Santa Barbara County and Sable Offshore Corp. reached a settlement agreement last week that will allow the company to install safety valves along its oil pipeline.
The pipeline and offshore oil platforms that used the pipeline have been shut down since the 2015 Refugio Oil Spill. Earlier this year, Sable was created with plans to purchase ExxonMobil’s Santa Ynez Unit assets and restart production.
Regulators told Sable/Pacific Pipeline Company to install safety valves along the pipeline to comply with the best available technology.
The county Board of Supervisors essentially denied permits by not taking any action on the valves project last year and the company sued.
In the conditional settlement agreement executed in federal court on Aug. 30, the county says it does not have jurisdiction over the pipeline, spokeswoman Kelsey Gerckens Buttitta said.
Sable/PPC plans to install 16 safety valves along the pipeline, and they must be operational before the company can restart production.
The revised plan is to install the valves and associated equipment entirely underground, which brings the project out of the county’s jurisdiction, Gerckens Buttitta explained.
“Because the safety valves will be one foot or more below the surface of the ground, the County is preempted by the Celeron agreement and federal law from exercising local control over the changes,” she said. The Celeron settlement from 1988 involved litigation over the original construction of the pipeline.
Sable’s Tuesday filing with the SEC outlined the agreement and its restart plans.
“Sable affirms that initial restart of production from Sable’s Santa Ynez Unit is expected in fourth quarter 2024,” wrote Gregory D. Patrinely, executive vice president and CFO of Sable.
The company’s share price rose 28% with the settlement news, the Wall Street Journal reported Wednesday morning.
Settlement Terms
The settlement agreement includes terms for Sable/PPC to boost the capacity for pipeline monitoring and oil spill response.
Sable/PPC will create a local surveillance and response team “for timely initial incident response and equipped with key resources to deploy in early containment,” especially along the Gaviota Coast, where the pipeline burst in 2015.
The company will train and provide equipment to Santa Barbara-area first responders “to assist in PPC’s incident response efforts.”
It will create two Operations Control Centers in Santa Barbara County and refurbish the Gaviota pump station, according to the settlement agreement.
The parties agreed to dismiss the lawsuit with prejudice within 15 days of the 16 underground safety valves being installed.
“We never want to relive the devastation of the 2015 Refugio Oil Spill and its impact on our coastline,” Board of Supervisors Chair Steve Lavagnino said in a statement on the agreement.
“Although the county does not have jurisdiction over these changes to the pipeline, I’m glad this settlement includes key safety, monitoring, and response protocols. If we continued to fight this out in court, Pacific Pipeline Company likely would have sought to recover lost revenue from the pipeline not being in operation. That could amount to millions of dollars the county would be on the hook for.”
Pipeline Restart Plans
Investigators determined the 2015 Refugio Oil Spill was caused by external corrosion and Plains All-American’s failure to detect it.
A jury found Plains guilty of failing to properly maintain the pipeline; failing to timely call emergency response agencies about the spill; and killing marine mammals, sea birds and other sea life.
In 2022, Plains sold the pipelines to Exxon and its subsidiary PPC, which needs it to transport oil to refineries from its offshore platforms and Gaviota Coast processing facilities.
This year, Sable took over those assets, known collectively as the Santa Ynez Unit.
The Office of the State Fire Marshal, which oversees pipeline safety, would approve the company’s restart plans.
“They require installation and testing of the safety valves, as well as implementing a number of integrity-related improvements required by that office before any operation of the pipeline takes place,” Gerckens Buttitta noted.
Santa Barbara County and the State Lands Commission are processing requests to transfer ownership on permits and oil leases, respectively, from Exxon to Sable.
Several environmental groups protested reassigning the leases before the SLC meeting in Goleta last week. Environmental Defense Center attorney Jeremy Frankel argued that Sable doesn’t have an adequate spill response plan or financial means to remediate a spill.
