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Tech drives Venoco

By   /   Sunday, February 15th, 2009  /   Comments Off on Tech drives Venoco

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Oil development off Santa Barbara County’s coast has been a thorny proposition since at least 1908, when the Santa Barbara Chamber of Commerce opposed the construction of a pipeline on Stearns Wharf.

Moratoriums on new offshore drilling in both state and federal waters followed decades later. But new drilling technology offers oil companies the chance to get at offshore leases with onshore rigs – circumnavigating restrictions on new ocean platforms.

Oil and gas firm Venoco plans to test whether what’s technologically possible is also politically feasible by going to Carpinteria voters with a proposal to tap some 20 million barrels of offshore reserves with on onshore rig.

But whether its bid succeeds or fails, expect to hear more about the “extended reach” drilling technology it would use – the advances could unlock as much as a billion a barrels of proven-but-undeveloped reserves off the coasts of Santa Barbara and Ventura counties, said University of Houston petroleum geologist Tom Bjorklund.

The drilling methods – developed in the 1990s – can reach more than seven miles horizontally. In research papers, Bjorklund has made the technical case for using onshore rigs to reach oil off the Santa Barbara and Ventura county coasts.

“The state [of California] needs more money, and these wells can provide flowing oil in a relatively short time, reaping taxes, jobs and royalty benefits,” Bjorklund said. “They ought to talk to Arnold about that.”

Venoco – which maintains its West Coast headquarters in Carpinteria – has filed papers for a Carpinteria ballot initiative for its Paredon project, which would use an onshore rig to tap an estimated 20 million barrels of offshore reserves on one of the firm’s leases over about 15 years. The initiative would bypass the Carpinteria City Council and Santa Barbara County Board of Supervisors to put the project in line for approval from the State Lands Commission.

In exchange for Carpinteria voters’ approval, Venoco would donate $1 million a year for the first five years of the project to the Carpinteria Education Foundation and give about 22 acres of the company’s land to the city.

Venoco spokesman Stephen Greig said the company has used extended reach technology from all its offshore platforms. It’s also used the techniques for onshore wells to onshore leases, but using an onshore rig for an offshore lease would be a first for the firm.

Greig argues the new technology is environmentally, economically and politically superior to the old approach – which would have been to build a new offshore platform.

“The most obvious [environmental improvement] is that the potential for a spill into the ocean is mitigated,” Greig said. “Because of the distance that the drilling facility is away from the beach, [Venoco has] the ability to have enough space and containment so that in the unlikely event that there was some kind of spill, it would all be contained on site.”

“While there are, I suppose, arguments that there are less risks of an offshore oil spill, there’s still a number of risk factors that must be considered with an onshore project,” said Nathan Alley, a staff attorney for the Environmental Defense Center, a Santa Barbara organization that is representing a host of environmental groups in opposition to the project.

Among those risks are 11 so-called “Class 1” environmental impacts – serious impacts that little or nothing can address. They include noise, the potential for contamination and a 140-foot or more drilling tower disguised a lighthouse that would stand for the first phases of the project.

That could torpedo the project in state hearings, Alley argued. “To see 11 identified Class 1 impacts is pretty extraordinary,” he said. “That’s a pretty high hurtle.”

The Paredon project was in the midst of the more conventional approval route with environmental officials from the city of Carpinteria when Venoco decided to go with an initiative.

Venoco’s Greig said the company canvassed city voters and determined that voters wanted a direct up-or-down say on the project.

“What we heard was that the community was curious as to how they could have more of a voice in the process,” Greig said. “The more people we met with, the more we heard support for the project.”

But the political calculus seems apparent enough to Alley and other observers. Times are tough for the state, county and city of Carpinteria, and Venoco has decided it has a better shot at victory in an open battle for votes than in hearing rooms, especially when armed with perks for the city and an estimated $100 million in tax revenue for Carpinteria and $1 billion in taxes for the county.

“Just because people want to vote on a project doesn’t mean they’ll approve it,” Alley said, adding that he plans to challenge the language in the initiative, which still needs approval from Carpinteria’s city attorney before Venoco can begin collecting the signatures needed to get it on a ballot.

But regardless of the Paredon project’s fate, extended reach drilling almost undoubtedly will be proposed again. Those 1 billion barrels of untapped reserves aren’t going anywhere.

“By looking at what’s been accomplished [with extended reach drilling], one can make the conclusion that Southern California has that capability because the depths of the reserves are within reach of horizontal drilling,” said oil researcher Bjorklund.

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