Venoco is bankrupt and Platform Holly platform’s on its way out the door, along with the platform’s 30 ocean floor wells in the South Ellwood oil field—and so far, the California State Lands Commission doesn’t know who will pay to end the operation.
First, the commission must plug and abandon Platform Holly’s 30 wells and two onshore wells—a process expected to cost between $63.2 million and $74.2 million over a two-year work period, according to the commission’s Public Information Officer Sheri Pemberton. The commission will then dismantle the platform itself, which will require about three years and additional funds. Pemberton said a cost estimate for the decommissioning isn’t available yet.
The commission is calling on a $22 million bond Venoco was required to maintain under its now-quitclaimed leases off the shore of Santa Barbara County. Pemberton said the bond company has confirmed it will provide $16 million by the end of May or June, and the additional remaining funds within 30 to 60 days.
Beyond that, funding resources are still in question.
“The commission is being very deliberate and very careful and thoughtful, now that Venoco’s in the bankruptcy process,” Pemberton said. “We will be making claims to try and ensure that the state is able to recover the cost, but that is in a very beginning phase, and so at this point I don’t have an answer for how the entire cost would be paid.”
Setting Holly’s eventual decommissioning aside, Peter Cantle, deputy director for Santa Barbara County’s Energy and Minerals Department, said the plugging and abandonment process for the offshore wells would be “a substantial undertaking” in and of itself.
The commission must follow specific guidelines laid out by the state Division of Oil, Gas, and Geothermic Resources to fill the wells with cement and drilling mud to seal them and prevent fluid from moving between underground rock layers.
“They’re expecting a two- to three-year process just to plug and abandon the wells, and after that the decommissioning itself might take two to three years as well,” Cantle said. “That’s assuming they get to it immediately after they plug and abandon.”
A fact sheet from the commission added that the timeline for removing Platform Holly “is heavily dependent on available funding,” as well as the environmental review process and the availability of platform removal equipment.
When Holly’s removal finally comes into play, it’ll present a smorgasbord of complex issues, including where to source equipment, how much of the platform to remove, and what to do with the leftover materials once Holly is dismantled.
As far as oil platforms go, Holly is comparatively small and stands in relatively shallow water—about 210 feet, according to Cantle.
“Still, it’ll be an undertaking,” he said. “It’s a pretty heavy-duty operation. It requires a lot of incredibly strong equipment.”
Typically, when oil platforms are decommissioned, a derrick barge with a large crane stations next to the platform. The crane lifts pieces of the platform from the structure and places them on a receiving barge. When that barge is full, it’s towed to a receiving area where the material is further broken down.
Cantle said the big oceangoing systems necessary for larger decommissioning projects typically reside in Europe or the Far East, meaning the commission may have to source equipment from other parts of the world.
“You have to get it from there to here, and it’s got its own schedule, so whoever owns that barge is scheduling work whenever they can,” Cantle said.
He added that since the undertaking is so expensive and complex, he wouldn’t be surprised if other operators with aging platforms “put their money into the hat” to create a decommissioning fund, which multiple operators would use to lease one massive barge to decommission several offshore oil platforms.
“I’m going to be very interested to see what other operators do or don’t do,” Cantle said. “There are other operators whose platforms may be toward the end of their useful life. They may just stack up, and we may see some sort of larger project than just decommissioning Holly.”
When Venoco announced Holly’s impending shutdown, most environmental groups cheered the occasion as a win for marine ecosystems. But the decommissioning process also carries its fair share of environmental impacts, according to Cantle.
He contributed to a 2015 study on the environmental impacts of decommissioning oil platforms. His portion focused on how the process contributes to air pollution, since dismantling a platform requires the use of diesel equipment.
“When you have diesel-fired equipment, you have [air] emissions,” Cantle said. “The more they have to stay on station doing the work, the longer they have to run, and the more emissions it will create.”
For this reason, Cantle found in the study that removing an entire oil platform from below the ocean floor creates six to seven times more air emissions than removing one up to 80 feet below sea level, which would leave an artificial reef on the ocean floor.
Milton Love, research biologist for UC Santa Barbara’s marine science institute, said oil platforms often act as large, fully functioning reefs, hosting a variety of fish species.
“There’s very little fishing, relatively speaking, around most platforms, so they tend to act as de facto marine reserves,” Love said. “Though they weren’t set up for that function.”
For that reason, some groups say it benefits marine life to leave the bottom portions of decommissioned oil platforms intact, he said.
“The argument is some of these fish that are being produced are ecologically important,” Love said. “They’re from overfished species. We’re trying to bring some of these species back, and it appears some of the platforms are helping.”
On the other hand, he said, some environmental advocates point to how oil platforms damage mud-animal populations. While Love agreed that oil platforms could have negative impacts on mud-animal populations, he said he had no particular opinion on whether it’s better to leave the bottom part of a decommissioned platform intact or remove the whole thing.
“As a biologist, I’m completely neutral about these things,” he said. “‘Good’ is a social term. It’s not a scientific term.”
He said Platform Holly hosts one of the most diverse fish populations out of all the platforms offshore of California, so leaving Holly’s bottom portion may help preserve the diversity of species.
“My guess is people on all sides will be yelling and whining and screaming,” Love said, “like they do for anything.”
Staff Writer Brenna Swanston can be reached at bswanston@santamariasun.com. Managing Editor Joe Payne contributed to this story.
This article appears in Jun 1-8, 2017.