Rincon Island, California
Encyclopedia
Rincon Island is an artificial island located off Rincon Beach in Ventura County, California
on public land leased from the California State Lands Commission (CSLC). The island is situated approximately 1000 feet (304.8 m) offshore in 55 feet (16.8 m) of water. The island was constructed in 1958 for the specific purpose of well drilling and oil
and gas
production. It is near the seaside communities of Mussel Shoals and La Conchita. The island is connected to the mainland by the Richfield Pier.
The Rincon basin properties cover approximately 1700 acres (6.9 km²), including a 1 acres (4,046.9 m²) island connected to land by a 2700 feet (823 m) causeway
containing the gas and oil pipelines and facilitating vehicular access. Greka Energy
, the petroleum company currently operating at the site, has faced numerous safety and permit violations.
Rincon means "corner" in Spanish. The area was said to be a battleground of the Chumash, and site of 1838 battle between Alvarado
and Pio Pico
, described in poem by Bayard Taylor, "The Fight of the Paso del Mar."
The Chumash Indians were once the largest cultural group in California. They were native inhabitants of what is today Ventura County, which was formed by splitting apart Santa Barbara County in 1873.
In the 1900s a plank causeway built just south of Rincon Point, sometimes on pilings over the ocean, completed the highway between Santa Barbara
and Ventura
. The first oil production in the Rincon Beach area took place in 1928.
, approximately 30 feet (9.1 m) high on the ocean/weather side and slightly lower on the land side. This berm is planted with scattered palm trees. The island's total area at ground surface is about 2.5 acres (10,117.2 m²), rising from a base of 6 acres (24,281.2 m²) on the sea floor. Oil production facilities are partially hidden from view within the island's interior acre, and also partially shielded by the palm trees. A one-lane causeway, 3000 feet (914.4 m) long, connects the Island to shore at Punta Gorda.
, local coastal mountains, U.S. Highway 101, several beach homes and a hotel located approximately 3000 feet (914.4 m) north near the Mussel Shoals exit along Highway 101, the nearby community of La Conchita, and other nearby petroleum production facilities.
In 1978, a study was conducted on the impact of the island, "Ecological Effects of an Artificial Island, Rincon Island." The study documented marine ecological conditions. Habitat features associated with the armor rock and concrete tetrapods surrounding the island support a microecosystem which differs in biotic composition from surrounding natural bottom areas, according to the study.
In general, the findings of the 1978 study indicated a rich and varied fauna and flora associated with the high-relief solid substrate of the island which differs substantially from the more depauperate natural bottom habitats in the area.
began from 1929 to 1931 with the issuance of leases for the lands and ended in 1955 with the issuance of a new state lease, PRC 1466. Several different oil companies have held these leases over the years. By the end of the 1980s, Atlantic Richfield Company (ARCO) and Berry Petroleum Company held all the various state leasehold interests at Rincon, except one small portion owned by Energy Development Corporation.
In 1992, the California State Lands Commission
approved the assignment by ARCO to Berry of all its interests in the Rincon leases. When approving that assignment, the Commission required that ARCO remain liable for removing Rincon Island and the causeway leading to it. British Petroleum (BP), which acquired ARCO, now has this liability. In 1995, the Commission approved the assignment of Berry’s interest in the Rincon leases to RILP with the condition that Berry remain liable for removing the Island and the causeway.
When Windsor acquired the Rincon Island Field, 16 wells were producing and 51 wells were shut-in. Windsor quickly brought six of the shut-in wells back into production, abandoned six considered non-commercial, and drilled 19 new commercial wells. The wells at Rincon produced from depths between 1,700 and 2800 feet (853.4 m) from the Miley sands of the Upper Pliocene-aged Pico Formation in an anticline, which plunges from the west towards the east.
Rincon's production profile is similar to Hermosa Beach, California
, which also uses directional drilling
techniques. The targeted formations are shallow, between 2,000 and 3000 feet (914.4 m) deep, and on the up-dip end of the structure.
Pursuant to a confirmed plan of reorganization, Rincon continues to operate the state leases, subject to the continuing jurisdiction of the Bankruptcy Court. Compass Bank, the principal creditor of RILP, held a first priority lien on the assets of RILP, the stock of RILP's managing general partner, Windsor, and the partner's equity interest in RILP.
In June 2001, Compass Bank foreclosed on all of the stock of Windsor and the partner's interest in RILP, thereby assuming indirect control of RILP. RILP, under the indirect control of Compass Bank, continues to operate the state leases on an interim basis. Compass Bank has indicated to staff that it acquired RILP with the intent of disposing of the limited partnership, or all of the assets, as quickly as possible. Compass Bank has actively been seeking a buyer for the properties.
