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Santa Maria Energy Cuts Back Drilling Because of Falling Oil Prices

Private company operating in hills near Orcutt still plans to pursue larger oil development project

Company officials say low oil prices have Santa Maria Energy ‘hunkering down,’ but plan for a major oil development in the Orcutt Hills are still on track.
Company officials say low oil prices have Santa Maria Energy ‘hunkering down,’ but plan for a major oil development in the Orcutt Hills are still on track. (Noozhawk file photo)

Low oil prices are good for consumers but not for oil companies extracting the stuff, which is why Santa Maria Energy has scaled back its Orcutt field operations.

The privately held energy company founded in 2002 and working on leased property south of Orcutt is operating only its conventional wells, stopping cyclic steam operations, according to inspectors who report to Santa Barbara County energy division director Kevin Drude.

Drude wasn’t sure how many wells were still in use or whether any Santa Maria Energy workers were laid off in the mean time.

According to a company filing to the SEC last year, Santa Maria Energy had 27 employees in addition to working with outside contractors.

Santa Maria Energy wouldn’t comment on any cutbacks, but Beth Marino, vice president of legal and corporate affairs, said the company was “hunkering down while oil prices were low.”

She confirmed Santa Maria Energy still plans to pursue an oil development project it fought so many years to start, winning final approval in November 2013 from the county Board of Supervisors — albeit with stricter carbon-gas emissions requirements than originally proposed.

The project aims to install a total of 136 production oil wells — a 110-well expansion — connecting pipelines and other oil equipment.

Santa Maria Energy’s operations use a cyclic steam injection process to heat oil in a well to a temperature that produces flow. The company has been extracting oil from 75 wells drilled into Monterey shale and 26 wells drilled into a diatomite layer at its Orcutt field.

Marino said the company was still on track with previous project timelines, which indicated the expansion would take shape over the next couple years.

The company is waiting on some permits, and is also taking into account the fact that the area could see more rain than normal this winter due to El Nino conditions.

“We can’t work during the rainy season,” she said.

A year ago, Santa Maria Energy was looking to raise capital for the project, eventually calling off proposed merger plans that would’ve helped in that effort.

The company has been meeting with county staff to ensure its project permits stay up to date, and Drude said Santa Maria Energy could request extensions if needed.

“So far, all their permits are still viable,” he said. “I think they’re interested in keeping the project alive.”

Drude said it appeared other oil companies were mostly operating business as usual despite the dip in the price of oil per barrel, with several of them continuing to pursue applications for new projects, including Aera Energy and ERG.

Noozhawk staff writer Gina Potthoff 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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