Mobil Exploration & Producing Inc. has given a tentative green light to a $1.8 billion project to tap oil reserves off California with extended reach drilling from shore.
Mobil plans to submit by yearend a detailed application to state and Santa Barbara County agencies for the Clearview project, proposed earlier in preliminary form by California's State Lands Commission. It would involve developing the 155 million bbl Coal Oil Point extension of South Ellwood field on state leases off Goleta Point with extended reach wells from upland drillsites.
ARCO was stymied in efforts during the 1980s to develop the field with offshore platforms, mainly over local objections to the sight of more platforms on the horizon. After several permit denials and lawsuits, ARCO dropped the proposal in return for state permission to expand its Long Beach Unit waterflood project.
Mobil cemented its interest in the proposal by acquiring all of ARCO's remaining interests in the Santa Barbara Channel earlier this year (OGJ, June 7, p. 17). The project would end a 6 year moratorium on drilling in state waters off California as well as confirm feasibility of long reach extended drilling from shore.
MOBIL'S DECISION
Mobil decided to proceed with the project after conducting community workshops followed by a public hearing in Santa Barbara last week.
Although the Santa Barbara County Board of Supervisors were neutral towards the project, and some environmental leaders were said to be "furious," the public response "was about what we expected," said Mike Brown, a Mobil attorney assigned to the project.
Brown noted intensive environmental review would follow submittal of the development project, which is certain to face some hostility from the area's residents as well a number of policy and legal hurdles.
"Mobil believes we can satisfy those concerns," Brown said. He cited the proposed project's expected environmental and financial benefits, including early removal of Platform Holly from state waters off Santa Barbara--thus in theory reducing the risk of offshore oil spills. The project also would generate about 170 permanent jobs and about $12 million/year in taxes and royalties to the cash strapped state and county governments.
The project faces an uphill battle with Santa Barbara's powerful environmental community and affected neighborhoods. The proposed sites are near the University of California-Santa Barbara and is surrounded by existing and future housing and hotel projects and a world class golf course.
Accommodating the project would mean changing existing zoning and county policies establishing only two oil processing sites on the county's coast plus drilling in state waters that recently were declared a state marine sanctuary. In addition, the inducement of state and county sharing royalties would require new state legislation certain to prove controversial.
PROJECT DETAILS
Mobil's preliminary project plans call for:
- Extended reach drilling of as many as 60 wells from the existing Ellwood marine terminal site and 20 wells from the existing Ellwood oil and gas processing plant site.
- Oil processing and oil storage at the marine terminal site, use of upgraded existing and possible new parallel onshore pipeline links to the Ellwood processing plant drillsite, a new offshore sweet gas pipeline to the Ellwood processing plant, and a new offshore sour gas pipeline to an existing major oil and gas processing plant at Las Flores Canyon.
- Oil processing, sweet gas processing, seep gas processing, and oil storage at the Ellwood processing plant site.
- Sour gas processing at the Pacific Offshore Pipeline Co. (Popco) gas processing plant at the Las Flores Canyon complex.
- Transporting Clearview oil output to refinery by onshore pipeline. Options include a link to the proposed Pacific Pipeline system at the Ellwood processing plant or connections to the All-American pipeline system at Las Flores and to the Mobil Rincon line east of Santa Barbara County.
- Removal of Platform Holly, offshore components of the Ellwood marine terminal, removal or abandonment in place of subsea pipelines, and termination of all marine oil transportation by barge by about 2000.
Mobil noted the general project scope would not change unless gas processing capacity at the Popco plant is inadequate or the processing fee is not competitive with other processing options. It believes the only economic alternative is for oil processing to occur at the drillsites. Projections showed that processing oil at Las Flores canyon would jump operating and capital costs sharply and result in a negative return for the project.
Mobil also said it would be willing to design structural camouflage for the drilling rig, as is commonplace elsewhere in southern California.
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