Platform Holly / Venoco, LLC Bankruptcy
- The public may access the bankruptcy filings for Venoco through Prime Clerk.
August 2019 Update
The Commission and its contractors will complete abandonment of the PRC 421-2 well on Haskell’s Beach in the near future. This is the site of the small oil discharge that occurred in late May. The Commission’s engineers and agents have developed a program to finish sealing the well and any connection it may have to natural fractures in the bedrock. There is a real likelihood that the abandonment could cause another oil discharge during the operation. To minimize the potential that any discharge would reach the marine or beach environment, the team has developed these mitigation measures:
- Response equipment and personnel staged on the beach during critical operations
- Vacuum truck on location.
- Critical operations will only occur at low tide.
- Leaving annular valves at the wellhead open (path of least resistance for flow). Leaving the annular valves open at the wellhead allows any free oil in the annular space to flow up the annulus into the well cellar, where it can be contained and recovered. The goal is to reduce any discharge of hydrocarbons, that may be present in the annular space, out into the bedrock fractures where it migrates to the surface.
- Continuous flow monitoring.
- Investigation using a boom during critical operations (difficult in surf zone even at low tide).
421-2 critical operations
The following operations may result in down-hole pressures exceeding water hydrostatic pressure and are considered critical operations (operations that have the potential to create a discharge). They will only be performed during low-low tide and with response equipment staged on the beach:
- The setting of balanced cement plugs (due to the higher weight of the cement).
- Pressure test of the wellbore in the open 9”x13-3/8” annulus.
- The final top cement plug of the wellbore.
Why target critical operations at low tide? It would be impossible to stage the response equipment and personnel on the beach at high tide. The previous discharge occurred at low tide and the expectation is that it will be easier to see and respond to a discharge at low tide without the complications of significant amounts of sea water inundating the release site.
Staff believes that the precautions explained above will minimize and avoid further discharges in the marine or beach environment owing to the final well abandonment work. Once the well is cemented, there should be no further surface discharges from the well or from the well into natural fractures in the bedrock that may be in contact with the well.
If you have questions or comments, please contact the Project Manager, Jeff Planck, at email@example.com | 714.345.7561.
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