By Katie Davis
A December 2023 investor presentation by startup energy company Sable promises a quick restart of Exxon’s three shuttered offshore oil platforms off the Gaviota coast and a long and lucrative payoff to would-be investors. As is often the case when something seems too good to be true, they left a lot out.
The idea is that Exxon would loan Sable $623M to purchase the oil field and associated assets including pipelines and the Los Flores processing plant on the coast. Sable would merge with blank check company Flame, already listed on the NY stock exchange, to raise more funding.
Sable fails to mention that a sale from Exxon to Sable would have to be approved by Santa Barbara County and the California State Lands Commission, both of which will be highly skeptical of Exxon offloading liability for their aging oil operation to a startup that would disappear in the event of a spill or other disaster.
Exxon’s oil platforms were once the major local oil producer responsible for 90% of the offshore oil in the channel, but production had been trending down since peaking in the 1990s. Then in 2015 a pipeline burst spilling 142,800 gallons of oil into one of the richest and most biologically diverse stretches of the Pacific coastline, killing hundreds of animals, tanking tourism and closing our beaches and fisheries for a time.
The oil operation has been shut down ever since, now almost nine years.
Sable’s investor presentation calls this a “pipeline issue” and promises a restart of their entire operation in July 2024. Sable claims that the State Fire Marshall will approve the restart of the pipeline by March. However, that’s unlikely as of January the State Fire Marshal says, “they are not currently considering or reviewing a proposed startup plan.”
The truth is there is no safe route to the market for oil from these platforms.
The spill uncovered the fact that the pipeline was badly corroded and unsafe to use. At the criminal sentencing hearing after Plains was convicted by the State and County District Attorneys for negligence in failing to maintain the pipeline and causing an oil spill, the prosecutor tried to prohibit Plains from restarting or even threatening to restart the pipeline transporting the oil to refineries.
Exxon seemed to agree that the pipeline is unsafe and impossible to fix, which is why they proposed trucking the oil and building a new pipeline instead. Trucking oil on dangerous, windy roads was denied by Santa Barbara County and a judge upheld that decision when Exxon sued. Exxon has dropped the new pipeline plan due to environmental impacts.
Now the only possible route to market is using the damaged pipeline. Work on that pipeline was denied by the County due to huge risks of restart and opposed by landowners where the pipeline is located.
Sable’s Investor presentation doesn’t mention any of that, and it also fails to mention that the lease for another pipeline through state waters has expired. State Lands Commission did not renew the lease and is undertaking a study of the risks of doing so.
Given that Exxon’s 40-year-old platforms were designed to last 25 years, and State Lands is on record opposing new offshore oil leases, it seems unlikely that the state will risk issuing a new lease that could result in future oil spills.
Offshore oil is wildly unpopular, opposed by 72% of Californians. Most of our population and economic output is in coastal counties that would be damaged by another coastal oil spill. State Lands Commission will likely not approve the transfer of the lease from Exxon to Sable and will likely not approve a lease renewal at all.
In addition to oil spills, a restart of Exxon’s oil rigs goes against state and local goals for reducing greenhouse gas emissions, and it would cause local air pollution to soar. When operating, Exxon’s Los Flores oil processing facility was the largest facility source of greenhouse gas emissions in the County. They were also the largest source of pollution in the county for Methane, VOCs, PM2.5, and Formaldehyde and one of the largest sources for SOx, NOx, PM10, Benzene and Hydrochloric acid.
PM2.5 is so small it can penetrate deep into the lungs, enter the bloodstream, and be deposited in human organs and tissues, causing DNA damage, inflammation, and chronic disease. It is linked to heart and lung disease, heart attacks, asthma, and premature death. The Harvard T.H. Chan School of Public Health finds that, "a small increase in long-term exposure to PM2.5 leads to a large increase in the COVID-19 death rate."
Prior to the spill in 2014 Exxon’s coastal plant was about 43% of PM2.5 facility emissions in the County.
Blank check companies are notoriously bad investments. The owners can promise very optimistic scenarios for unproven ventures to would-be investors like Sable is doing today, but they tend to underperform in the real world.
The word “Sable” can either mean the color black or a kind of weasel, and weasel is a synonym for deceitful. That seems apropos.
My advice is don’t trust anyone trying to sell you a shuttered offshore oil platform off the California coast.