Santa Barbara County seeks to restrict Gaviota plant activity

Santa Barbara County�s Planning Commission wants Arguello Inc.�s Gaviota processing plant closed to potentially large amounts of new offshore oil and gas processing. Although the 4-0 decision on Monday may slam the door on that location for others, 'I don�t believe it changes any of our plans,' said Tom Gladney, Arguello Inc.�s project manager.

Nov 1st, 2000


SANTA BARBARA, CALIF.�Santa Barbara County�s Planning Commission wants Arguello Inc.�s Gaviota processing plant closed to potentially large amounts of new offshore oil and gas processing.

Although the 4-0 decision on Monday may slam the door on that location for others, �I don�t believe it changes any of our plans,� said Tom Gladney, Arguello Inc.�s project manager. There is no specific date to the closure, since Arguello can continue operations until it�s no longer economically feasible.

Requiring a shutdown of the entire plant before that�a long-held goal of environmentalists��would raise serious Constitutional objections regarding taking,� noted the county�s Energy Division staff report.

Thus, Arguello Inc. is free to continue processing oil and gas on its offshore platforms, and hopes to add additional production soon using extended reach drilling from its Rocky Point lease. The plant is currently used to heat the processed oil for transport in the All-American Pipeline, and Arguello Inc. intends only to use it for that in the future.

But if other oil companies want to use the site in processing oil (or gas) from 36 existing, but undeveloped, federal leases mostly in the Santa Barbara Channel and Santa Maria Basin, they�ll have to look elsewhere, according to the commission�s decision. The county Board of Supervisors and state Coastal Commission must still review the judgment.

Those leases could hold up to 1 billion bbl of oil and 500 bcf of gas. But their future is on hold due to Secretary of the Interior Bruce Babbitt�s decision to conduct a new environmental analysis (OGJ, Nov. 1, 1999, p. 36). That decision puts the onus on the next presidential administration to decide whether any of those leases can be developed.

If the commission�s decision holds, it would leave only one major consolidated oil and gas processing site left on Santa Barbara�s South Coast�ExxonMobil Corp.'s Las Flores Canyon, which by permit must be shared with other oil companies.

Gladney expects the Point Arguello project (consisting of Platforms Hermosa, Harvest, and Hidalgo in the Santa Barbara Channel and the onshore plant) will continue operating at least until 2015. It currently processes 20,000 b/d of oil, but that may increase to 35,000 b/d if Arguello is allowed to tap into the Rocky Point lease.

Arguello is also sweetening sour gas on its platforms for use primarily by its turbines and, according to an agreement reached this month with the US Minerals Management Service, is encouraged to sell any surplus gas rather than reinject it. �Gas is a resource and they [MMS] would like to see it utilized,� Gladney said. That policy reflects the growing price and need for sweet gas.

Arguello Inc. is a subsidiary of Plains Resources Inc. of Houston, which, with other partners, bought the Point Arguello Project from Chevron Corp. in 1999 (OGJ Online, July 12, 1999). Primary partners are Arguello Inc. and Phillips Point Arguello Production Co. with 26% each, Texaco Exploration & Production Inc. with 16.7%, Pennzenergy Exploration & Production LLC with 10%, and four other partners taking up the rest.

Arguello Inc. is also in negotiations to become the operator of the adjacent Gaviota terminal, now operated by Equilon Enterprises LLC and used for oil storage. Although built as a marine terminal, it has never operated as one, and that equipment was abandoned years ago.

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