June 29, 2015

Eric Gillies, Assistant Division Chief Environment Planning and Management

CITY COUNCIL California State Lands Commission 100 Howe Avenue, Suite 100-South Paula Perotte Mayor Sacramento, CA 95825

Jim Farr RE: Notice of Preparation of a Draft Environmental Impact Report and Mayor Pro Tempore Notice of Public Scoping Meeting for the Venoco South Ellwood Field Roger S. Aceves Project (SCH No. 2015051001) Councilmember Dear Mr. Gillies, Michael T. Bennett Councilmember Thank you for this opportunity to comment on the Notice of Preparation Tony Vallejo (NOP) for the Venoco South Ellwood Field Project (Project). The Project Councilmember proposes to expand the boundary of State Oil and Gas Lease No. PRC

3242 (PRC 3242) to include approximately 3,400 acres east of the CITY MANAGER existing PRC 3242 boundary. The Project also proposes to change the Michelle Greene bottomhole locations of six wells on Platform Holly to extend into the

proposed expanded lease area of PRC 3242.

The Project is located directly offshore of the City within and adjacent to unique and sensitive marine coastal ecosystems. The recent Refugio Oil Spill serves as a reminder of the devastating environmental consequences of oil and gas production. The Project expands existing production and creates new and more serious oil spill risks.

The City is concerned about the use of the Ellwood Onshore Facility (EOF) for processing oil and water emulsion and wet gas. As the NOP accurately states, the EOF does not conform to the City’s land use or zoning designation and is therefore a legal nonconforming use. Any project that proposes to expand or extend the duration of use of this nonconforming use is of great concern to the City.

As discussed in the NOP, at a December 16, 2014 City Council Meeting the Goleta City Council authorized a hearing to consider the termination of the EOF. Given the potential termination of the EOF, the EIR needs to consider the proposed Project in this context. This and other issues are further detailed for EIR scoping purposes below.

Mr.Gillies, CSLC June 29, 2015 2 of 9 Specific Topics and Issues to be Addressed in the EIR

1. Project Description

a. Piecemealing

Venoco has a previously proposed and ultimately withdrew the Full Field Development project which was similar to the current proposal as it involved many of the same project components such as the drilling of new or extended wells from Platform Holly, the expansion of lease PRC 3242, and processing of oil and gas at the EOF. The Full Field Development project also included a number of other project components not included in the current proposed Project including upgrades at the EOF, installation of a new pipeline from the EOF to Las Flores Canyon, installation of a new power cable to Platform Holly, and Ellwood Marine Terminal and Line 96 abandonment. A number of these components of the previously proposed Full Field Development Project have already been completed including the installation of a new power cable to Platform Holly under the auspices of maintenance and the installation of a new Line 96 pipeline that commences at the EOF and connects to the Plains All American Pipeline west of Las Flores Canyon. Additionally, permitting for other components such as the abandonment of the Ellwood Marine Terminal and old Line 96 have been initiated. The City approved a permit (Case No. 12-045-DP-CUP) for Venoco to complete the abandonment of Line 96 and is awaiting California Coastal Commission approval. CEQA requires that the entirety of the project be considered including reasonable foreseeable future expansions and other actions. The previously proposed Full Field Development Project included upgrades at the EOF that are not proposed under the current Project. The EIR should include a complete project description that includes any upgrades or expansion at the EOF or elsewhere that are reasonably foreseeable in the future.

b. Use of the Non-conforming EOF

The NOP states that the proposed Project would operate until at least the year 2055, and that all oil and gas would be processed at the EOF. Any oil or gas processing component at the EOF raises serious policy conflicts for the City, including policy consistency issues that extend beyond CEQA analysis and mitigations. In the event that the City orders termination of the EOF through the non-conforming use termination procedures, Venoco would no longer be able to process oil and gas at the EOF. For this reason, the Project should not rely on use of the EOF for oil and gas processing or for Platform Holly product transport. As part of the project description, the EIR needs to include a discussion and evaluation of how oil and water emulsion and wet gas would be processed once the EOF is shut down as part of the project description. The project description and EIR analysis must address the inevitable scenario of cessation of all offshore oil and gas transport through the City.

