On Monday, Venoco announced that it had filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court for the District of Delaware.
Venoco’s assets — including Platform Holly off the coast of Goleta and the Ellwood Onshore Facility processing plant near Haskell’s Beach — “are expected to be sold or wound down through the bankruptcy process,” the company said in a news release emailed to Noozhawk.
“Today’s filing is the result of unfortunate circumstances impacting the company’s financial strength, including the ongoing closure of Plains All American Pipeline’s Line 901,” said Mike Wracher, Venoco’s COO. “We have pursued a number of market-based and regulatory solutions to address these challenges during the last year.
“Despite these considerable efforts, our financial position now compels us to take this action.”
Platform Holly has been idle since the May 2015 rupture of the Plains pipeline, which spilled 123,228 gallons of crude oil onto the coastline and into the ocean near Refugio State Beach on the Gaviota coast.
Taking the pipeline offline has curtailed more than 50 percent of Venoco’s production, according to the company, whose principal assets are oil facilities located offshore and onshore in Southern California.
The company said that as it pursues the disposition of its assets, it expects to conduct business as usual, and day-to-day relationships with employees, vendors and customers will continue.
Venoco Inc. filed a lawsuit last year against Plains All-American Pipeline, seeking more than $12 million in lost profits after the Refugio pipeline spill caused a shutdown of southern Santa Barbara County oil and gas transportation pipelines.
That legal action came shortly after Venoco filed for bankruptcy with a plan to shed more than $1 billion in debt under an agreement with senior lenders, including Apollo Investment Corp., to exchange debt for ownership shares.
At the time, the company cited low oil and gas prices, in addition to the pipeline shutdown, as reasons for the restructuring.
Venoco said it expects all of its 110 employees to eventually lose their jobs as part of the sale and wind-down of its assets.
“We are hopeful that many employees will be hired by the purchasers of our assets,” the company said in its statement.
Prior to bankruptcy, Venoco quitclaimed its leases in the South Ellwood Field back to the state of California.
“The leased areas now become part of the state marine sanctuary, subject to decisions by California’s elected officials,” Venoco said in its news release.
“The state and prior operators will be responsible for the decommissioning process of Platform Holly and related infrastructure under California law.”
That news prompted celebration from several local environmental groups.
The Sierra Club, Get Oil Out! and the Citizens Planning Association have all been represented for years by the Environmental Defense Center in their opposition to oil development in the area.
“We are pleased that Venoco’s aging oil facilities will be removed, and the area restored to its natural condition,” said Linda Krop, chief counsel for the Environmental Defense Center. “Venoco’s operations have threatened our coast with risks of oil spills, greenhouse gas emissions, and dangerous hydrogen sulfide leaks. This action is long overdue and a huge victory for our community.”
Goleta Mayor Paula Perotte expressed similar sentiments.
“The quitclaim is a positive development for the Goleta community and all of us who look forward to the restoration of our coastline,” Perotte said. “The City’s paramount concern has been and will continue to be the public health and safety of our community and our residents. Our city council and staff look forward to working with California’s State Lands Commission and other agencies on the decommissioning of these facilities.”
Venoco and the State Lands Commission have executed an agreement for Venoco to maintain the South Ellwood Field assets until the state designates another operator responsible for managing the safety and security of the assets throughout the formal decommissioning process.
The bankruptcy process is estimated to take 6-12 months, according to a company spokesman.