EXXON PUTS LONG EMBATTLED SANTA YNEZ UNIT EXPANSION ON STREAM

Exxon Corp. has started production from its $2 billion expanded development of Santa Ynez Unit (SYU) in the Santa Barbara Channel off California.

The milestone came after 25 years of controversy ended in what local officials called a "model project."

Exxon received first oil from Platform Harmony Dec. 4 at its onshore Las Flores Canyon oil and gas processing plant, although it had not achieved a stabilized flow rate at presstime last week.

Harmony and Platform Heritage were installed in 1989-92 to develop the western part of Hondo field and Pescado field, respectively. Platform Hondo currently produces about 20,000 b/d of oil and 30 MMscfd of gas from the eastern portion of Hondo field. Development of the remaining SYU field, Sacate, with Platform Heather has been deferred indefinitely over air quality concerns, and Exxon scrapped plans for a new marine terminal.

SYU production is expected to build to a peak of 90,000 b/d by 2000.

OS&T, ONSHORE PLANT

The onshore plant in Las Flores Canyon will replace the existing Offshore Storage & Treatment facility (OS&T), the first commercial use of a floating production system (FPS) in U.S. waters (OGJ, Dec. 7, 1992, p. 20).

The OS&T serves Platform Hondo, which began production in 1981 in 850 feet of water, the second greatest water depth for a U.S. platform at the time (OGJ, May 4, 1981, p. 102). That initial development of SYU reserves took more than a decade of regulatory delays and cost $600 million. Since then, Platform Hondo has produced 130 million bbl of oil and will continue to produce as part of the expanded SYU.

The OS&T was installed because Santa Barbara County insisted Exxon meet stringent onshore air quality requirements and guarantee full pipeline transport. Deciding that the county had no authority to require that, plus objecting to increased costs of doing so, the company gained federal permission to install the FPS, converted from the 50,000 dwt Esso Newcastle tanker just outside the 3 mile limit. Being in federal waters meant the OS&T was beyond the jurisdiction of the county which in turn lost millions of dollars in potential tax revenue had the processing site been permitted onshore.

But the 40,000 b/d capacity of the OS&T hampered Exxon's ability to fully produce SYU reserves estimated at a combined 500 million bbl of oil and 1 tcf of natural gas.

In 1982, Exxon reapplied for permits to install an onshore oil and gas processing plant that could handle as much as 100,000 b/d, hoping it could resolve the political and technical problems. But that led to another long string of permitting battles and court fights.

PERMITTING SUCCESS

Success finally came in 1987 only because Exxon was able to design a cogeneration plant that helped reduce air pollution enough to satisfy local regulations and make electrifying two new offshore platforms financially feasible.

"It was a custom-made deal," said James Ryerson, the county's Air Pollution Control District director. Exxon promised a net air quality benefit that would entail cutting existing air emissions to a greater extent than the new facilities would emit, satisfying a permit condition that went beyond existing federal regulations. For example, Exxon is allowed to emit 330 tons/year of nitrogen oxide but has reduced the county's existing NOx emissions by 586 tons/year-no mean feat in a county that had few industrial offsets to offer. It did so by installing selective catalytic reduction controls at the processing/cogeneration facilities, buying pollution credits from ARCO's undersea seep containment pyramids (see Journally Speaking, OGJ, May 31, p. 13), and retrofitting some of Chevron Corp.'s older processing facilities in the area.

Too, Exxon promised to route all of its SYU oil via pipeline, "if feasible and reasonable," thus avoiding protracted anti-tanker battles similar to those experienced by the nearby Chevron group Point Arguello project. That concession became reality just this year with favorable rate agreements with All American Pipeline (AAPL) (OGJ, Oct. 25, Newsletter), which gives Exxon the ability to market its crude oil to refineries throughout California and the Gulf Coast.

Although Exxon announced in the early 1980s it would refine most of the heavy crude-about 17.4 gravity from Hondo-in Texas, it now favors Los Angeles area refineries, because of a firmer West Coast market, improved refining capabilities, and lower cost of transporting the heavy oil a much shorter distance. The initial choice of Texas, however, sparked the speculative construction of AAPL, the nation's first West Coast to Gulf Coast oil pipeline, by Celeron Corp., now part of Goodyear Tire & Rubber Co.

There are three competing pipeline proposals now pending to handle Santa Barbara Channel's OCS oil by connecting to AAPL for transport to Los Angeles (OGJ, Nov. 22, p. 26).

