Will Arroyo Grande Oil Field add 481 new oil wells? It just cleared a major hurdle

Tour the Arroyo Grande Oil Field between SLO and Pismo

Take a look around the Arroyo Grande Oil Field located between Pismo Beach and San Luis Obispo. It has been in operation for more than a century.
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Take a look around the Arroyo Grande Oil Field located between Pismo Beach and San Luis Obispo. It has been in operation for more than a century.

Sentinel Peak Resources has cleared an environmental hurdle that could allow it to move forward with years-old plans to increase drilling in the Arroyo Grande Oil Field — but whether it will or not is still up in the air.

The Environmental Protection Agency granted Sentinel Peak Resources an aquifer exemption on April 30, exempting portions of the aquifer under the oil field from protections guaranteed by the federal Safe Drinking Water Act.

In its decision, the EPA determined that portions of the aquifer where the Denver-based company plans to inject wastewater underground are not currently used for drinking water and will not in the future serve as drinking water because it contains “commercially producible quantities of hydrocarbons.”

After several years of regulatory limbo, this means Sentinel Peak Resources has finally secured necessary federal approval that would allow it to add 481 wells to the Price Canyon Oil Field outside of Pismo Beach.

Now that the ruling is in hand, representatives of the company have yet to say whether or not they will actually pursue the controversial plan.

“We keep all options open, including completion of the latest approved development plan,” Christine Henley, Sentinel Peak Resources director of environmental health and safety and regulatory affairs, wrote in an email to The Tribune on May 20.

She did not respond to further requests for clarification on the company’s plans.

San Luis Obispo County planning director Trevor Keith told The Tribune on Friday that the company has two existing applications in to the county for new well projects. Both have been in stasis since about 2015.

Meanwhile, environmental activists are prepping to fight potential expansion at the oil field.

“We hope that the county and state will recognize that approving new oil extraction will hinder California’s progress toward its climate goals,” said Maya Golden-Krasner, an attorney with the Center for Biological Diversity. “In the meantime, we will continue to monitor those processes, and will use every tool available to us to protect Californians, our water, and our climate.”

Oil field expansion plan

The oil field’s previous owner, Freeport-McMoRan, Inc., first pushed expansion plans at the 1,480-acre property in 2015.

That year, the company announced plans to add 450 wells, including about 100 replacement wells at the property.

At the time, there were 165 oil wells and up to 40 injector wells in the field that produced about 1,600 barrels a day, according to Tribune archives.

Freeport-McMoRan said that it 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 were put on hiatus, however, after a California agency began a years-long examination of state water resources.

Aquifer exemption delays

As Freeport McMoRan eyed expansion, the California Department of Conservation’s Division of Oil, Gas and Geothermal Resources, which supervises oil and gas production in the state, began a push to re-examine all of the oil wells in the state.

Several agencies embarked on a joint plan to “ensure that fluids injected in connection with oil and gas production are not impacting water with current or potential beneficial uses in California,” according to DOGGR, which falls under the state Department of Conservation.

The decision came after a 2014 review by the EPA found about 5,625 injector wells in the state were improperly injecting “produced water,” or, wastewater, into aquifers that were considered protected under the Safe Drinking Water Act.

Freeport-McMoRan submitted an application for an exemption in 2016, and the EPA estimated then it would have a decision by February 2017.

Instead, the issue lingered for more than three years — enough time for the oil field to switch hands from Freeport-McMoRan to Sentinel Peak Resources, and for a groundswelling of opposition to very nearly block any potential new wells at the field ever.

Measure G, the initiative to ban new oil wells and fracking in unincorporated areas of San Luis Obispo County, ultimately failed in the November 2018 election.

Opposition builds

Since November 2018, the issue of oil field expansion has stayed somewhat dormant. Now that Sentinel Peak Resources has cleared a major hurdles to its expansion, local environmentalists are prepping for their next battle.

The Center for Biological Diversity, which opposed the aquifer exemption, said the company failed to show wastewater injection is safe and that the EPA ignored warnings from scientists.

“Unfortunately, this approval means that the oil company can inject toxic oil wastewater into the aquifer, increasing the risks of seismic activity and the potential for these chemicals to travel into surrounding groundwater,” Golden-Krasner said. “It is a shame that California and Trump’s EPA ignored the scientists who pointed out that the oil company’s data did not prove that injecting waste fluids was safe, as required by law, and that they disregarded the concerns of residents who live next this oil field and rely on groundwater wells for drinking water.”

Now the organization and others will prepare for the next round in the fight over the future of the oil field: to prevent new wells.

31 new wells

The first battle will likely be over a previously submitted application to drill more than two dozen new wells at the field.

Freeport-McMoRan applied to the county in 2015 to build 31 wells that were approved in 2005. But those permits expired before the wells were drilled due to the question of the status of the aquifer.

The application was approved by the county Planning Commission and appealed to the county Board of Supervisors, but never actually made it to the board for consideration.

On Friday, Keith said the county expects an appeal to go the Board of Supervisors “later this year in the fall.”

Charles Varni, coordinator of the San Luis Obispo chapter of the Surfrider Foundation’s STOP Climate Change Campaign, said the coalition of opponents will fight against new well drilling, asking that the county not issue a land use permit based on “flawed studies, threats to municipal, agricultural, and private water wells, and exacerbating the climate crisis by adding more very dirty CO2 into the atmosphere.”

“Our basic position is that the climate crisis is so acute that our species cannot afford, and the atmosphere cannot tolerate, any expansion of new fossil fuel production if we are to avoid increasing global temperatures by 2 degrees Celsius — as well as the acute threats to local water supplies,” Varni said.

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