Terracore Abandons New Oil Wells Project in Cat Canyon

Third and Final Company to Abandon Plans to Expand

The West Cat Canyon site for ERG, aka Terracore, is outlined in blue and marked number 1. That project and the other two outlined here will not go forward. | Credit: Project FEIR

The last oil company with permit applications in Cat Canyon withdrew its proposal for 187 new wells, the Environmental Defense Center announced with satisfaction today.

The project has been in Santa Barbara County’s planning pipeline for such a long time — six years — that the applicant went through three name changes and two companies. It was filed in June 2014 by ERG, a Texas-based company that went bankrupt a year later and was bought in 2019 by Terracore, a Colorado company that changed its name for this project to Cat Canyon Resources.

Two other companies that applied to expand existing wells or drill new ones in Cat Canyon were PetroRock and Aera Energy, both of which abandoned their applications this spring. Between them, the three companies were proposing 760 new wells for steam-injection petroleum production, non-thermal production, wastewater dumping, non-potable and fresh water, and observation. The area has just over 500 existing wells that are currently active or idle. Tara Messing, an attorney with EDC, said Terracore’s letter to the county indicated the company had decided to concentrate on its existing operations in Cat Canyon.

At the last Terracore hearing before the Planning Commission, the nonprofit law firm, which was working on behalf of the Sierra Club Los Padres Chapter and the Santa Barbara County Action Network, submitted a comment that was hundreds of pages long. Messing said the lengthy letter was a detailed list of what the environmental impact report neglected to state: threats to groundwater, the lack of a greenhouse-gases mitigation plan, and potential seismic issues, among other issues.

The last was due to the project’s intent to pull oil out of one formation far underground and then attempt to balance the void by injecting produced water (or wastewater from the production process) into a formation several thousands of feet deeper. This departure from standard procedure would create unbalanced well stimulation, an impact pointed out by Aera in its draft EIR, Messing observed.

“With this project, we really looked at every section of the EIR,” Messing said, “bringing in experts like hydrogeologists to determine what the real environmental harms would be and what was omitted.” The project would have to get an aquifer exemption from state water officials, she said, because Terracore planned to “reinject nasty wastewater for disposal purposes. We had experts submit reports on how underground conduits could allow the contamination to travel to drinking water basins” that underlie the oil field.

In so doing, EDC worked with community groups like MICOP (Mixteco Indigena Community Organizing Project), Santa Barbara Standing Rock Coalition, Lideres Campesinas, and CAUSE (Central Coast United for a Sustainable Economy) “to join together as one voice in opposing these projects,” Messing said. It was a collaboration made possible through years of strengthening the coalition to defeat the projects, she said, not just through appearing at hearings but by sharing information, holding rallies, and raising public awareness.

As for why Terracore threw in the towel at this juncture, Messing said since the Planning Commission meeting in March 2019, the company had offered no proposals in answer to commissioners’ requests for more information on such things as how it would more fully mitigate or prevent greenhouse-gas emissions, aquifer contamination, or any of the other issues EDC had raised. As well, oil prices had tumbled, and Phillips 66 had announced that it was converting one of its petroleum processing plants in California to renewable fuels only.

Calls and emails to Terracore and industry representatives for comment were not returned by filing time.

[Update 11/04/20 12:30 p.m.] After this story first published, Errin Briggs at the county’s Energy Division stated that with the withdrawal of the permit, Terracore would need to start the process all over again should Cat Canyon become of interest again for new steam-injection petroleum production.

[Update 11/04/20 3 p.m.] A representative of Cat Canyon Resources phoned the Independent after the early version of this story appeared. Rich Field has worked in Santa Barbara County oil for almost 30 years, first for Unocal and more recently for Terracore, which changed its name to Cat Canyon Resources and is headquartered in Santa Maria. He’s the company’s environmental health safety regulatory and compliance manager, and Field described their operations to put into context the statements made by EDC.

“We took a hard look at it,” Field said of the project, “and it didn’t fit with our business plan. We decided to focus on our existing entitlements, work our wells, and maintain production.” That enables the company to employ 50 people directly and 25-30 people through their contractors, he said. “That’s important to us with the current pandemic and the high unemployment rate.”

The company operates 160 wells currently, 130 of them employing cyclic-steam injection to pull crude mainly from the Sisquoc Formation. The other 30 wells pull crude from the deeper Monterrey Formation using conventional “cold” pumping. The field produces about 2,000 barrels a day, which makes the company viable, he said, even with the price of a barrel of oil somewhere in the $39 range.

Field said that the Cat Canyon area has produced oil since the 1940s and steam injection has been around since the 1950s. The increased pressure in the production technique hasn’t produced contaminated groundwater, he said, nor has it caused seismic activity.

The conversion of the Philips refinery in Martinez to alternative fuels and the shut-in of its Mesa production site in Arroyo Grande was a shock, he said. But a lot of producers used the facilities, and he felt confident a work-around would be found.

As for Messing’s belief that it had been a year with no word on Terracore’s progress on the Planning Commission’s instructions, Field said they had been evaluating a 3-5 megawatt solar project on 2-3 acres to power the operations. They had also been looking into carbon sequestration to remove the carbon from the steam generators.

“My main goal would be to mitigate the CO2 in Santa Barbara County, but, really, there’s no mitigation available in the county,” he said. “We have to go through Sacramento and cap and trade.”

Aside from oil, Cat Canyon is largely devoted to cattle grazing with a number of acres in lease from landowners. Field praised his company for its regulatory-minded operations and employment rate.

“At some time, we’ll come back with another project,” he said.

Correction: It was the EIR for ERG’s West Cat Canyon project, not the EDC, that identified a well pad within a mile of an elementary school near Sisquoc.

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