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Goleta City Council Hears Status Update on Venoco’s Ellwood Onshore Facility Operations

Public meeting discusses future of oil and gas processing facility, which some council and community members want closed

Venoco’s Ellwood Onshore Facility is located on Holister Avenue in Goleta, between Sandpiper Golf Club and Bacara Resort & Spa. Click to view larger
Venoco’s Ellwood Onshore Facility is located on Holister Avenue in Goleta, between Sandpiper Golf Club and Bacara Resort & Spa. (Tom Bolton / Noozhawk file photo)

It’s no secret that Venoco’s Ellwood Onshore Facility, which processes oil and gas from its offshore Platform Holly, is not welcomed by many Goleta residents — or the City Council.

The prospect of an oil spill, the facility’s extended lifespan and its status as a legal nonconforming use have been concerns for the community, and those points were rehashed Tuesday night when the City Council heard an update on the status of the plant.

Built in the 1960s by ARCO and acquired by Venoco in 1997, the EOF processes oil and gas extracted from Platform Holly, which sits in the Santa Barbara Channel two miles off the coast west of Goleta.

In 1990, the EOF site on Hollister Avenue near Haskell’s Beach, between Sandpiper Golf Club and Bacara Resort & Spa, was re-zoned for open space and recreational use, making the processing operation a legal nonconforming use, City Attorney Tim Giles said.

He said a legal nonconforming use can remain as long as the use isn’t changed or intensified, although the city can choose to terminate the use if it follows specific processes.

The termination process does result in the removal of the on-site structures or the property owner, who cannot be forced to change the use.

Giles said Venoco’s plans for the EOF do not address the fiscal inequalities generated by the facility’s impacts that are borne by the City of Goleta.

“The burdens are here, but the money goes elsewhere,” he said.

Joe Armendariz, public affairs director of the Santa Barbara County Taxpayers Association, said the oil and gas royalties do help local residents through the services the state provides, which are paid for in part by revenue drawn from the energy industry.

Amortization studies make for an expensive, taxpayer-funded way to cut off those revenues, he said during public comment at the meeting.

Most of the other public speakers took a very different view, however.

“We cannot take 25 more years of this risk,” said Owen Bailey, executive director of the Santa Barbara-based Environmental Defense Center.

“We need the Ellwood Onshore Facility closed now — as soon as (Venoco) emerges from bankruptcy. We need our recreation area freed up, and to move away from the threats this facility offers visitors and residents alike.”

Because of ongoing litigation related to Venoco’s Lease 421, which is partly within the city’s jurisdiction, the council members were advised not to deliberate or take action at Tuesday’s meeting.

“Venoco strongly disagrees with those who claim that its Ellwood Onshore Facility can be or should be terminated,” the company said in a statement following the meeting.

“The EOF and the underlying property are owned by Venoco and are a critical part of its broader Platform Holly complex. Venoco’s new Lease Line Adjustment proposal before the State Lands Commission offers a certain path for the early termination of not only the EOF but Platform Holly as well.”

Venoco’s local operations have been stalled since the 2015 Refugio oil pipeline leak and the subsequent shutdown of the ruptured line that took its oil to market. The pipeline was operated by Plains All-American Pipeline, which Venoco later sued for lost profits.

Goleta commissioned an amortization study to determine how long Venoco needs to recoup its investment in the facility so that it won’t be shut down at an overall loss to the company.

“We conclude that Venoco’s original capital investment in the Ellwood Facilities was fully amortized by 2009, including estimated costs for abandonment,” the study said. “Therefore, capital investments and income after 2009 have no impact on the amortization period.”

Venoco commissioned its own study, which reached a different conclusion.

“Since the remaining life of the (South Ellwood Field oil) reserves is at least 38 years, the remaining useful life of Platform Holly, and, therefore, the EOF, is also at least 38 years,” that study said. “Accordingly, the amortization period for the EOF is a minimum of 38 years.”

In 2014, the council enacted a controversial ordinance that could force Venoco to shut down the EOF.

Under the ordinance, a hearing is initiated by the City Council, which will decide whether the legal nonconforming use should be terminated. If a use is terminated, the property owner or user could be ordered to modify or end that use within five years.

A day after that vote, the State Lands Commission approved Venoco’s recommissioning project for near- and onshore production wells in Lease 421. Goleta immediately challenged the approval in court, and that litigation is still ongoing, Giles said.

Earlier this year, Venoco filed for bankruptcy to reduce the company’s debt and restructure itself while it deals with low oil prices and the closure of the Plains pipeline.

Venoco is protected by the bankruptcy court process from certain actions being taken against the company, Giles said, such as terminating the EOF’s legal nonconforming status.

Once the bankruptcy process is over, he added, the city can follow through on termination proceedings the council already asked city staff to initiate.

On Sept. 15, the Lands Commission released the draft environmental impact report of Venoco’s lease line adjustment proposal, in which the company is seeking to change the boundaries of its lease over the South Ellwood offshore oil field.

If approved, Venoco would return 3,800 acres of its current lease to the state in exchange for 3,400 new acres that would allow it to more efficiently get at oil reserves using six existing wells.

The public has 60 days to submit comments on the draft EIR to the commission. Two State Lands Commission hearings are scheduled for Oct. 19 at Goleta City Hall.

On the same day the EIR was released, Venoco ​offered to revise its proposal to include the closure of Platform Holly and the EOF in 25 years — 15 years sooner than the original proposal — as well as the abandonment of the company’s controversial Paredon project off the Carpinteria coast.

If the lease line adjustment is not approved, Venoco could continue operating indefinitely.

The Goleta Planning Commission will hear an EOF update after Venoco exits the bankruptcy process, and the public will have another opportunity to provide input.

After that, the council will hold another hearing on the future of the facility.

Comments on the draft EIR for the lease line adjustment proposal are due by 5 p.m. Nov. 14 and can be sent to the State Lands Commission at [email protected].

Noozhawk staff writer Sam Goldman can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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