Sable Offshore Corp. completed its acquisition of ExxonMobil’s Santa Ynez Unit on February 14, 2024. The company has targeted July 2024 to restart the facilities, which shut down in 2015, when a pipelined owned by Plains All American Pipeline, LLC ruptured and spilled 142,000 gallons of oil into the ocean near Refugio State Beach.
Sable Offshore is seeking permits to restart the Santa Ynez Unit and expects to restart production at approximately 28,100 barrels of oil and gas per day. The company has stated that the field has 112 wells and the potential for more than 100 additional wells from infill drilling and “step-out” drilling. Sable is also evaluating a strategy to use existing infrastructure for carbon capture, utilization and storage (CCUS).
Exxon’s sale to Sable was first announced in November 2022, when Sable agreed to buy the assets for $643 million, at a loss of approximately $2 billion, and Exxon agreed to finance the deal through a $625 million loan. The transaction terms have since been adjusted. Sable originally targeted January 2024 to restart the unit.
Exxon recently took an impairment charge of $2.4 billion to $2.6 billion in its fourth-quarter earnings primarily from “idle Upstream Santa Ynez Unit assets and associated facilities in California.” Exxon shut down production after the 2015 spill, as it did not have a pipeline to transport oil to refineries. It has been unable to restart production. (Exxon Cites State Regulatory Environment in $2.5 Billion California Asset Impairment.)
Sable Offshore Corp. is the combination of Flame Acquisition Corp., Sable Offshore Holdings, LLC, and Sable Offshore Corp. Sable Offshore Corp. was formed to evaluate the Santa Ynez Unit acquisition.
Santa Ynez Unit
The Santa Ynez Unit consists of the three offshore platforms located in federal waters located five to nine miles offshore from Goleta in water depths of 900-1200 feet. It also includes an onshore oil processing plant located in Las Flores Canyon, near Goleta, and related pipeline infrastructure.
Oil was discovered in the area in 1968. Since 1970, Exxon has acquired and maintained 16 federal leases for the 114 offshore wells in connection with the three platforms. Construction of the Hondo platform began in 1976 and production of crude oil and natural gas began on the platform in 1981. The Harmony and Heritage platforms began operations in 1993. Both platforms have dedicated rigs for future development, according to Sable. The processing plant, which Exxon built to address local concerns regarding transportation of oil and gas by tanker ship, began operations in 1993.
In 2010, Exxon drilled from the Heritage platform what was then the world’s longest extended-reach well from an existing fixed platform. The well extends horizontally more than six miles and more than 7,000 feet below sea level and it has increased the ability to produce more oil from existing facilities, according to Exxon.
The Santa Ynez Unit produced more than 663 million oil equivalent barrels of oil and gas between 1981 and 2014, according to Exxon. Production in 2014, the last full year of production, averaged 29 thousand barrels of oil per day and 27 million cubic feet per day.