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Goleta Council to Re-Examine Venoco Franchise Agreement

Pipeline access is at the heart of a standoff over plans for the Ellwood Onshore Facility

In what has become something of a chess game between Goleta and Venoco Inc., the City Council unanimously voted to initiate an amendment to its franchise agreement with the oil company. Accompanying that potential amendment would be possible changes to sections of the city’s Coastal Zoning Ordinance.

According to Steve Chase, the city’s planning and environmental services director, the amendments staff recommended came about because of a potential project Venoco may push through in the event it doesn’t receive approvals for its full field development project. That new project would include an overland pipeline directly to the All-American Pipeline at Las Flores Canyon from Venoco’s Ellwood Onshore Facility.

“If that happens, Goleta’s stuck with the Ellwood Onshore Facility,” said Chase, who commented that to his understanding, Venoco has already approached Santa Barbara County on the concept.

Specifically, the franchise agreement amendment city staff suggested for study refers to the removal of a “common carrier clause,” which allows for the shared use of Line 96, a pipeline that transports oil underground from the Ellwood Onshore Facility near Bacara Resort & Spa southeast to the Ellwood Marine Terminal, on UCSB-owned property, for temporary storage.

According to the staff report, the pipeline is currently configured for only one user, and Venoco is its sole user. Changing the clause would reflect its current use and “avoids any potential future alternate or joint use which could extend the life of the pipeline beyond Venoco’s use,” said the report.

Meanwhile possible amendments to the city’s Coastal Zoning Ordinance would remove references to “new production,” which is not allowed by the Ellwood facility’s legal nonconforming land-use designation, and would effectively prevent use of the facility outside its current permits.

The council’s decision came despite Venoco’s protest that the city was out of its jurisdiction with regard to the changes it is considering to the franchise agreement. Goleta has no right to change the public utility status of Line 96, said Venoco counsel Steven Kirby. Only the state Public Utilities Commission has that authority, he said.

As to the amendments to the Coastal Zoning Ordinance, Kirby said the city could be violating Venoco’s vested rights in its property.

“What we understand is that (the city) is trying to change the rules of the game and the rights of the property owner after those rights have been established,” he told Noozhawk. Venoco, and all the projects it has proposed could operate under the existing set of rules, he added.

This amendment initiation is the latest in an ongoing tug-of-war between Venoco, which wants to increase operations at its Ellwood facilities, and the city, which has been trying to prevent that from happening.

Currently Venoco has four projects on the table, including full-field development of the South Ellwood Oil Field through extended-reach technology from existing well slots on Platform Holly, and recommissioning of two derelict oil piers on the shore east of Haskell’s Beach. Another project is is the extension of its lease with the UCSB-owned Ellwood Marine Terminal near Coal Oil Point, where oil is stored before being shipped out by barge. Another is a project that would allow for truck transportation of its product if the barge is out of commission.

With the expiration of its lease at the Ellwood Marine Terminal (the facility is currently on lease on a year-to-year basis), Venoco would no longer be able to use the single-hulled barge Jovalan to transport oil and gas, and would have to build a pipeline to transport the crude directly to Las Flores Canyon, about 10 miles away.

To fund that 10-mile pipeline, Venoco has asserted, it would need to intensify drilling from Platform Holly, a rig about two miles from the Ellwood coast. Environmentalists have decried the full-field development proposal, meanwhile, calling it a “new project on old facilities.”

The state Lands Commission, in the Draft Environmental Impact Report on the full-field development project released in June 2008, commented that the environmentally superior alternative would be the piping of the oil and gas directly to Las Flores Canyon from the offshore platform, bypassing the onshore facility, the marine terminal and Line 96 altogether.

Among the things amendment initiation should clear up, said the city, would be the definition of “new production” in the Zoning Ordinance. Kirby called that phrase “a term of art,” defined specifically in the Coastal Zoning Ordinance the city adopted from the county in 1987. Goleta, meanwhile, insists the definition is outdated.

Kirby also said the initiation would be a waste of time, given the seeming lack of authority the city has to change the status of Line 96, but the council felt differently.

“I’m concerned about these issues, but I don’t know what the answers are,” said Councilman Michael Bennett, pointing to the need for the study, which is expected to be back before the council in June.

Venoco officials, meanwhile, for the moment are planning to monitor the situation.

“We’ll watch the process,” said Steve Greig, Venoco’s government relations liaison. “We’ll wait to see what happens in the process.”

Noozhawk staff writer Sonia Fernandez can be reached at .(JavaScript must be enabled to view this email address).

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