Excelaron drilling plan for Huasna Valley headed to supervisors

Plans to drill as many as 12 oil wells in the Huasna Valley face a crucial and possibly final hearing Tuesday before the Board of Supervisors.

In the run-up to the hearing, project opponents are raising a variety of questions about the project’s viability and whether approval could start a wave of new oil exploration applications in the county.County planning staff recommends that the project be denied. The oil exploration company Excelaron is asking supervisors to delay a final decision while a revised project is studied, one that could reduce some of the main environmental concerns surrounding it.

Supervisors have already held one hearing on the proposal after the Planning Commission denied the project, but they made no decision. Tuesday’s hearing will begin at 1:30 p.m.

John McKenzie, county planner for the project, said supervisors will have two options Tuesday — complete the hearing and make a decision or grant another delay to a later date.

The project calls for as many as 12 oil wells to be drilled on 160 acres in the Huasna Valley, an isolated and rural community of about 200 people 10 miles east of Arroyo Grande. Excelaron representatives say the field could produce as much as 1,000 barrels of heavy oil a day, which would be trucked to a refinery.

The Planning Commission rejected the proposal in February, saying it is incompatible with the area’s pastoral character. Commissioners also cited a long list of environmental concerns including noise, visual impacts and the danger of spills and wildfire.

Excelaron immediately appealed the decision to the supervisors, saying the commission did not give the project a fair hearing.

“The Planning Commission did not even discuss any possible project alternatives, whether listed in the EIR or not, before voting to deny Excelaron’s application,” Carol Florence, Excelaron’s planner, wrote in a letter to supervisors.

At their first hearing, on May 15, supervisors grappled with the project for hours but postponed further consideration to Tuesday and asked for more information on a variety of issues. Since then, the company has come up with a revised project that could reduce noise and aesthetics concerns.

Namely, Excelaron proposes to limit drilling on a pad that is close to a nearby residence to daytime hours to reduce noise. It also proposes clustering the wells on that pad to the south end where they would be less visible from the Huasna Valley Road.

Florence said another delay is necessary to give county planning staff and their consultant time to evaluate the new proposal and receive public comment.

Project opponents will urge denial Tuesday.

“We think it’s a bad project and sets a huge precedent,” said Ron Skinner, spokesman for the Huasna Foundation, a group of residents who oppose the project.

Tip of iceberg?

Their main fear is that approval of the Excelaron project would cause a rash of similar highly speculative oil projects in the Huasna Valley and elsewhere in South County. This could include additional drilling proposals by Excelaron, which owns the mineral rights on more than 1,000 acres in the valley.

A separate oil company, Alamo Creek Oil, owns mineral rights on 9,051 acres at Porter Ranch that is adjacent to the Mankins Ranch where the Excelaron project would be located. Ninety percent of Alamo Creek Oil is owned by the same foreign oil companies that own Excelaron — United Hunter Oil & Gas Corp. and Australian Oil Co. — according to United Hunter Oil & Gas.

The critics point to an independent resource evaluation of the Huasna oil field done for Excelaron by Gaffney, Cline and Associates of Houston that indicated that the field could be as large as 600 acres and would require up to 60 wells to fully develop it. The evaluation was done at the request of one of Excelaron’s parent companies.

Excelaron representatives say such concerns are “highly speculative.” It is a common practice in the oil industry to own surrounding mineral rights in order to prevent other oil companies from tapping into a field from an adjacent one using horizontal drilling, they say.

They also point out that additional wells would require more county permits. Excelaron has already spent five years and more than $5 million to get the project approved.

“Given the many restrictions and constraints and the expenditure of time and financial investment in this specific project, any additional future investment would give anyone great pause,” said Dave Cox of Barnett, Cox and Associates, Excelaron’s publicists in San Luis Obispo.

Critics also question whether the 12 wells proposed by Excelaron could produce 1,000 barrels of oil a day. The company plans to use hot water injection to loosen the heavy oil, a technique that recovers only about 4 percent of the available oil.

“Impacts for Excelaron’s project are currently known only for 12 vertical wells, using hot water extraction methods that could produce a maximum of only 96 barrels of oil per day,” Skinner told supervisors in May.Critics point to other oil fields in the area, such as the Cat Canyon and Price Canyon oil fields, which have similar daily outputs but are much larger and use many more oil wells.

Florence said those oil fields are decades old and production dwindles over time. A new field could have much higher production levels. County planners report that the Excelaron field’s maximum production is likely to range between 650 and 1,000 barrels a day, but the true potential of the field will not be known until Excelaron completes an exploratory phase.

Huasna Valley residents are also concerned that, once the project is approved, regulation of it would be pre-empted by the state, leaving county authorities with little say over whether horizontal drilling or hydraulic fracturing could be used.

Hydraulic fracturing or fracking is the controversial practice of injecting water and chemicals into an oil field under high pressure to fracture the rock and release more oil. Excelaron officials have said the rock in the Huasna field is already fractured and fracking would be a waste of money.

Company officials have gone further, saying they would be willing to have restrictions placed on their county permit that would formally bar them from using fracking or other techniques not outlined in their proposal.

Excelaron is based in San Luis Obispo but is owned by two foreign oil companies. United Hunter Oil & Gas of Calgary, Canada, owns 65 percent of the company, with the remaining 35 percent owned by the Australian Oil Co. of Perth.