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

 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 Introduction

 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 Information Added During Recirculation

 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 ( ’s) and could leak under pressure  PRC and only remaining wells for pressure measurements; measurements cannot be taken while shut-in Repressurization of the Vaqueros Formation

5 Historic Well Locations

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

PRC 421 key Infrastructure EOF

 PRC 421 generally shut in (no production) since 1994  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  2011 Repairs – Pier seaward facing caisson repaired; older pilings removed from Piers and Historical Overview (1995 to present)

PRC 421 Current Conditions Table 1.Active Oil and Gas Operations in California State Waters Pier Pier 421-2

Existing Piers and Caissons Pier Pier 421-2

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

 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 Chronology of Events (Cont’d)

 Recommission Pier & Well  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 Summary of Proposed Project

 Decommission and remove Pier & Well  Following start up of PRC (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 Summary of Proposed Project (cont)

15 Aerial View of the Project

Impacts Associated with the Proposed Project Resource Area Potentially Significant Significant & Unavoidable Geological Resources40 Safety43 Hazardous Materials20 Air Quality and Greenhouse Gasses10 Hydrology, Water Resources and Water Quality22 Marine Biological Resources23 Terrestrial Biological Resources12 Land Use, Planning, and Recreation04 Public Services11 Transportation and Circulation10 Noise00 Aesthetic and Visual Resources11 Cultural, Historical, and Paleontological Resources10 Energy Mineral Resources00 TOTAL2016

 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 Summary of Potential Impacts

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 ExxonMobil’s Las Flores Canyon facility 18 Comments Raised Regarding the Final EIR

Project Alternatives and Potential Impacts

 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  Includes new processing equipment on Pier No Project Alternative  Impact summary  20 Potentially Significant  15 Significant and Unavoidable  Primary concerns  Processing in shorezone  Continued use of  Greater impacts than the proposed Project Potential Impacts

 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 No Production/ Quitclaim Lease 421 Alternative  Impact summary  0 Potentially Significant  14 Significant and Unavoidable  Primary concerns  Cost to the State  Vaqueros Reservoir repressurization  Greater impacts than the proposed Project Potential Impacts

 Similar to No Project – oil processing on Pier  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  Impact summary  20 Potentially Significant  15 Significant and Unavoidable  Primary concerns  Processing in shore zone  Greater impacts than the proposed Project Potential Impacts Reinjection at Platform Holly

 PRC production transported to LFC for processing  No processing at the EOF  Decommissioning of PRC  Construction of 10.2 miles of pipelines  Additional equipment on Pier  Larger ESP, isokinetic sampler, check meter, 4 chemical tanks  New Venoco Receiving Station at LFC  Oil dehydration plant, oil &water storage tanks, injection well Processing PRC 421 Oil at Las Flores Canyon (LFC) Alternative NOTE  Assumes pipeline transport of oil/gas/water emulsion  If not possible, additional equipment at PRC  1,000 to 1,500-barrel breakout tank, flare, and oil shipping pump

24 Bore Hole Segments along the New Pipeline New Pipeline Route

25 New Venoco Receiving Station and Pipeline Route at LFC

Impacts Associated with the LFC Alternative Resource Area Potentially Significant Significant & Unavoidable Geological Resources 110 Safety 53 Hazardous Materials 40 Air Quality and Greenhouse Gasses 40 Hydrology, Water Resources and Water Quality 55 Marine Biological Resources 46 Terrestrial Biological Resources 26 Land Use, Planning, and Recreation 27 Public Services 13 Transportation and Circulation 30 Noise 20 Aesthetic and Visual Resources 21 Cultural, Historical, and Paleontological Resources 60 Energy Mineral Resources 10 TOTAL 5231

 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 Summary of Potential Impacts

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

1)Certify the Environmental Impact Report, CSLC EIR No. 732, State Clearinghouse No )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 Recommended Commission Actions

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 C1, is consistent with Lease PRC 421 and the Final EIR, pursuant to the following conditions: i.Well 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 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 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 and its associated facilities to proceed. 31 Recommended Commission Actions (Cont’d)

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