Mr.Gillies, CSLC June 29, 2015 3 of 9 c. Historic and Proposed Production

The NOP Figure 4, which is intended to depict historic and proposed production from Platform Holly, is confusing and does not clearly depict past, present, and future projected production. This figure should be updated to more accurately represent historic production and related events (e.g. commencement of production for the Monterey formation), as well as depict the period that is being used to calculate baseline for the proposed Project. Furthermore, the scaling of the y-axis provides a misleading visual of the dramatic increase in production under the proposed project. The EIR and related environmental analysis require accurate production estimates over time, including visual graphics.

d. Lifetime of the proposed Project

According to the NOP, the expected life of Platform Holly under the Project and under existing conditions would be the same, with the economic life of the field extending through at least 2055. However, the CSLC’s Final EIR (certified in 2014) for the Revised PRC 421 Recommissioning Project, a related Venoco project, stated that the estimated productive life of Platform Holly is based on reservoir modeling and market forecasts, and is affected by several factors, including the rate of production decline. Presumably, the lease expansion would result in significant changes to the attributes of the reservoir, including a large increase in the amount of recoverable reserves. Additionally, access to additional reserves and redrilling of new wells would affect the rate of production and eventually the rate of production decline.

Given that the amount of recoverable oil reserves and the rate of production and production decline would change, and that these factors contribute substantially to the expected productive life of Platform Holly, it appears likely that the Project would extend the life of Platform Holly beyond current projections, especially given that wells would be redrilled up to the year 2030. The EIR should explain this inconsistency and provide more information about the projection of the productive life of Platform Holly, including a thorough explanation of why the anticipated life of Platform Holly would not increase when the amount of recoverable oil increases due to the proposed lease expansion. The EIR should also address the inconsistencies with the CSLC’s recently certified EIR for the PRC 421 Project. Only under a clearly defined lifetime of the Project under these new conditions can the impacts accurately be analyzed and alternatives reasonably be compared to the proposed Project.

Additionally, when the proposed Project extends beyond the existing life of Platform Holly, the analysis should discuss the implications to the EOF as a non-conforming use. Given that the EOF is a non-conforming use, the life of the EOF under the proposed Project is not allowed to extend beyond the expected life of the EOF under existing conditions. These existing conditions include future termination of the legal non- conforming use and the EIR must evaluate this reality.

Mr.Gillies, CSLC June 29, 2015 4 of 9 e. Transportation of Oil from the EOF to the Regional Market

Given the recent failure of the coastal segment of the Plains All American Pipeline and associated oil spill that occurred along the Gaviota Coast on May 19, 2015, the EIR should include an explanation and analysis of how the oil produced from the proposed Project would be shipped from Platform Holly to EOF and to the regional market. As part of the project baseline, the EIR should assume that the oil pipeline operated by Plains All American Pipeline will be unavailable, as it is today. All impacts associated with the new transport process should be fully discussed and analyzed.

f. Shipping of Used Drilling Muds

The NOP states that, “due to the relatively high economic value for mineral oil-based drilling muds, Venoco plans to ship any mineral oil-based muds used back to the vendor for recycling.” The EIR should provide details regarding the transport of used drilling mud and any marine-based shipping, transfer of materials to the shore, and land-based shipping associated with returning used drilling muds to the vendor. Specifically, the EIR should include an analysis of what materials may be included in the retrieved drilling muds and any potential hazardous materials that may be included in this waste product. The analysis should include a review of the risk associated with shipping these materials, including the risk of a potential release of these materials and the associated consequences to biological resources, water quality, recreation, and public health and safety. If truck transport is necessitated, all trucking impacts must be quantified and disclosed (see comment below).

