Another Offshore Oil Operation to be Retired by CA State Lands Commission

12-6-17

Commission's combined 2017 actions to retire offshore oil operations have now returned over 9,000 acres to the California Coastal Sanctuary

SACRAMENTO - The California State Lands Commission has taken back offshore oil and gas leases associated with Rincon Island in Ventura County, ending offshore oil drilling and production from the island and adding more than 1,500 acres to the California Coastal Sanctuary. It is the second offshore oil and gas drilling operation taken offline by the Commission this year under Lt. Governor Gavin Newsom's chairmanship and in partnership with State Controller Betty T. Yee and the Governor's Department of Finance.

"We've successfully taken yet another offshore oil drilling operation offline, and I am proud of this victory for our cherished coastline," said Lt. Governor and State Lands Commission Chair Gavin Newsom. "It's also a testament to the Commission's dedication and fierce vigilance, which was pivotal in engineering the lease reversion and placing the ocean area into the Coastal Sanctuary where it will be permanently preserved."

Rincon Island Limited Partnership (RILP), a subsidiary of Greka Energy, held the leases in Ventura County. In November 2014, the Commission discovered substantial regulatory violations on the leases, and then sought to terminate the leases for default after assessing the extremely poor condition of the facilities and the oil operations, and the operator's failure to remedy the violations. On the eve of the Commission's termination of the leases in 2016, RILP filed for bankruptcy in Texas. However, on November 29, at the request of the Commission, and by agreement of RILP's largest creditor, the bankruptcy trustee surrendered their rights in the leases by quitclaiming them to the State.

"There are insurmountable environmental, public safety, and financial risks in maintaining the Rincon Island leases; ending offshore oil drilling there is the clear path," said State Controller and State Lands Commission member Betty T. Yee. "I am proud of the Commission's commitment to protecting the State's interests and focused efforts to find an outcome benefitting both the public and the coastal environment."

The lease terminations mean the last operational offshore oil drilling and production facility in the Santa Barbara Channel is over and all 1,551 acres of RILP's interests will be added to the California Coastal Sanctuary. Furthermore, two additional leases associated with the onshore production sites in Ventura County will most likely revert to the State in the coming week. The delayed disposition is due to objections from West Energy Offshore Ltd., which had sought to operate all three leases.

Rincon island is not the only major offshore oil and gas decommissioning effort the Commission is undertaking; it is also responsible for the Platform Holly decommissioning project offshore in Santa Barbara County, having assumed control of related leases from Venoco LLC in April 2017.

These combined actions by the Commission this year have resulted in approximately 9,233 acres of offshore lands being added to the Coastal Sanctuary (7,682 acres associated with Platform Holly; 1,551 acres associated with the Rincon Island), and approximately 88.2million barrels of recoverable oil will remain in the ground (85.1 million barrels associated with Platform Holly, and 3.1 million barrels associated with the Rincon Island).

The Commission is now, as it has been during the last year, working to secure Rincon Island facilities to ensure public and environmental safety and to protect the state's sovereign Public Trust lands and resources. The Commission will take steps to start the plug and abandonment work for the 49 wells on the island and 30+ plus wells onshore and decommission the facilities. The ultimate disposition of the island and the connecting causeway will be determined after further analysis and public input.

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