California offshore platform slated for removal as Venoco files for bankruptcy

American oil exploration and production company Venoco has filed for bankruptcy. Before this move, the company quit-claimed its lease for the South Ellwood field off California which is now slated for decommissioning.  

The company and its affiliates, (TexCal Energy (LP) LLC; Whittier Pipeline Corporation; TexCal Energy (GP) LLC; Ellwood Pipeline, Inc.; and TexCal Energy South Texas, L.P., filed for Chapter 11 of the Bankruptcy Code in the U. S. Bankruptcy Court for the District of Delaware.

Venoco’s assets are expected to be sold or wound down through the bankruptcy process.

“Today’s filing is the result of unfortunate circumstances impacting the company’s financial strength, including the ongoing closure of Plains All American Pipeline’s Line 901,” said Mike Wracher, Venoco’s COO.

“We have pursued a number of market-based and regulatory solutions to address these challenges during the last year. Despite these considerable efforts, our financial position now compels us to take this action.”

Venoco said it is working with regulators and stakeholders to ensure the transition or wind-down of its assets throughout the bankruptcy process. As the company pursues the sale/disposition of its assets, it expects to conduct business as usual and expects day-to-day relationships with employees, vendors, and customers to continue.

Prior to bankruptcy, Venoco quit-claimed its leases in the South Ellwood field, offshore California in the Santa Barbara Channel, back to the state, which starts the decommissioning process. Venoco and the State Lands Commission have executed a reimbursement of temporary services agreement for Venoco to maintain the South Ellwood field assets until the state designates another operator responsible for managing the safety and security of the assets throughout the decommissioning process.

Environmentalists celebrate the move 

Local environmentalists and community members are celebrating the announcement that Venoco has quit-claimed its oil and gas leases offshore Ellwood near Santa Barbara. The leases include those supporting operations from platform Holly and the Ellwood Pier.

According to a statement by the Environmental Defense Center (EDC), a non-profit corporation which provides legal counsel to other non-profit organizations, the Ellwood onshore facility (EOF), which processes oil and gas from platform Holly, will also likely be decommissioned.

The EDC has been representing the Sierra Club, Get Oil Out! and Citizens Planning Association in their opposition to oil development in this area for decades. “We are pleased that Venoco’s aging oil facilities will be removed, and the area restored to its natural condition,” said Linda Krop, Chief Counsel of EDC.

“Venoco’s action to quitclaim its leases is a turning point in our State’s role in offshore oil development,” said Michael Lyons, President of Get Oil Out! “Platform Holly is the last remaining platform in State waters, and its removal will symbolize our transition from fossil fuels to clean energy.”

The Ellwood Pier was built in 1949, and platform Holly and the Ellwood onshore facility were constructed in 1966.

According to the environmental groups, all of these facilities pose a threat to public health and the environment. In 1994, the Pier leases were shut down following an oil spill. Also, platform Holly and the Ellwood onshore facility were temporarily shut down in 1999 following an H2S leak. All of the facilities have been shut down since the Plains All American Pipeline spill at Refugio in May 2015.

Over the past few months, State Lands Commissioners Betty Yee and Gavin Newsom expressed opposition to Venoco’s plan to expand production from platform Holly. Also in 2016, newly elected Goleta City Council members Stuart Kasdin and Kyle Richards offered support to shut down the Ellwood onshore facility.

Combined with the inability to transport oil and gas due to the shutdown of the All American Pipeline, these actions likely contributed to Venoco’s decision to abandon its plans at Ellwood, the EDC concluded.

Offshore Energy Today Staff