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Sunday, March 24 , 2019, 7:50 pm | Fair 57º

 
 
 
 

Venoco Bankruptcy Ends Major Source of Tax Revenue, Philanthropy — and Eases Environmental Worries

Oil company’s generosity engendered appreciation in some, but its operations spawned concern in others

Platform Holly, 2-1/4 miles off the coast of Goleta, will be decomissioned by the State Lands Commission. Click to view larger
Platform Holly, 2-1/4 miles off the coast of Goleta, will be decomissioned by the State Lands Commission. (Sam Goldman / Noozhawk photo)

Venoco, Inc. has had an interesting relationship with the Santa Barbara community.

The Denver-based energy company has engendered appreciation in many for its philanthropic involvement locally, but its operations have spawned concerns from residents opposed to oil development in their environmentally sensitive backyard.

The company’s second bankruptcy filing, announced last month, effectively ended offshore oil and gas drilling in the Santa Barbara Channel’s state waters, as well as a steady stream of tax revenues and philanthropy.

Dozens of jobs and plenty of tax revenue are being lost, though the possibility of an oil spill or gas leak will be mitigated.

The bankruptcy announcement came almost two years after the May 2015 rupture of a pipeline near Refugio State Beach that spilled more than 123,000 gallons of crude oil along the coastline and into the ocean.

Venoco used the Plains All American pipeline to transport oil and gas to refineries, and shutting down the pipeline curtailed more than 50 percent of its production. 

The company's principal assets are oil facilities located offshore and onshore in Southern California.

Just before initiating the bankruptcy process, Venoco quit-claimed its leases in the channel back to the State Lands Commission, along with Platform Holly and its infrastructure of piers off the shores of Goleta.

At one point, Venoco employed about 80 people in its Carpinteria office, and had 80 to 90 people out in the field, including those who had worked for ExxonMobil before Venoco took over the oil giant’s leases.

Now, there are fewer than 20 employees left in Carpinteria, according to the company’s operations manager, Larry Huskins.

Before the Refugio spill, he said, Venoco was consistently one of Santa Barbara County’s top three tax generators. He put the total revenue the state has received in royalties at over $150 million.

According to the Santa Barbara County Treasurer and Tax Collector’s Office, Venoco has paid more than $20 million in property taxes going back to 2010.

“Venoco’s renowned from the state, as well as the federal authorities, as one of the best operators in California,” Huskins said of his company’s safety standards and procedures.

Venoco’s 2016 Crystal Apple Awards honored educators from all over the county. From left, Marybeth Carty, Venoco’s community partnership manager, with the South Coast Crystal Apple winners: Hope School Principal Barbara La Corte, Marilyn Garza of Santa Barbara Junior High School, Gwen Patterson of Peabody Charter School, Tracy Schifferns of McKinley School and Maria Pacheco of the Santa Barbara County Education Office. Click to view larger
Venoco’s 2016 Crystal Apple Awards honored educators from all over the county. From left, Marybeth Carty, Venoco’s community partnership manager, with the South Coast Crystal Apple winners: Hope School Principal Barbara La Corte, Marilyn Garza of Santa Barbara Junior High School, Gwen Patterson of Peabody Charter School, Tracy Schifferns of McKinley School and Maria Pacheco of the Santa Barbara County Education Office. (Venoco photo)

Venoco’s community partnership manager, Marybeth Carty, described to Noozhawk a corporate culture of volunteerism. Employees will continue their volunteering and involvement with nonprofit boards “right up into the bitter end.”

Carty said Venoco would match employee donations and volunteer hours with its own dollars.

The company benefited Goleta Valley Cottage Hospital’s remodel and expansion, the Boys & Girls Club of Santa Barbara, Girls Inc., the Foodbank of Santa Barbara County and the Scholarship Foundation of Santa Barbara.

“Over 20 years, we’ve donated $12 million and reached well over 200 organizations,” Carty said, noting that lost revenue after the Plains spill increasingly curtailed her company’s philanthropic reach.

“There are organizations that will definitely feel the pinch.”

Partners in Education, a county program that leverages corporate, foundation, government and individual resources to prepare students for post-school life, received ongoing support from the company.

“Venoco has consistently stepped up to the plate for education, giving nearly half a million dollars to our organization since 2001,” the organization’s executive director, Chelsea Duffy, told Noozhawk in an email.

“Venoco was especially instrumental in ensuring that our Computers for Families program — which has delivered more than 11,000 refurbished computers to local families — could continue in perpetuity.”

