NOT A GOOD LOOK: I have yet to meet Jim C. Flores. Given my propensities, I’m sure to like the guy. He’s a hair-on-fire, don’t-give-a-shit genius who confronts the world with a friendly “You and what army?” belligerence.
Flores is CEO for Sable Offshore, and for the past two years, he’s been picking more fights with more government agencies in
an effort to restart Exxon’s oil operations up the coast than Elon Musk, another mad genius, has sent rocket ships up into outer space from Vandenberg Space Force base. Both, ironically, “self-made” men who could not have made it as far as they have without massive infusions of federal help and protection.
In Flores’s case, he succeeded in turning on the switch at Exxon’s old Las Flores Canyon operation up the Gaviota Coast only because the Trump White House and its Bureau of Energy Dominance gave Flores what Philadelphia Eagles football fans call the “Tush Push.”
In Flores’s case, I call it the Trump Rump Bump. Translated into plain English, Trump seized jurisdiction for pipeline safety away from the state and put it in federal hands and then ordered Sable to begin pumping oil under a wartime powers act that may or may not withstand legal scrutiny.
But here’s the thing. And admittedly,
it might be a little one. But it’s disquieting, nonetheless.
The pipes and pumps out at Platform Heritage — located out-of-sight-out-of-mind 25 miles off the coast — have sprung something of a natural gas leak. I don’t want to want to overstate the problem, but this week, Sable is seeking its second request for a “variance” from the county’s Air Pollution Control District (APCD).
To be fair, Sable’s only asking for a temporary 90-day variance, but the plant was only reactivated three months ago, and this is the second air pollution control “variance” it has requested. As “soft openings” go, it does not instill confidence.
It definitely does not instill confidence in the massive industrial facility that screwed up so badly 10 years ago — the Refugio Oil spill of May 2015 — that it put all three oil companies then operating off the coast out of business. Not one of them came back. To be accurate, Exxon tried, gave up, and sold out to Sable, I suspect as an act of revenge against a county it came to truly despise.
I suggest nefarious motives because Exxon loaned Sable the billion bucks needed to buy the plant but then imposed insanely improbable performance thresholds. If Sable failed to meet these, the property reverted to Exxon and Jim Flores would be out.
Say what you want about Flores, but he is creative, driven, desperate, innovative, ruthless, and fearless. And he can clearly hear the clock ticking. Why else would his company award Flores a pay package worth $176 million last year, before one drop of oil had been produced. Most of that’s in stocks, but still, it’s $20 million more than what the CEOs of Exxon and Chevron — combined — take home.
Flores ain’t stupid. With such speculative ventures, you eat dessert first.
Why else would Sable award Flores a pay package worth $176 million last year? That’s $20 million more than what the CEOs of Exxon and Chevron — combined — take home.
This week, Flores’s note with Exxon came due. He hoped to launch another offering to generate the $1 billion needed to pay Exxon back. Offerings take time. Instead, Exxon agreed to extend its deadline by one month. For that, Flores had to pay Exxon $30 million. This from a company that lost $197 million in the first quarter of the new fiscal year.
Admittedly, I’m not competent to render an informed opinion about stock offerings, but from where I sit, Flores is Fred Astaire when it comes to dancing on the razor’s edge of the financial cliff.
Let’s get back to the variances and the APCD. According the variance petition filed by Sable: “The platform has experienced an unexpected number of equipment malfunctions, onshore and offshore balancing issues, and well production issues which are related to restart of the platform and which have resulted in excess unforeseen issues with the re-establishment of sweet gas well production [that] has also caused unexpected flaring related to attempts to stimulate gas flow.”
To be honest, I’m probably not competent to read a variance application form either. But words like “unexpected,” “unforeseen,” and “equipment malfunctions,” when applied to the escape of gases that can pose severe respiratory and cardiovascular hazards, should keep even guys with ice water in their veins — like Flores — up at night. “If immediate compliance were required,” Sable’s application adds, “the facility would be required to completely shut in and depressurize the system. Immediate compliance would result in delayed production and lost revenues of approximately $1.75 million per day.”
According to the APCD permit, Sable is allowed to release no more than a ton of these gases — reactive organic carbons and nitrogen oxides — every three months. Right now, it appears they’re perilously close. If they exceed that mark without a variance, they’d be given a notice of violation. There would be fines.
Right now, Sable has no answers. No doubt, Flores will figure something out.
So, yes, always eat dessert first. But be sure to wear a gas mask.
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