California State Lands Commission Revised PRC 421 Recommissioning

California State Lands Commission Revised PRC 421 Recommissioning Project on State Oil and Gas Lease No. PRC 421 December 17, 2014 1

Introduction Final Environmental Impact Report (EIR) for Revised PRC 421 Recommissioning Project released – Jan 2014 California State Lands Commission (CLSC) meeting requested additional analysis – April 23, 2014 Recirculated Final EIR builds on previous EIR, providing additional analysis as directed by CSLC

Information Added During Recirculation Vaqueros Reservoir Repressurization Section 5. 0, Project Alternatives Analysis No Project Alternative (redefined) No Production/ Quitclaim State Oil and Gas Lease PRC 421 Alternative Processing PRC 421 Oil at LFC Alternative

Repressurization of the Vaqueros Formation Increasing pressure in the Vaqueros Formation documented in 1987 to 2000; no data available after 2000 Engineering analysis- repressurization is most likely from aquifer influx (natural groundwater movement) Approximately 21 offshore wells in this formation were not properly abandoned (1930 -1950’s) and could leak under pressure PRC 421 -1 and 421 -2 only remaining wells for pressure measurements; measurements cannot be taken while shut-in

Historical Overview (1929 to 1994) PRC 421 was produced continuously from 1929 to 1994 1929 First Oil & Gas Lease at PRC 421 (by State Surveyor General) May 1994 Production curtailed due to onshore spill from a 6 -inch line Oct 1949 Lease extended and renewed by CA State Lands Commission

PRC 421 key Infrastructure EOF

Historical Overview (1995 to present) PRC 421 generally shut in (no production) since 1994 2000 -2001 Production – In order to repair methane leak, oil produced to reduce pressure in Vaqueros Reservoir 2001 Repairs – Caissons, casings, wellheads; production equipment removed; subsurface safety valves installed 2004 Repairs – New seaward facing caisson at Pier 421 -1 2011 Repairs – Pier 421 -2 seaward facing caisson repaired; older pilings removed from Piers 421 -1 and 421 -2

PRC 421 Current Conditions Pier 421 -1 Pier 421 -2

Pier 421 -2 Pier 421 -1 Existing Piers and Caissons

Chronology of Events Throughout EIR preparation Coordination with city of Goleta and CCC through a Joint Review Panel. 10+ public notices, news releases, or news articles published in the Santa Barbara Independent, Santa Barbara News-Press, and Noozhawk. 2004 Application submitted. 2005 Notice of Preparation (NOP) (May 2004 application). Public scoping meetings (Goleta). 2006 -- 2007 Joint Review Panel Formed. Two Administrative Drafts Reviewed by JRP. Public Draft EIR / 60 -day comment period. Draft EIR public meetings (Goleta). 2008 Two Administrative Draft Final EIRs Reviewed by JRP. 2008 - 2013 EIR suspended due to various Project delays. 11

Chronology of Events (Cont’d) 2013 CSLC staff and Venoco agree to restart the EIR process. Venoco submits application for revised project. NOP published (May 2004 application with 2013 amendment). Public scoping meetings (Goleta). Administrative Draft Reviewed by JRP. Public Revised Draft EIR / 60 -day comment period. Public meetings (Goleta). 2014 Final EIR published. Meeting w/ Venoco, the City, and CSLC on MMP. Final EIR and CSLC Hearing (Directed to recirculate to address LFC). Administrative Draft Recirculated DEIR reviewed by JRP. Public Recirculated Draft EIR (Public meetings in Goleta). CSLC staff presents at City of Goleta City Council – Discussion of Recirculated EIR Final EIR released. Commission Hearing. 12

Summary of Proposed Project Recommission Pier 421 -2 & Well 421 -2 Repairs, new equipment and improvements at Pier/ Well 421 -2, along access road and delivery pipeline Limited improvements to Ellwood Onshore Facility (e. g. , power equipment and monitoring and control system) Pressurization monitoring No new drilling, use of hydraulic fracturing, matrix acidization, or acid- fracking stimulation treatments – production resumption from well 421 -2.

Summary of Proposed Project (cont) Decommission and remove Pier 421 -1 & Well 421 -1 Following start up of PRC 421 -2 (application within 90 days) Remove pier, caisson, piping, and ancillary supporting facilities Processing of produced oil/gas/water emulsion at the Ellwood Onshore Facility (EOF) Commingled with production from Platform Holly Processed using existing equipment Within existing production limits for Platform Holly and permitted throughput of EOF Would not extend the life of the EOF

Aerial View of the Project 15

Impacts Associated with the Proposed Project Potentially Significant & Unavoidable Geological Resources 4 0 Safety 4 3 Hazardous Materials 2 0 Air Quality and Greenhouse Gasses 1 0 Hydrology, Water Resources and Water Quality 2 2 Marine Biological Resources 2 3 Terrestrial Biological Resources 1 2 Land Use, Planning, and Recreation 0 4 Public Services 1 1 Transportation and Circulation 1 0 Noise 0 0 Aesthetic and Visual Resources 1 1 Cultural, Historical, and Paleontological Resources 1 0 Energy Mineral Resources 0 0 TOTAL 20 16 Resource Area

Summary of Potential Impacts Impact summary 20 Potentially Significant Impacts 16 Significant and Unavoidable Impacts 13 related to potential for an oil spill to occur (even though volumes/ potential for occurrences are low) 3 related to small addition of processing at the EOF and safety response Primary concerns Use of the EOF for processing Continued/expanded use of a legal non-conforming facility Compatibility with surrounding uses; potential safety concerns

Comments Raised Regarding the Final EIR • Venoco’s rights to resume production at PRC 421 • Life of the Ellwood Onshore Facility (EOF) it’s status as a legal non-conforming use • Project Duration • Reservoir repressurization • Processing PRC 421 oil at Exxon. Mobil’s Las Flores Canyon facility 18

