The EIR for Venoco's "grand compromise" to close Platform Holly in exchange for plugging other wells and drilling outside its lease was just released.

Paul Wellman (file)

The EIR for Venoco's "grand compromise" to close Platform Holly in exchange for plugging other wells and drilling outside its lease was just released.

Venoco Modifies Adjustment Proposal

Grand Compromise’ Would Close Holly in 25 Years but Allow Drilling Outside Lease

Venoco announced this week it would shut down Platform Holly and the Ellwood Onshore Facility in 25 years should the State Lands Commission approve its Lease Line Adjustment, a proposal that would extend drilling operations thousands of feet beyond the boundary of its current lease. Per the proposal, Venoco would plug wells in the lower portion of its existing lease. The so-called adjustment would allow the small oil company to increase its oil reserves by an estimated 60 million barrels, tripling its current portfolio.

Mike Wracher, Venoco’s chief operations officer, stressed the project does not call for new infrastructure while providing more effective and efficient recovery of the state’s oil and gas reserves. “At the same time, we recognize that California’s goal is to move toward more renewable energy in the coming years,” he said in a statement. “We offer today’s proposal in the spirit of compromise as a way to realize the benefits of the [Lease Line Adjustment] while being consistent with the direction of the state and the feedback we’ve received from the community.”

What Venoco executives dubbed a “grand compromise,” environmental attorney Linda Krop dismissed as “all spin.” “They want to drill into what is protected as part of the California state sanctuary,” said Krop, chief counsel at the Environmental Defense Center (EDC), which represents a handful of environmental organizations decidedly opposed to oil development. “This is Venoco wanting to expand to existing operations for another 25 years … it is completely unacceptable.”

On Thursday, the State Lands Commission released the draft Environmental Impact Report (EIR), beginning the 60-day comment period. Venoco stressed that if the commission — made up of Lieutenant Governor Gavin Newsom, State Controller Betty Yee, and Financial Director Michael Cohen — denied the project, Venoco could continue to drill within its existing lease, which has no termination date; however, the company estimates the field will lose its economic viability in 40 years or so. That all could be a moot point if the City of Goleta shuts down the Ellwood Onshore Facility, which processes oil produced from Platform Holly. If they do so, Venoco has threatened litigation.

On Tuesday, the Goleta City Council will hear an update on the Ellwood Onshore Facility, which environmentalists contend should have been shut down 26 years ago when the property was rezoned. “They’ve known they were operating on borrowed time,” Krop said. The fate of the facility is stalled until Venoco’s Chapter 11 bankruptcy is lifted, according to the Goleta staff report. The case was approved by the Bankruptcy Court earlier this summer, but it remains pending. Venoco production remains shut-in since last May’s Refugio Oil Spill as Plain All American Pipeline’s Line 901 has ceased operation since it ruptured.

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