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Santa Maria Sun / News

The following article was posted on November 13th, 2013, in the Santa Maria Sun - Volume 14, Issue 36 [ Submit a Story ]
The following articles were printed from Santa Maria Sun [santamariasun.com] - Volume 14, Issue 36

Santa Maria Energy project is approved with an emissions caveat

BY CAMILLIA LANHAM

Santa Maria Energy finally received a green light to go ahead with its well expansion project, but it comes with a price that might make the project economically unfeasible.

The price the energy company will pay for the project—should it become a reality—is in the form of emissions. After months of discussion over what should or should not be the greenhouse gas emissions threshold for the project, the Santa Barbara County Board of Supervisors voted 3-2 on Nov. 12 to uphold the demands of an appeal filed by the Environmental Defense Center and to set a threshold of 10,000 metric tons. Fifth District Supervisor Steve Lavagnino and 4th District Supervisor Peter Adam dissented.

"Oil wells in a state-designated oil field with no fracking—I thought this was what we were looking for," Lavagnino said during deliberations. "You're not hurting an oil company today, you're hurting a community."

He prefaced this declaration by explaining that Santa Maria Energy "is not big oil," but rather a company that plays by the rules and gives back to the community in which it's located.

The boardroom in Santa Maria was packed with speakers who made impassioned arguments for nearly five hours. The fight pit jobs and revenue against the environment.

Many Santa Maria Energy supporters who attended the meeting sported yellow, and pleaded with supervisors to consider the much-needed money and jobs the project could bring to the poorer half of the county. One individual who spoke out against the project referred to the discussion as a civil war between the north and south counties and to the oil debate as a war between fossil fuels and the earth.

What exactly the vote means for Northern Santa Barbara County is still unclear. It could take away the potential jobs, tax revenue, and any trickle down effect installing an extra 110 steam injection wells just southwest of Orcutt would bring into North County. But, then again, it could only mean that Santa Maria Energy gives less money to various causes and nonprofits in North County, because the company will have to shell out more of its profit to mitigate for any greenhouse gas emissions produced above the 10,000 metric tons threshold.

"That's what we are going to be focusing on here in the short-term ... to see if we have an economically viable project," Santa Maria Energy Public and Government Affairs Manager Bob Poole told the Sun. "We have an environmentally and technically viable project."

What is clear is that should the well expansion project get up and running, there will be less greenhouse gas pollution going on somewhere in the world, if not in Santa Barbara County.

Environmentally speaking, the company was projected to produce 88,000 metric tons of greenhouse gases at peak production. When the Santa Barbara County Planning Commission approved the project in September, the company would have been required to mitigate for 29 percent of those emissions—most likely by purchasing emissions credits through the cap-and-trade market.

The cap-and-trade market is fueled by companies or projects that somehow manage to ramp down emissions and therefore get credit for greenhouse gases that are no longer being produced. Those credits are then sold to companies that need them, like Santa Maria Energy should it get 136 wells worth of steam injection cranking.

The Environmental Defense Center appealed the Planning Commission's decision based solely on the emissions portion of the project. Ken Hough with the Santa Barbara County Action Network—one of organizations on whose behalf the defense center filed the appeal—"told county supervisors at the Nov. 12 meeting that Santa Maria Energy is a "well-loved company."

"As oil projects go, this is probably one of the better in the county," Hough said. "But please remember this issue is about emissions."

Oil project plans call for installing a six-mile pipeline to pull recycled water from the Laguna County Sanitation District for use in cyclic steam-injection wells. With a 26-well pilot project already in place, the plans call for the drilling of an additional 110 wells to pull oil out of diatomite formations in the Monterey Shale—located roughly 800 to 1,000 feet below the surface.

Steam is injected at high pressure into the wells and pools in the oil reservoir, and the heat produced loosens oil from its deposit holes in the diatomite. That oil is then brought back up to the surface, where it's separated from the water and sold as crude. Two gigantic burners would combust natural gas to heat water into steam, which is where the emissions come into play.

Environmental Defense Center attorney Nathan Alley told county supervisors that his organization felt the bar should be set at zero emissions for the project, but that he and his colleagues would settle for a threshold of 10,000 metric tons. Alley pleaded with the board to mimic thresholds set by other areas, such as the Bay Area and South Coast air quality control districts, whose greenhouse-gas thresholds are set at 10,000 metric tons. Recently, the San Luis Obispo County Air Pollution Control District set a temporary threshold of 10,000 metric tons as well.

One of the reasons the emissions discussion has proliferated for as long as it has is because, the county currently deals with project emissions on a case-by-case basis.

Several environmental advocates who spoke during the hearing said whatever threshold the county set for Santa Maria Energy would be the precedent for future projects of its magnitude.

"It will set a precedent because when Santa Barbara speaks, people listen," one speaker said.

Only time will tell if Santa Barbara County did set a precedent with the board's vote on Nov. 12. In the meantime, Santa Maria Energy officials have to decide what the future holds for their company. Considering California's cap-and-trade market just got off the ground in the last year or two, Santa Maria Energy's Poole said, it's not going to be an easy task.

"We don't know what the costs are; our best guess is we're going to have to guess what those costs in the future will be," Poole said. "That's no way to run a business."