Project Alternatives and Potential Impacts

No Project Alternative Commission agreement that Venoco has adequately repaired PRC 421 infrastructure Venoco authorized to resume production as the current lease operator Production and processing on Pier 421 -2, wastewater and gas reinjection at Well 421 -1 Includes new processing equipment on Pier 421 -2 Potential Impacts Impact summary 20 Potentially Significant 15 Significant and Unavoidable Primary concerns Processing in shorezone Continued use of 421 -1 Greater impacts than the proposed Project

No Production/ Quitclaim Lease 421 Alternative State terminates PRC 421 – denies Venoco’s contractual right to produce State likely required to pay Venoco for interest taken Potentially no production or processing at PRC 421 No pressure testing of the Vaqueros Reservoir Potential Impacts Impact summary 0 Potentially Significant 14 Significant and Unavoidable Primary concerns Cost to the State Vaqueros Reservoir repressurization Greater impacts than the proposed Project

Reinjection at Platform Holly Similar to No Project – oil processing on Pier 421 -2 Wastewater and gas reinjection at Platform Holly Use of existing utility pipeline to Platform Holly Operational changes at Platform Holly (H 2 S scrubbers) Decommissioning of PRC 421 -1 Potential Impacts Impact summary 20 Potentially Significant 15 Significant and Unavoidable Primary concerns Processing in shore zone Greater impacts than the proposed Project

Processing PRC 421 Oil at Las Flores Canyon (LFC) Alternative PRC 421 -2 production transported to LFC for processing No processing at the EOF Assumes pipeline transport Decommissioning of PRC 421 -1 of oil/gas/water emulsion Construction of 10. 2 miles of pipelines If not possible, additional Additional equipment on Pier 421 -2 equipment at PRC 421 -2 Larger ESP, isokinetic sampler, check 1, 000 to 1, 500 -barrel meter, 4 chemical tanks breakout tank, flare, New Venoco Receiving Station at LFC and oil shipping pump Oil dehydration plant, oil &water NOTE storage tanks, injection well

New Pipeline Route Bore Hole Segments along the New Pipeline 24

New Venoco Receiving Station and Pipeline Route at LFC 25

Impacts Associated with the LFC Alternative Potentially Significant & Unavoidable Geological Resources 11 0 Safety 5 3 Hazardous Materials 4 0 Air Quality and Greenhouse Gasses 4 0 Hydrology, Water Resources and Water Quality 5 5 Marine Biological Resources 4 6 Terrestrial Biological Resources 2 6 Land Use, Planning, and Recreation 2 7 Public Services 1 3 Transportation and Circulation 3 0 Noise 2 0 Aesthetic and Visual Resources 2 1 Cultural, Historical, and Paleontological Resources 6 0 Energy Mineral Resources 1 0 52 31 Resource Area TOTAL

Summary of Potential Impacts Impact summary 52 Potentially Significant 31 Significant and Unavoidable Primary concerns Impacts from construction and operation of 10. 2 miles of new pipelines and new 1. 5 acre oil processing facility New equipment at Pier 421 -2, including 4 chemical tanks (55 to 350 gallons) Reduced accuracy in the leak detection system (from 3 phase operation) Greater impacts than the proposed Project

Environmentally Superior Alternative Proposed Project selected as the environmentally superior alternative Benefits No processing in the surf zone Decommissioning of PRC 421 -1 Minimal new equipment on Pier 421 -2 Pressurization monitoring Use of the EOF for processing Primarily uses existing infrastructure No extension of the life of the EOF

Recommended Commission Actions 1) Certify the Environmental Impact Report, CSLC EIR No. 732, State Clearinghouse No. 2005061013. 2) Adopt the Mitigation Monitoring Program (Exhibit C). 3) Adopt the CEQA Findings & Statement of Overriding Considerations (Exhibit D). 4) Find that this activity is consistent with the use classification designated by the Commission for the land pursuant to Public Resources Code section 6370 et seq. 5) Find that adequate corrective measures have been taken to repair the infrastructure associated with PRC 421, as required under California Code of Regulations, Title 2, section 2121, and that, pursuant to the Lease, Venoco is obligated to resume production of oil and gas from PRC 421. 29

Recommended Commission Actions (Cont’d) 6) Find that Venoco’s proposed Project, utilizing the EOF for processing oil from PRC 421, subject to the implementation of the MMP identified in Exhibit C 1, is consistent with Lease PRC 421 and the Final EIR, pursuant to the following conditions: i. Well 421 -2 will not be stimulated, within the meaning of Public Resources Code section 3157, using hydraulic fracturing, matrix acidization or acid fracturing techniques, unless subsequently approved by the State Lands Commission. ii. Venoco must comply with all other applicable laws and obtain all required DOGGR permits. iii. Venoco shall be responsible for all costs associated with the execution of the adopted MMP, including staff/consultant monitoring. 30

Recommended Commission Actions (Cont’d) 7) Exercise the State’s option to require Venoco to remove, at Venoco’s sole expense, Well 421 -1 and its associated facilities, including Pier 421 -1, pursuant to the following conditions: i. Venoco shall submit to the Executive Officer the information necessary to evaluate whether the decommissioning and abandonment plan of Well 421 -1 and its associated facilities is consistent with the Commission’s regulations, Lease PRC 421, and the Final EIR within 90 days of receipt of all required permits. ii. If the Executive Officer determines that the decommissioning and abandonment plan is consistent with the Commission’s regulations, Lease PRC 421, and the Final EIR, then the Executive Officer is authorized to allow the removal and decommissioning of Well 421 -1 and its associated facilities to proceed. 31

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