Sable Offshore Plans October Start Time for Refugio Pipeline

Santa Barbara County Examining Transfer of Ownership from ExxonMobil

By Margaux Lovely Wed May 15, 2024 | 09:19am

Sable Offshore got an “incomplete” from Santa Barbara County in April on its application to transfer ownership of ExxonMobil’s oil platforms and network on the Gaviota Coast. While the county’s hard look at that transfer might delay Sable’s ambitious announcement that it would get the oil in Gaviota flowing by this October, another obstacle was removed. A settlement worth $70 million was reached last week between Sable Offshore and landowners along the pipelines involved in the 2015 Refugio oil spill.

On May 1, a federal court case settled between Santa Barbara attorney Barry Cappello, who contended the easements on his clients’ land had expired, and Sable. As ownership of the pipelines passed from Plains All American Pipeline to Exxon to Sable, so did the litigation, with Sable footing the $70 million bill. The settlement agreement requires automatic shut-off valves on the existing pipelines — an issue already denied by county Planning Commissioners in 2023. The appeal to the Board of Supervisors resulted in a tie vote split along north-south lines when Supervisor Joan Hartmann recused herself as she lives near one of the pipelines.

Barry Cappello | Credit: Paul Wellman File

If Sable proposes safety valves, will the county’s answer change? It will, said Cappello, who led the charge against safety valves in 2023, arguing Sable was not “in the room” and gained the planning commissioners’ “no” vote. “I won’t object this time,” he said. “Sable is not the same operation that Exxon is. It seems like they want to do it right.”

Sable has hinted it will utilize an alternative “best available technology” that could avoid county approval. In Sable’s 2023 Annual Report to the Securities and Exchange Commission, the company notes the use of “polymer-based liners that are corrosion-free” as an “alternative to existing corrosion protection monitoring,” as well as “added pipeline internal and external inspections, additional spill containment, enhanced leak detection.”

The liner would essentially serve as a “line within a line,” according to Errin Briggs, with the Energy Division of County Planning, meaning the company would put a 12-inch-diameter “polyline” into the existing 24-inch pipeline. Briggs was firm that this would “absolutely require permits from the county.”

Regardless, Sable must go through a multi-stage approval process with the Office of the State Fire Marshal, which ultimately gets the final say on the restart of the Santa Ynez Unit (SYU), which is Las Flores Canyon facility; the offshore platforms Heritage, Harmony, and Hondo; Line 903, which runs to Bakersfield; and the infamous Line 901 that caused the Refugio Oil Spill. Sources from Cal Fire said that the agency’s priority was simply ensuring that all requirements are met, whether it takes months or years. An agency representative said they will not fast-track anything or make exceptions to adhere to Sable’s October goals.

“I’m not convinced that it’s possible,” said Briggs, referring both to Sable’s hopes to bypass county permits and get the SYU fully functioning by October.

But, if Sable can work around county permitting, the only remaining county influence would be the approval or disapproval of the sale of assets from Exxon to Sable.

Roadblocks have appeared. On April 23, Santa Barbara County Planning and Development deemed Sable’s transfer application “incomplete” and asked for 18 bullet points of information regarding environmental impacts, financing, and safety and compliance. Sable was to produce this within 30 days or risk the process being delayed further.

The “incomplete” letter asked for simple pieces of information, such as emergency contacts, and more complicated facts, like how the company will finance the SYU’s operation and potential problems or spills — both connected to the issues surrounding the environmental impacts of running crude oil along the Gaviota Coast.

Sable CEO James C. Flores hasn’t had the best luck with his previous oil endeavors. He served as the chief executive for PXP (Plains Exploration & Production Co.) in the early 2000s, spearheading a groundbreaking environmental agency-oil company collaboration that had many people baffled. The 2009 deal — if it had been approved — would have granted PXP new oil drilling permits with the caveat that the company would cease all operations in 2022. Arizona-based Freeport-McMoRan eventually bought out PXP in 2013 and retained Flores as a CEO. He departed the company in 2016 when Freeport amassed huge amounts of debt under his leadership, a company news release stated.

From there, Flores headed Sable Permian Resources, which, according to its Chapter 11 filings, went bankrupt in a hasty three years when oil prices shot down.

Notably, Exxon loaned Sable more than 60 percent of the funds needed for the purchase of the unit, “making finances a concern,” said Briggs.

Santa Barbara’s Environmental Defense Center (EDC) is looking into whether the public can weigh in on any restart of the pipeline with a public hearing, said Linda Krop, chief counsel for the EDC.

“We’re very concerned,” Krop said of the EDC and its clients, a group of organizations opposed to Sable’s plans to restart the pipeline. “We know the pipeline is damaged, and we know that it won’t be able to operate safely,” Krop emphasized.

Other sources say that doing it right takes far longer than another few months. One source from the county laughed out loud when asked if Sable could get the SYU up and running by October. Exxon has also imposed its own deadline with Sable — if the SYU is not functional by January 1, 2026, Exxon will reacquire the assets for free.