Senate subcommittee approves funds to protect public health, marine life by securing, plugging bankrupt firms' oil wells

April 26, 2018

SACRAMENTO ­– After two companies running offshore oil and gas drilling and production facilities off the Central Coast declared fiscal insolvency, a Senate budget subcommittee today approved $108.5 million in funding over three years to permanently secure, plug and abandon oil wells and facilities in Santa Barbara and Ventura counties, according to State Senator Bob Wieckowski (D-Fremont).

Venoco LLC and Rincon Island Limited Partnership filed for bankruptcy and rejected their lease obligations to plug and abandon the wells and decommission the oil production facilities. In their absence, the State Lands Commission must step in to protect the public health and safety and the coastal marine environment from an accidental release of oil from Platform Holly and Rincon Island.

“In the wake of the State Lands Commission assuming responsibility for preventing oil spills at these facilities, it is critical that we give it the financial resources to protect our public health and safety,” said Senator Bob Wieckowski, chair of the Senate Budget and Fiscal Review Subcommittee No. 2 on Resources, Environmental Protection, Energy and Transportation. “It is unfortunate that this burden falls on the state, but given the environmental risks involved, and the fact that the state is already staffing and monitoring the facilities as a result of the bankruptcies, allocating these funds immediately will reduce the long-term costs associated with plugging and abandoning the facilities.”

The $108 million, which was proposed by Governor Brown, includes $58 million in 2018-2019, $40 million in 2019-2020 and $10.5 million in 2020-2021. The Legislative Analyst’s Office concurred with the subcommittee that immediate action is needed.

The subcommittee also directed the State Lands Commission to report back by January 10, 2019 on the status of negotiations with ExxonMobil, a prior lessee of Platform Holly. The commission believes that under terms of its prior lease, ExxonMobil retains significant liability to plug, abandon, and decommission Platform Holly since Venoco is unable to do so. ExxonMobil disputes the extent of its liability.

The State Lands Commission will also provide a status report on the work accomplished, timelines for completion and the latest cost estimates for both Platform Holly and Rincon Island. The status of lease renegotiations with existing offshore platform and island lessees and protections put in place to limit future state liability will also be included in the report.

“While it is critical we decommission and remediate the significant oil infrastructure in California waters, including in the Santa Barbara Channel, we must not forget what this budget actions represents. After decades of profiting from California resources, the oil industry has left the state with yet another mess, and expects that California taxpayers will pick up the bill,” said Senator Hannah Beth Jackson (D-Santa Barbara). “No industry should think their responsibility ends when their profits do.  While we work towards securing funding in this year’s budget to ensure public health and safety and prevent oil spills, we must continue to pursue every avenue possible to ensure responsible parties pay their share.”

Production stopped at Platform Holly in 2015 when a pipeline rupture caused the Refugio oil spill. Rincon Island has not produced oil since 2008 due in part to damage to the causeway that connects the island to shore.

Senator Wieckowski represents the 10th District, which stretches from southern Alameda County to parts of Santa Clara County.