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Venoco proposes to retire Platform Holly early

Venoco issued the following news release Thursday night regarding a proposal to shut down oil production in the ocean off the Goleta coast ahead of schedule:

Venoco today announced a sweeping new companion proposal to its South Ellwood Field Lease Line Adjustment (LLA) that would bring an early end to significant offshore oil and gas production in state waters off the Central Coast.

Under the proposal, Venoco would quitclaim its offshore oil leases in state waters back to the state of California and retire Platform Holly and the Ellwood Onshore Facility in Goleta roughly 15 years ahead of schedule.

“The existing LLA proposal already provides a number of important benefits to the local community and the state of California: good jobs, hundreds of millions of dollars in revenue for state and local governments, and the more effective and efficient recovery of the state’s oil and gas reserves without any new infrastructure,” said Mike Wracher, Chief Operations Officer at Venoco.

“At the same time, we recognize that California’s goal is to move toward more renewable energy in the coming years. We also recognize that even while people view Venoco as a responsible, top safety operator and understand that we’ll need oil and gas for years to come, there is increasing support in the local community for the state’s transition toward more renewable energy. We offer today’s proposal in the spirit of compromise as a way to realize the benefits of the LLA while being consistent with the direction of the state and the feedback we’ve received from the community.”

Currently, Venoco’s offshore leases from the state have no set termination date, enabling the company to produce oil as long as production is economic. Today’s proposal is contingent upon the approval of the LLA, currently undergoing California Environmental Quality Act (CEQA) review by the State Lands Commission. The specific elements of the proposal include:

The early retirement of Platform Holly 25 years after LLA production begins;

The early retirement of the Ellwood Onshore Facility in Goleta at the same time;

The permanent quitclaim of all Venoco’s leases in the South Ellwood Field back to the state of California;

The permanent quitclaim to the state of all Venoco’s Paredon oil and gas leases that overlay a separate oil field off Carpinteria, ensuring 20+ million barrels of oil and gas stay in the ground;

The carbon neutrality of all LLA related operations.”We don’t offer this proposal lightly,” said Wracher. “It is the product of many conversations with stakeholders, including the business community, environmentalists, elected officials and other community leaders. We look forward to continuing these conversations through the regulatory approval process and are optimistic that we can forge a path that works for Venoco, the Central Coast, and the State of California.”

The 60 day public comment period for the LLA proposal begins with this week’s release of the Draft EIR from State Lands Commission.

LLA Background Venoco is seeking to adjust the lease boundary of its state oil and gas lease in the South Ellwood Field off the Santa Barbara coast. Venoco leases the production rights from the State of California, who owns the oil and receives royalties from its production.

The LLA would allow for more efficient recovery of state resources without a need for new infrastructure. The project is currently undergoing CEQA review by the State Lands Commission, who is empowered under state law to adjust existing lease boundaries over an oil field already partially contained within the existing lease.
Under the basic LLA proposal:

Venoco would maintain its South Ellwood leases until production is no longer economic -roughly 40 years using current available technology (would change to 25 years from LLA production under the above proposal);

Venoco would voluntarily reduce its offshore footprint by 400 acres, releasing 3800 acres in exchange for 3400 adjacent acres that overlay the same field;

No new wells would penetrate the ocean floor the LLA would re-enter and extend from six existing wells on Platform Holly;

No fracking would be used.

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