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.