2. Impacts Associated with Using Aging Existing Infrastructure

The Project relies heavily on existing aging infrastructure, both onshore and offshore, in order to accomplish the project objectives. The age of each facility, pipe, and cable considered for use in the Project should be included. All necessary upgrades needed for that infrastructure over the life of the Project to ensure the safety of the system must be discussed. All impacts associated will these necessary upgrades should be disclosed in the project description and analyzed in order to fully understand the impacts associated with the Project.

The EIR should make clear the risks associated with this aging infrastructure, whether they be new risks or the exacerbation of existing risks. As the Refugio Oil Spill indicated, spill and accident risks are real and must be included in any analysis of the project. The analysis associated with the aging infrastructure should include a discussion of the potential for a spill or other accident and impacts to biological resources, both onshore and offshore, and to recreational and commercial fishing resources. Additionally, the EIR should include an analysis on public safety services ability to respond to such an incident. Specific concerns about the infrastructure relied upon for this project are described below.

Mr.Gillies, CSLC June 29, 2015 5 of 9 a. Increased Production from Platform Holly

The Project is projected to increase oil production from the platform from the current rate of approximately 3,600 barrels of oil per day (BOPD) to rates up to 10,000 BOPD. Given that oil would be produced much more quickly under the Project than under existing conditions, the EIR must analyze any potential related increase in risk associated with accelerated production from the expanded lease area, including risks associated with increased production at the platform, increased subsea pipeline transportation to the EOF, increased processing at the EOF, and increased transportation from the EOF.

b. Addition of Pipe Rack on Platform Holly

The project description includes the addition of a Pipe Rack on Platform Holly through the year 2030. This addition to Platform Holly will take up an area of 1,350 square feet and reach 21 feet in height. This is a significant addition to the platform. The EIR should assess whether the aging Platform Holly can accommodate this addition without compromising any operational or safety functions. Additionally, the EIR should explain how the addition of the pipe rack and piping it may hold will not compromise the seismic safety of the Platform.

c. Reliance on the EOF

Should the EIR still rely on the EOF for processing, the EIR must adequately analyze the risks associated with its use. As a legal non-conforming use, no significant improvements or modifications can be approved at the EOF. Given that the Project would significantly increase the processing throughput at the EOF, the facility may not be able to safely accommodate this increase. The EIR should analyze the potential safety impacts related to increased processing at this facility, especially given that the facility could not be upgraded or expanded to accommodate this throughput. This analysis should include a discussion of the potential for a spill and the associated impacts to biological resources given the sensitive location of this facility (i.e., adjacent to Bell Canyon Creek and in close proximity to the Tecolote estuary and Haskell’s Beach and the Pacific Ocean).

The EIR must provide assurance that the infrastructure in place at the EOF is capable of disposing of the water produced during processing of the oil and water emulsion from Platform Holly. Injection well WD-1 at the EOF is used to dispose of this water. The EIR must show that WD-1 has adequate capacity to account for the additional water produced with this Project. The EIR must also analyze the potential threat of groundwater contamination due to WD-1. Data on WD-1 capacity and geological isolation must be provided in order to adequately analyze the impacts associated with the Project.

Additionally, the EIR must evaluate backup oil storage at the EOF, including the length of time the Project could continue operating and the amount of time it would take to shut

Mr.Gillies, CSLC June 29, 2015 6 of 9 down operations if necessary. This discussion should include information about the recent shutdown associated with the pipeline spill on May 19, 2015. The EIR should include an evaluation of the safety and environmental impacts associated with the storage limitations at the EOF.

3. Impacts Analysis

a. Response Capabilities

As the Refugio Oil Spill has shown, the response to an oil spill or other catastrophic event as a result of oil and gas operations can prove costly. The EIR should include an analysis of Venoco’s financial capabilities and insurance coverage regarding risks associated with the drilling, operation of Platform Holly, transport to and from the EOF, and processing at the EOF. All analysis of impacts in the EIR should consider the capability and speed under which a response could be undertaken given a spill or other catastrophic event.

b. Safety of Abandonment and Redrilling Operations

The NOP states that the proposed Project would include partial abandonment of existing well bores and directional drilling to new bottomhole locations within the adjusted lease area. Redrilled wells would use existing conductor casings below the seafloor and would be drilled to lengths of approximately 15,000 to 23,000 feet.