The SYU expansion cost Exxon $2 billion, including the two new platforms and the onshore oil/gas processing facilities. Platform Hondo is still part of the project, but the OS&T has been sold and will be removed sometime in first quarter 1994. Platform Hondo crude continues to be produced into the OS&T in the interim, and after the OS&T is dismantled, production from the platform will be rerouted into Las Flores Canyon.

Its technological advances on the project notwithstanding, Exxon's biggest battles were in the political and legal realms. Throughout the project's long history, the resulting controversies served as a litmus test for industry on how to develop offshore reserves in the face of awesome local and state opposition. It meant little or no tankering, a net air quality benefit, tough regulations that at one time had monitors monitoring the monitors, and unprecedented safety and environmental approaches.

"The struggle between competing interests is part of the legend of the Santa Ynez Unit," noted Charlie Lyons, manager of the unit during the onshore plant's dedication Oct. 28.

SYU EXPANSION DETAILS

Among details of the SYU expansion project are:

An offshore portion that includes two new conventional steel jacket platforms, Harmony and Heritage, in addition to Platform Hondo. Harmony and Heritage are located in federal waters in 1,200 ft of water on OCS lease P-0190 and 1,075 ft of water on P-0182, respectively. Each has 60 well slots to produce oil and gas. Platform Hondo, with 28 well slots, was installed in 1977. Each of the two new platforms has the ability to segregate wellhead fluids into oil/water emulsion and gas streams. The oil/water stream is raised to pipeline pressure, and the gas compressed using electric motor pumps and compressors. Fuel gas for process heating and flare pilots is provided by sweetening sour gas produced from both platforms. The unit lies 3-9 miles offshore in federal waters in the western end of the Santa Barbara Channel, comprising 16 tracts covering 76,000 acres.
An oil treating plant in Las Flores Canyon 20 miles west of Santa Barbara can handle 100,000 b/d. Permit conditions require Exxon to share the facilities, and the plant was designed to expand to 140,000 b/d for that contingency. So far, no other oil company has applied to use the site. Initially, the oil/water stream is preheated, sent for separation to a knock-out vessel, and then fed into an electrostatic treater for further separation using heat, chemicals, and an electrostatic field. The crude oil is stabilized by extracting lighter components and reducing hydrogen sulfide of 100-300 ppm to 10 ppm or less. It is then pumped to two nearby tanks with a combined capacity of 540,000 bbl.
The plant boasts an advanced technology, 90,000 b/d water treating system to extract any remaining oil and grease with plate separators, multimedia filters and, for hydrogen sulfide removal, a vacuum flash system. Organic matter is removed using anaerobic and aerobic treatment methods. The water is then transferred back to Harmony for disposal into the ocean.
Gas is compressed and routed to the 21 MMscfd gas stripping/treatment plant immediately west of the oil processing plant, which also features a thermal oxidizer relief flare system in case of upset and a vapor recovery system. The gas plant removes heavy hydrocarbons, sweetens the gas, and recovers sulfur, using all of the gas for onsite fuel to run equipment at the oil treatment plant stabilizer. Propane and butane, fractionated from the heavy hydrocarbon liquids, is stored in four NGL/LPG bullets for transfer to tanker trucks. Elemental sulfur is stored in an onsite tank, awaiting truck transportation to markets. A tail gas cleanup unit was added to cut sulfur content before incineration, which utilizes low NOx burners and thermal de-NOx to reduce emissions.
Most of the power to run SYU offshore and onshore facilities comes from an onsite cogeneration power plant, using an Exxon-patented thermal de-NOx system that injects ammonia directly. The power system ties into Southern California Edison's power grid in case additional electricity is needed. The cogen plant has a 40,000 kw gas fired turbine generator and a 9,000 kw steam turbine generator. Almost all of the fuel comes from processed SYU natural gas while additional supplies come from purchased gas. Heat from the 40,000 kw unit provides steam to run the steam turbine, adding 9 more megawatts of power. The steam also heats heavy crude for transport into AAPL. Platform Hondo also has gas turbine generators as a secondary power source, while the two new platforms utilize diesel generators for emergency use.
Permit conditions required Exxon to remove onshore and subsea equipment and restore habitat related to the El Capitan marine terminal, previously operated by Shell Oil Co. to handle oil from El Capitan oil field in state waters and now inactive.
Exxon's processing plant is located adjacent to Pacific Offshore Pipeline Co. (Popco) gas treating plant. Currently, the Popco plant purchases about 35 MMscfd of untreated sour natural gas from Platform Hondo and has applied for permits to expand capacity to 60 MMscfd to handle Exxon's expanded gas production. Exxon's 21 MMscfd gas stripping/treating facility is a separate entity.