Duffy called out Carty as an especially dedicated volunteer and board member who has “personally volunteered nearly 200 hours through Partners.”

Carty called the bankruptcy procedure “a process of actively liquidating and selling assets,” many of which are not necessarily headed back to the State Lands Commission.

The future of Venoco’s Ellwood Onshore Facility in Goleta will be determined during the bankruptcy process. Click to view larger
The future of Venoco’s Ellwood Onshore Facility in Goleta will be determined during the bankruptcy process.  (Tom Bolton / Noozhawk file photo)

The fate of facilities off the Carpinteria coast and the Ellwood Onshore Facility near Haskell’s Beach and Sandpiper Golf Club in Goleta, which processed the oil and gas extracted by Platform Holly, will be determined during that process, which Venoco has estimated will take six months to a year.

The city of Goleta has for a while been looking to shut down the EOF. The facility is considered a legal-nonconforming use of land that is zoned for recreation, and many residents fear it could cause some sort of spill or leak.

Now, with Venoco throwing in the towel, oil and gas production in the Santa Barbara Channel’s state waters has come to an end.

“This is definitely something that is a huge relief to the community,” said Linda Krop, chief counsel of the Santa Barbara-based Environmental Defense Center.

Even as environmentalists hail the end of Venoco’s production, Krop said there are 23 other platforms in the Santa Barbara Channel region, 15 of which are still operating.

“You can plan and have the best measures in place to try to prevent an oil spill, but accidents do happen,” said Jenna Driscoll, watershed and marine program associate with Santa Barbara Channelkeeper. “Anytime we can move away from extraction techniques to more sustainable development is a good thing.”

Venoco’s bankruptcy was also the final nail in the coffin for the company’s proposal to alter the boundary of its lease in the channel. If approved, it would have allowed the company to end its operations after about 25 years instead of the anticipated 40 years.

The tradeoff would have been allowing Venoco to extract 40 million more barrels of oil than it otherwise could have — a big driver of residents’ oil spill concerns.

It now falls on the state to decommission Platform Holly, which will take an estimated three years, depending on funding and the environmental review process.

Especially with the platform sitting in a state marine sanctuary, the overarching consideration is what course of action would be most environmentally friendly.

Completely removing Platform Holly down to the seafloor would disrupt the marine ecosystem that has developed around the platform’s submerged infrastructure, said Milton Love, a UC Santa Barbara research biologist who studies fish populations around reefs and platforms.

Platform Holly sits in water over 200 feet deep, and its 30 wells reach thousands of feet below the sea floor. Click to view larger
Platform Holly sits in water over 200 feet deep, and its 30 wells reach thousands of feet below the sea floor. (Sam Goldman / Noozhawk photo)

Those in shallow waters like Platform Holly serve as nursing grounds for hundreds of thousands of young fish in addition to a multitude of invertebrates such as sea stars, Love said.

Platforms also enable the comeback of over-fished species, with Holly likely aiding bocaccio, widow and canary rockfish.

Completely rooting out the platform would be expensive and require running charges down to its base, more than 200 feet below the surface, and blowing it all up. The huge amounts of destroyed materials — covered in dead sea life — would then have to be lugged somewhere that would accept them.

That would kill off virtually all of the life attached to the platform, with repercussions for the wider ecosystem.

Love said the idea of shearing off the top 100 submerged feet of Platform Holly has been tossed around, which should save the fish nursing below, but kill the mussels and associated organisms above.

The task is further complicated by having to make sure large ships can coast over the remains without scraping their hulls, or, should the whole platform stay, the money it would take to maintain the above-surface infrastructure. That’s an option Love said he hasn’t heard anyone raise.

“All the platforms off of California harbor many species of fishes, and then this very robust invertebrate life,” Love said. “It’ll be intellectually fascinating to see how this whole process starting with Holly plays out.”

Krop told Noozhawk that the State Lands Commission informed her that the first step will be immediately plugging the 30 wells. She said the Environmental Defense Center is committed to the facility’s full removal — the course of action she said she expects the state to propose.

She said there are too many competing uses in the water there for partial or no removal to be entirely safe.

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.

Oil continuously seeps up to the surface of the Santa Barbara Channel — here, in the form of bubbles that pop and leave the substance floating on the water. Venoco officials say the natural process will worsen without drilling equipment to suck it out manually. Click to view larger
Oil continuously seeps up to the surface of the Santa Barbara Channel — here, in the form of bubbles that pop and leave the substance floating on the water. Venoco officials say the natural process will worsen without drilling equipment to suck it out manually. (Sam Goldman / Noozhawk photo)

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