The EIR must provide a detailed description of the process for partial abandonment and address the safety and potential for leaks associated with abandonment of the lower portion of the six existing well bores, while continuing to use the upper portion of these wells. Additionally, the EIR should discuss the condition and integrity of the existing conductor casings that would be reused for the new wells and analyze any potential safety concerns related to reuse of these materials.

The EIR must also discuss potential safety issues related to direction drilling for wells with lengths up to 23,000 feet. Directional bore operations have a potential to release drilling fluids into the surface environment through frac-outs (a frack-out is the condition where drilling mud is released through fractured bedrock into the surrounding rock and sand and travels upward to the surface of the waterbody). Because drilling muds consist largely of a bentonite clay-water mixture, they are not classified as toxic or hazardous substances. However, if released into water bodies, bentonite has the potential to adversely impact fish and invertebrates. The EIR should discuss impacts to the marine biological environment and recreation from a potential frac-out. While drilling fluid seepage associated with a frack-out is most likely to occur near the bore entry and exit points where the drill head is shallow, frac-outs can occur in any location along a directional bore.

Additionally, the EIR must address and evaluate the risk that redrilling will lead to additional seep creation on the ocean floor. As discussed below, the natural oil and gas

Mr.Gillies, CSLC June 29, 2015 7 of 9 seeps are delicate part of the ocean ecosystem. Any alteration to this system caused by redrilling, including frac-outs, could have a devastating impact that must be fully disclosed and analyzed in the EIR.

c. Natural Oil and Gas Seeps

The Santa Barbara Channel contains natural ocean oil and gas seeps. These seeps are very old and the ocean ecosystem has adapted to natural seep conditions. The Project has the potential to drain a seep that would have otherwise continued to function. While it may eliminate a perceived public nuisance, draining a natural seep could cause ecosystem failure due to a relatively sudden alteration in the natural processes. Identifying, quantifying, and fully disclosing these impacts must be assessed and included in EIR. Simply stating that a natural seep is bad for the environment is not enough. Clearly our thriving ocean environment has been thriving under natural seep conditions. Tinkering with nature is dangerous and must be fully evaluated. The science underlying our understanding of seeps and the impacts that drilling have on them should be fully described based on the best available science before any analysis of the impacts, either beneficial or harmful, of the active seeps can be accurately stated.

d. Air Quality Impacts

Increased production at Platform Holly would increase the amount of hydrogen sulfide (H2S) released into the environment. The EIR must analyze the potential for increased air emissions and analyze whether any increase would result in the exceedance of air quality standards at Platform Holly or the EOF where the oil and gas is proposed to be processed. The EIR must also describe the locations of sensitive receptors in relation to Project components including the EOF as well as potential health and odor impacts associated with these emissions.

e. Land Use, Planning, and Recreation Impacts

Given the increased activity that would be occurring at the EOF under the proposed Project, the EIR must include a detailed evaluation of policy consistency with respect to the City of Goleta's General Plan for processing at the EOF and product transfer through the City. This should include an analysis of all relevant General Plan polices such as Land Use Policies 10.1 through 10.6, which are applicable to energy-related on- and off-shore uses. Specifically related to offshore uses, subpolicy LU 10.6 states “The City shall oppose any new leases in the western Santa Barbara Channel for offshore oil and gas production within state waters and within the waters of the outer continental shelf” and “The City shall oppose the construction of any new oil and gas production or processing facilities in the waters offshore of Goleta.” An expanded lease is considered a new lease in this context. The policy consistency analysis should also include a discussion of other relevant policies related to the land use risk of upset, noise, air quality, and biological resources. This discussion should also include evaluation of any permits that may be required from the City of Goleta in order to continue operating the EOF.

