New $72 Million Settlement Reached in Refugio Oil Spill Litigation

In the lengthy rounds of court cases arising from the 2015 Refugio Oil Spill in Santa Barbara County, a new settlement was announced on Tuesday by California’s State Lands Commission. Plains All American Pipeline, which a jury found guilty of criminal negligence for failing to maintain its Gaviota pipeline, will pay $72.5 million toward closing offshore oil wells owned by Venoco, which was bankrupted by the pipeline rupture. Among the Venoco possessions being liquidated by its bankruptcy trustee is the Ellwood Onshore Facility in Goleta, which sold earlier this year for a half-million dollars to Bell Canyon Recreation, LLC.

Venoco Inc. filed for bankruptcy in 2017 due to insurmountable losses in revenue after the broken Line 901 could no longer deliver the company’s crude oil from Platform Holly to refineries. (A lawsuit between Venoco and Plains settled privately earlier this year, with speculation placing the sum in the hundreds of millions for a decade of lost revenue.) This placed the burden on the State Lands Commission to “protect public health, safety, and the environment” by maintaining and decommissioning Venoco’s rapidly deteriorating ocean infrastructure.

“Plains’ negligent maintenance of its pipeline unjustly shifted decommissioning liability to California taxpayers and terminated the state’s royalty income,” a press release from the commission announcing the settlement stated. Of the new settlement amount, $50.5 million goes to State Lands and $22 million to Aspen American Insurance Company, which held Venoco’s performance bond for its offshore drilling activities.

State Lands estimated it could cost $350 million to shut down Platform Holly’s 30 wells and two wells at Pier 142 off Goleta. Since production ceased at Holly, dribs and drabs of gas and oil from the wells were piped to the Ellwood Onshore Facility, which was built in the early 1970s by Atlantic Richfield. State Lands kept the facility in operation before the bankruptcy trustee sold it, originally for $1 million which was renegotiated to a half-million dollars in January.

The new owner is named for its location, Bell Canyon, said Michael Johnson, who formed a partnership with Tim Finnigan to buy and restore the 4.5-acre property. Johnson said he’d lived about two miles from the site since 1998, before moving to Santa Barbara in recent years.

Bell Canyon itself is named for the family of Katherine Den Bell, the eldest daughter of Nicholas Den, who owned all the land between Fairview Avenue and El Capitan Canyon before his death in 1862. Kate Bell is said to have pointed to a spot on her ocean-front acreage in 1920 and declared oil would be found there, which it was in 1928, two years after she died, kicking off the Ellwood oil field boom.

At Bell Canyon, all hydrocarbons had been removed from the Ellwood facility, said Johnson. All the pipes and tanks were “clean, rinsed, washed out,” he said. With a background in construction, he was well aware of the cleanup required, which carries estimated remediation costs of between $4 million and $20 million. “The first thing we did was test the groundwater,” Johnson said, “and it was significantly cleaner than previous tests.” They’ve hired the same contractors that State Lands had used for operations and environmental assessment, and Johnson counted about seven agencies, including the City of Goleta, that they’d be going through before beginning to plan for the site. What they have in mind is a glamping campsite, he said.

“It’s a delicate dance right now. It’s zoned active recreation, so there are certain things we can do. We named it Bell Canyon Recreation because we want to do a camping site, something that’s coastal dependent.”

An estimate published at Reuters put Plains All American’s costs due to the oil spill at about $870 million, roughly $500 million or more of that in settlement costs, for a company with net income of more than $1 trillion in 2022. The pipeline’s new owner, Sable Offshore, just had its transfer of ownership approved by the county Planning Commission, but a battle with environmentalists lies ahead. As for Platform Holly, its wells were completely plugged and abandoned as of September. The next phase is completion of an environmental impact report for public comment, State Lands indicated. After that, the platform would be removed at ExxonMobil’s expense.