Will more oil wells be built in SLO County? Company is ‘eagerly awaiting’ board decision
On Tuesday, the San Luis Obispo County Board of Supervisors will decide whether to deny or grant a hotly contested appeal to the construction of 31 new oil-producing wells at the Arroyo Grande oil field.
The board’s hearing has been six years in the making.
“Sentinel Peak is eagerly awaiting next week’s resolution of the Phase IV time extension appeal,” Jeremy Vanderziel, asset manager for Sentinel Peak Resources, wrote in an email to The Tribune on Oct. 13. Sentinel Peak is the energy company that now operates the Arroyo Grande oil field.
Environmentalists against oil drilling are less enthusiastic.
“It’s going to take a lot of gall for the county to approve more than 30 new wells after allowing the shady drilling of so-called replacements for years,” Liz Jones, an attorney for the Center for Biological Diversity, said in a statement sent to The Tribune on Oct. 13.
In 2015, the Center for Biological Diversity appealed the San Luis Obispo County Planning Commission’s decision to grant an extension request by Freeport McMoRan — which at the time operated the oil field — to finish its so-called “Phase IV” planned operations at the Arroyo Grande oil field off Price Canyon Road a few miles northeast of Pismo Beach.
Between 2004 and 2015, Freeport McMoRan was permitted by the county to build 95 oil production wells, 30 steam injection wells and three steam generators, as well as new and modified well pads at the oil field.
The permit gave the company no more than 10 years to build those new wells.
In 2015, when that building time expired, the oil company hadn’t yet built 31 of those 95 oil production wells. So, it applied for an extension later that same year so it could have more time to build them.
The county planning commission then granted that extension request to give the company three more years, or until November 2018, to build the 31 wells.
The Center for Biological Diversity promptly appealed the planning commission’s decision because it was concerned about the environmental impacts those wells could have — specifically any new impacts that may have arisen since the original permit was granted a decade before.
In its November 2015 appeal, the nonprofit organization detailed how droughts have increased the need for the county to diversify its drinking water sources and that the oil field operations were likely further polluting the aquifer beneath it. The Center says there’s a chance that polluted water could breach the contained aquifer and seep into neighboring drinking water wells that residents nearby the oil field tap into.
Additionally, the Center alleges in its appeal that the county must examine the environmental impacts of the 31 proposed wells because the previous environmental impact review is outdated and additional information is now known about the damage oil drilling does to the environment.
The county planning commission refutes the claims that the Center makes in its appeal, arguing that the 2004 environmental impact review is sufficient and that Sentinel should be allowed to drill the 31 new oil production wells in the next three years.
Wells drilled at Arroyo Grande oil field since 2015 appeal
The oil field was supposed to be quiet while awaiting the Board of Supervisors’ hearing on the appeal of that extension. County staff assured the Center that no new wells would be drilled on the oil field because the permit had expired, according to records obtained by The Tribune.
But records dispute that.
The county has approved 37 new wells to be drilled on the property since 2017, according to county documents.
To gain approval for the 37 new wells, which have been deemed “replacement wells” by the county, Sentinel has applied for and received “new drill” permits from the California Geologic Energy Management Division (CalGEM), state records show.
Then, the company turned to the county Planning Commission for approval of those new wells.
The county has granted all of those requests because “each well would replace an existing well that has been or will be plugged and abandoned or converted to a temperature observation well,” according to a so-called “notice to proceed” document granting some of the new wells to be constructed at the Arroyo Grande oil field.
County documents say that “an ongoing component of this operation includes the closure and replacement of wells that no longer produce commercially viable amounts of oil or that are physically compromised.”
Under state law, an oil drilling operator must apply for what are known as permits from CalGEM to drill new wells. If it wishes to re-drill a well, it must apply for a rework permit, according to state law.
There is no such thing as a so-called “replacement well” under state or county law.
Center for Biological Diversity says replacement wells are illegal
The Center submitted a letter to the county planning commission on Aug. 23 outlining its concerns about the 37 replacement wells, which it said were illegal.