Mr.Gillies, CSLC June 29, 2015 8 of 9 f. Lease Expansion into a Protected Sanctuary

The Project includes expansion into an area that is protected from oil and gas development under the Cunningham-Shell Act of 1955, which protects the area of tidelands offshore of Santa Barbara County that stretches from Coal Oil Point to Summerland Bay. The 1994 California Coastal Sanctuary Act also protects this area, as it protects all State Tidelands (all waters and underlying lands out to three miles from the coast) from being leased for oil and gas development. The EIR must evaluate both of these acts as they apply to the lease expansion area and explain if and how the Project qualifies for any exceptions included in these acts. Additionally, the EIR must evaluate the impacts to the coastal sanctuary of exchanging protected area east of the existing lease area in exchange for adding sanctuary area elsewhere, including potential impacts to biological species.

The EIR must also consider whether a precedent would be created whereby protected coastal sanctuaries can simply be swapped when convenient for oil and gas development, in particular where the extension of the lease has already been quitclaimed in the past. The EIR should address land use and policy implications and biological implications for any such action as part of this Project.

When discussing the California Coastal Sanctuary and the adjustment to lease boundaries, the EIR must accurately cite the California Public Resources Code. The findings required for a lease boundary extension are found in § 6872.5 not § 6872.

g. Additional Environmental Factors to Considered

According to the NOP, the EIR must consider additional environmental factors that are not anticipated to be affected by the Project.

Transportation/Traffic impacts must be analyzed based upon the transportation of used drilling muds and Platform Holly works and equipment deliveries. Without a clear understanding of the routes and frequency of these trips, the potential transportation impacts cannot accurately be analyzed.

Noise impacts must be included because of the drilling operations that will take place during this Project. This may lead to a substantial temporary increase in ambient noise levels in the project vicinity and therefore should be thoroughly analyzed in the EIR. Additionally, residents may be exposed to groundborne vibration and noise during drilling, again justifying further analysis.

Due to the additional production sent to the EOF, additional fire protection services will be needed. Consequently, Public Services should be included in the EIR for a thorough analysis. The increased demand for public services as part of this Project should not be ignored in the EIR as emergency response capabilities are of paramount importance as we have recently witnessed during the Refugio Oil Spill. Western Goleta lacks a fire station and the City and County emergency response capabilities are already over-

Mr.Gillies, CSLC June 29, 2015 9 of 9 burdened. The Project would exacerbate these conditions warranting a Public Services section complete with mitigation.

The scarcity of water resources and the need for substantial amounts of water for this Project requires a thorough analysis of Utilities and Service Systems in the EIR. Omission of this section fails to provide analysis of a critical issue related to this project.

4. Cumulative Impacts Analysis

The EIR must provide a broader geographic scope of cumulative impacts than indicated in the NOP. At a minimum, the EIR should consider all oil and gas operations, facilities, and infrastructure within Santa Barbara County and all oil and gas projects and operations offshore of Santa Barbara County. All cumulative projects in the region must be considered to adequately ass potable water impacts, emergency response impacts, traffic impacts, and more.

5. Alternatives Analysis

The NOP notes two project alternatives as technically infeasible or otherwise rejected that must be included in the EIR. The first is the use of alternative energy sources. Alternative energy is surely not an infeasible option given the current regulatory and economic landscape. A thorough vetting of this option must be included in the EIR. Additionally, an onshore drilling option warrants further analysis. Such an alternative must include drilling from the Las Flores Canyon facility where consolidation of offshore oil and gas processing facilities are intended. Onshore drilling from Las Flores Canyon would remove or reduce many of the potentially devastating impacts associated with offshore drilling and processing in an urban setting.

Thank you for your consideration of our comments on this Project that is of such great concern to our City. If you have any questions, please feel free to contact me at [email protected] and 805-961-7557.

Sincerely,

Anne Wells Advance Planning Manager cc: Goleta City Council Michelle Greene, Goleta City Manager Tim Giles, Goleta City Attorney Jennifer Carman, Goleta Planning and Environmental Review Director Jennifer Lucchesi, Executive Officer of the CSLC Members of the California Coastal Commission Alison Dettmer, Deputy Director of the California Coastal Commission