In what the State of California calls a monumental victory, Venoco’s bankruptcy court ruled on Tuesday that the State Lands Commission’s takeover of the Ellwood Onshore Facility in Goleta was “an exemplary illustration of its police power.”
When the Venoco oil company declared bankruptcy in 2017, it fell to California’s State Lands Commission to bring Venoco’s offshore oil wells at Platform Holly to a close and to maintain its onshore operations at Ellwood. Venoco’s bankruptcy trustee argued that the state owed $161 million for the taking of the onshore facility at Ellwood (EOF). However, State Lands had necessarily kept the EOF up and running in order to handle the toxic hydrogen sulfide coming from the offshore oil lines and to collect the remnants of oil coming ashore as part of the platform’s decommissioning process.
In his ruling, Delaware bankruptcy Judge John T. Dorsey stated, “The bottom line is that Venoco created an emergency when it threatened to leave unmanned a facility that required constant monitoring to ensure public safety. It cannot now claim that it is owed payment when the State responded accordingly.” His ruling followed a trial held March 7-11, 2022.
State Lands noted that the Venoco trustee remains the owner of the EOF and is responsible for its remediation and disposition.
State Lands is also bringing Venoco’s two wells at Piers 421 to a close, announcing on Wednesday that removal of the pier and its caissons will begin on August 29 and take about six months. Except for an interruption during the pandemic years, State Lands has been working on removing the oil infrastructure below Sandpiper Golf Club at Haskell’s Beach since 2018. Haskell’s, which once held 13 of the large piers as the Ellwood oil fields have been tapped since the 1920s, will be closed at times near the pier equipment and removal, which will mainly take place during low tide.