“This replacement law concept is completely made up,” Jones, the Center attorney, told The Tribune in an August interview. “Plugging and abandoning a well is a legal requirement for every well that gets permitted. So it’s really absurd to say that if an operator fulfills its legal obligation by plugging and abandoning a well, then it’s somehow entitled to drill another well without further review.
“If this were the case, by this logic operators could just drill an infinite number of wells without any further review as long as they were plugging and abandoning the wells along the way.”
Sentinel has told the county that these replacement wells are “necessary to maintain existing oil field operations by abandoning a failed well and drilling a new well to take its place in approximately the same location,” according to county documents.
Steve McMasters, a supervising planner at the county, told The Tribune in an August interview that in order for the approved new wells to be considered replacement wells, they have to be “tapping into the same area” even though the “top of the well, where it’s being drilled, doesn’t necessarily have to be in the same location as the old well.”
An analysis of CalGEM records, however, show that many of the replacement wells drilled are several — sometimes more than a hundred — feet away from the well they’re purported to replace. The replacement wells’ bottom holes, or where the wellbore taps into the oil, are also sometimes many feet away from the original wells’ bottom holes, according to CalGEM records.
Erika Schuetze, a spokeswoman for the county Planning and Building Department, said the distance between the bottom holes was determined by the county to be “reasonable” because if they had been drilled any closer it “would have result[ed] in drilling in unacceptable close proximity to another existing bore.”
New court ruling further establishes state’s authority over oil drilling operations
A key ruling on Oct. 12 in the Sixth District of the California Court of Appeals further established in case law that CalGEM has the preemptive authority over permitting oil drilling operations.
The ruling said that counties have the land-use authority to decide where oil drilling operations may occur, but they cannot outright ban oil drilling operations such as the drilling, operation, maintenance and abandonment of wells.
Essentially, CalGEM’s authority trumps any local authority over such activities, the ruling said.
Although state law recognizes that oil drilling operations must avoid to the extent possible impacts on local “life, health, property and natural resources,” it does not give any power to local entities to limit the state’s authority to permit any oil drilling operations, according to the ruling.
In response to an inquiry by The Tribune in August, state Oil and Gas Supervisor Uduak-Joe Ntuk, head of CalGEM, said the agency “coordinated with the county to ensure that CalGEM’s approvals were consistent with local land use approvals,” regarding the 37 new wells drilled at the Arroyo Grande oil field since 2017.
The county’s Phase IV land use permit allowed for a total of 130 wells to be built between 2005 and 2015.
Because the 37 replacement wells did not require any additional county land use permitting for activities such as grading new well pads or cutting down trees, the ruling makes clear that the state has the exclusive authority to approve those wells.
County staff suggests supervisors reject the Center’s appeal
The Center is asking the Board of Supervisors to accept its appeal to the extension request for two main reasons.
First, the Center says it appears that more than 31 wells have been drilled since the appeal was sent in during a time when the county’s land use permit to drill new wells at the Arroyo Grande oil field had expired.
Second, should the county still want to move forward with allowing those 31 wells to be drilled, the Center’s appeal asks the county to first examine the environmental impacts those new wells may have on the area to be in accordance with the California Environmental Quality Act.
“All of these wells spew pollution, heat our climate and could leak at any time,” Jones said on Wednesday. “We expect the county to follow the law, protect residents and order a full environmental review before allowing one more well at Arroyo Grande.”
County planning commission staff and Sentinel fiercely dispute the Center’s allegations that the 37 replacement wells were illegal and agree that the Center’s appeal should be rejected.
“While the CBD (Center for Biological Diversity) has continued its promulgation of inaccurate and baseless allegations against the operations which have not been supported by the law, the courts or the facts, the Phase IV time extension simply provides Sentinel Peak three years to complete 31 wells that were previously approved in the Phase IV Conditional Use Permit,” Vanderziel wrote to The Tribune. “Sentinel Peak is a proud member of the San Luis Obispo community and looks forward to continuing our partnership.”
The county planning commission has recommended the Board deny the appeal and allow Sentinel to drill the 31 wells in the next three years without any additional environmental review.
In its recommendation to the board, planning commission staff said the 31 wells “will have the same level of impacts currently as it would have during its original ten-year timeframe.”
This story was originally published October 19, 2021 at 10:10 AM.
