.

The new owner of the pipeline will need to apply for a county owner/operator change, Briggs said.

“With respect to existing applications for valve additions and the proposed replacement line, the change in ownership will not affect the permitting process for these projects,” Briggs said.

Noozhawk editor-in-chief Giana Magnoli can be contacted at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Login with Noozhawk on Facebook.

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