Texas Firm Fights California Over Offshore Oil Production Restart

A Texas oil company is engaged in a complex legal struggle with California authorities to resume crude oil production from three offshore platforms located in federal waters near Santa Barbara. Houston-based Sable Offshore Corp, overseen by experienced industry leader James Flores, is attempting to navigate a series of lawsuits and regulatory challenges posed by the state, which has historically imposed strict controls on oil operations.

Sable Offshore acquired the platforms from ExxonMobil in 2021, financing part of the estimated $625 million purchase with a loan from the oil giant. The platforms have been inactive since 2015 due to an oil spill caused by a corroded pipeline, which released approximately 3,000 barrels of oil onto nearby beaches and had devastating effects on local wildlife.

In response to California’s opposition, Sable is proposing an alternative strategy involving shuttle tankers to transport oil directly from the platforms to markets, avoiding state regulatory requirements altogether. Despite receiving backing from the Trump Administration for federal oil projects, Sable has faced mounting lawsuits from California, raising concerns over the company’s financial stability.

As Sable grapples with legal challenges, its stock price has plummeted by 68% over the past month, following accusations that Flores shared insider information with select investors. The company is now pursuing federal approvals for its proposed shuttle tanker strategy, which it argues would provide “immediate economic relief to California residents” while stabilizing local refineries.

California authorities have not been receptive to Sable’s plans, and legal action has intensified. In September, the Santa Barbara County District Attorney filed a lawsuit alleging environmental violations, claiming that Sable rushed to meet a deadline imposed by the California Office of State Fire Marshal without adhering to necessary water regulations. California Attorney General Rob Bonta has stated that Sable’s actions indicate a prioritization of profits over environmental protections.

“By avoiding the imposition of waste discharge requirements and associated regulatory oversight, Sable placed profits over environmental protection in its rush to get oil on the market,”

Bonta noted in his complaint.

Sable is also engaged in litigation with the California Coastal Commission, which imposed an $18 million fine on the company for continuing work on the pipeline despite state orders. In retaliation, Sable has filed a lawsuit against the commission seeking damages exceeding $347 million for delays and damages related to the restart of the Las Flores Pipeline System.

The company has expressed concern about the potential consequences of California’s stringent regulations on the state’s energy landscape. Sable argues that the lack of domestic oil production could lead to economic challenges for California, particularly if refineries are forced to close due to inadequate supply.

Industry insiders have expressed skepticism regarding Sable’s persistence in pursuing offshore oil production in California. Many companies have exited the state due to regulatory complexities and reputational risks. Robert Collier, CEO of offshore decommissioning firm BlueLift, remarked that “offshore oil in California is a nightmare.”

Experts in litigation and regulatory compliance have indicated that Sable may face protracted legal battles, with some suggesting that the path to actual production is fraught with obstacles. Elmer Danenberger, a former expert with the Interior Department’s offshore oil and gas program, summarized the outlook as “pretty bleak” for the company’s future production efforts.

As Sable Offshore Corp continues to navigate these challenges, the outcome remains uncertain, and the implications for California’s energy sector could be significant. The ongoing conflict underscores the broader tensions between state regulations and federal interests in oil production, reflecting the complexities of energy policy in the United States.