A year later, plans for Price Canyon Oil Field expansion still up in the air

Up to 20,000 barrels of purified water can be released from the Price Canyon Oil Field into Pismo Creek. The water from reverse osmosis is so pure that minerals need to be added before it can be released into the creek. John Martini watches over the process in March 2016.
Up to 20,000 barrels of purified water can be released from the Price Canyon Oil Field into Pismo Creek. The water from reverse osmosis is so pure that minerals need to be added before it can be released into the creek. John Martini watches over the process in March 2016. dmiddlecamp@thetribunenews.com

For close to a year, a controversial plan to expand production at the Price Canyon Oil Field has lingered in regulatory limbo while the Environmental Protection Agency pondered whether it would approve a necessary exemption that would allow the addition of 481 new wells at the property.

Proponents and opponents of the project were told the EPA would likely make a decision by February 2017.

That date has finally arrived, but the agency has yet to announce a decision, and the fate of the project is still up in the air.

“It’s been tough,” said Natalie Risner, who heads Protect Price Canyon, a group opposing plans to expand the oil field. “It’s been in limbo, and we’ve been holding our breath. The neighbors are concerned. We’re concerned because there has been no word.”

Meanwhile, the property switched hands, adding more confusion to whether the new owners would continue to pursue the controversial plan.

Holding pattern

Freeport-McMoRan Inc. announced in October that it would sell its onshore California oil and gas properties to Sentinel Peak Resources California LLC for $742 million.

Among those properties was the 110-year-old Price Canyon Oil Field, located halfway between San Luis Obispo and Pismo Beach on Price Canyon Road at Ormonde Road.

The deal closed Dec. 30, but the company has since been mum on its plans for the local oil field.

On Friday, Christine Henley, Sentinel Peak director of environmental health and safety and regulatory affairs, said the company has taken no action toward furthering the expansion plans. But she did not dismiss the possibility in the future.

“We have not reactivated or pulled those applications,” she said. “They are holding at the same status right now.”

She declined further comment on the company’s plans for the oil field, saying any future plans would be brought before the public at the appropriate times.

Expanding controversy

The oil field has been the subject of contentious debate for the past two years, as the previous owner attempted to push plans to add the 481 wells at the 1,480-acre property.

There are 165 oil wells and up to 40 injector wells in the field that produce about 1,600 barrels a day, according to past Tribune reports.

In late 2015, Freeport-McMoRan applied for permission from San Luis Obispo County to drill 31 new wells at the field. The proposed wells were originally approved in 2005 under a 10-year construction permit, but could not be built during that time because of regulatory delays.

After a series of heated meetings, the county Planning Commission approved a permit extension. That decision was then appealed to the county Board of Supervisors but never made it before the board.

In a separate application to the county, Freeport-McMoRan announced plans to add 450 wells, including about 100 replacement wells at the property.

The company wanted to add the new wells after geological exploration showed that the existing injection area boundaries — or where the company could drill — could be much larger, allowing for more production. The overall size of the oil field would not increase: Instead, the injection area within the oil field would grow from 249 acres to 807 acres.

The plans raised concerns from neighbors who said the expansion plan would endanger nearby wells by increasing the risk of tainting the water supply with water that is re-injected back into the ground after the oil is pumped out.

The water is a byproduct of pumping (Only about 5 percent of what is brought up from the ground during production is actually oil, the rest is water that has to be disposed of.)

At the Price Canyon Oil Field, this meant as much as 2.1 million gallons of oil-tainted water has to be disposed of on a daily basis. All of that water is first sent through a water treatment plant to remove impurities. About half is boiled into steam to be injected into the wells to make the oil easier to pump. About 40 percent is treated to drinking water standards and released into Pismo Creek. The rest is highly concentrated brine, injected back into the ground.

“How do we know that toxic waste isn’t migrating?” said Risner, who lives in the area of the field with her two young daughters. “We know it’s not moving right now, but how do we know it won’t migrate in the future? They have to look into that.”

Exemption limbo

The plans hit another roadblock in the form of a 2014 review that found about 5,625 injector wells in the state were improperly injecting water into aquifers that were considered protected under the Safe Drinking Water Act.

The California Department of Conservation’s Division of Oil, Gas and Geothermal Resources, which supervises oil and gas production in the state, announced a plan to re-examine all of the oil wells in the state to ensure they comply with the Safe Drinking Water Act.

To accomplish this, oil fields across the state have been required to apply to the EPA for aquifer exemptions, proving the water they inject back into the ground is safe and not going into the drinking supply. They were given a deadline of Feb. 15, 2017, to apply.

The oil and gas division recommended approval of the Price Canyon exemption, which also would expand the allowable area that the company could inject into. The Central Coast Regional Water Quality Control Board agreed with the assessment that the oil field does not endanger nearby drinking wells.

The division submitted the exemption application in February 2016. The Center for Biological Diversity challenged the division and the State Water Resources Control Board’s approval of the exemption, saying the expansion would endanger 100 nearby drinking water wells.

Meanwhile, both of the field expansion plans were put on hold while the application went before the EPA, pending a decision there.

Nahal Mogharabi, spokeswoman for EPA Region 9, which covers California, said Friday that the EPA has yet to make a decision on the Price Canyon exemption and has not set a timeline for when a decision could be made.

Kaytlyn Leslie: 805-781-7928, @kaytyleslie