, then a publicly-traded company based in New York, bought the Rincon Island operation, which included 56 wells, and assumed about $1.7 million of debt. Greka's current primary areas of activity are in California, where it has interests in heavy oil fields and an asphalt plant. A separate Greka entity, also owned by CEO Randeep Grewal is active in China, where it has signed production agreements for coalbed methane
properties.
Greka is Santa Barbara County's largest onshore oil producer and is also a major employer in Santa Maria
. Greka also owns and operates the only asphalt plant in the county, producing asphalt for most of the area's roads, highways and parking lots.
Greka was formed in 1999 after the merger of two publicly traded companies, Saba Petroleum Company and Horizontal Ventures. In May 2003, Greka chairman and chief executive officer Randeep S. Grewal formed Alexi Holdings Ltd. to effect a reverse merger with Greka, taking the company private. Prior to the buyout, he held a 14.3% stake in the company. The price paid for the buyout was a 69% premium over the $3.70 closing price for Greka's stock May 19, 2003, the day before Grewal announced his intent to take the company private. CIBC World Markets advised Greka on Grewal's offer.
In 2005, Greka Energy filed for voluntary Chapter 7 bankruptcy liquidation in New York, beset by legal judgments, state environmental litigation and a federal criminal probe. Greka's Nov 30, 2005, bankruptcy filing, under the name Saba Enterprises and including Greka, Horizontal Ventures and Petro Union, listed debts of up to $50 million but assets of less than $50,000 and Greka listed unsecured creditors including Chevron's UNOCAL arm.
As all petroleum extracted from California state lands is subject to a royalty, Greka has paid the state about $143,000 for oil and gas pumped from Rincon Island during the first half of 2007.
reported the island facility spilled 130 gallons of crude oil.
Starting in 1999, the Santa Barbara Air Pollution Control District inspected Greka facilities 855 times and issued about 300 violations. During a nine-year period, more than 200 Greka spills threatened or polluted state waters 20 times, according to published reports.
On January 3, 2008 the California State Lands commission shut down Rincon Island due to unsafe conditions at the bridge which pipes the oil from the island to the shoreline.
Greka resumed oil production, and by the beginning of June 2008 Greka had produced 240 barrels of oil at Rincon Island.
As of October 2008 production was again suspended at Rincon Island when testing showed that serious structural deficiencies exist with the causeway to the island. Employees use a golf cart to reach the island because vehicle traffic is deemed too dangerous. As of the end of 2008 the lease has produced 2,622 barrels of oil for the year. The gross revenue to the State of California for 2008 is under $20,000. As indicated by the State Lands Commission Audit Program, the cost of enforcement and monitoring by the State Lands Commission of the Rincon Island 1466 lease is well in excess of $100,000 per year.
On March 17th 2011 Greka agreed to pay Santa Barbara County over $2 million in fines due to spills at other Greka operations in the area near Santa Maria (60 miles away).
On June 17th 2011 the federal government sued Greka for over over $2.4 million in cleanup costs.
Ventura County, California
Ventura County is a county in the southern part of the U.S. state of California. It is located on California's Pacific coast. It is often referred to as the Gold Coast, and has a reputation of being one of the safest populated places and one of the most affluent places in the country...
on public land leased from the California State Lands Commission (CSLC). The island is situated approximately 1000 feet (304.8 m) offshore in 55 feet (16.8 m) of water. The island was constructed in 1958 for the specific purpose of well drilling and oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
and gas
Gas
Gas is one of the three classical states of matter . Near absolute zero, a substance exists as a solid. As heat is added to this substance it melts into a liquid at its melting point , boils into a gas at its boiling point, and if heated high enough would enter a plasma state in which the electrons...
production. It is near the seaside communities of Mussel Shoals and La Conchita. The island is connected to the mainland by the Richfield Pier.
The Rincon basin properties cover approximately 1700 acres (6.9 km²), including a 1 acres (4,046.9 m²) island connected to land by a 2700 feet (823 m) causeway
Causeway
In modern usage, a causeway is a road or railway elevated, usually across a broad body of water or wetland.- Etymology :When first used, the word appeared in a form such as “causey way” making clear its derivation from the earlier form “causey”. This word seems to have come from the same source by...
containing the gas and oil pipelines and facilitating vehicular access. Greka Energy
Greka Energy
Greka Energy, currently also known as HVI Cat Canyon Inc. is a private United States oil and gas company operating principally in southern and central California, centered on Santa Barbara County...
, the petroleum company currently operating at the site, has faced numerous safety and permit violations.
Area history
Juan Bautista Alvarado
Juan Bautista Valentín Alvarado y Vallejo was a Californio and twice Governor of Alta California from 1836 to 1837, and 1838 to 1842.-Early years:...
and Pio Pico
Pío Pico
Pío de Jesús Pico was the last Governor of Alta California under Mexican rule.-Origins:...
, described in poem by Bayard Taylor, "The Fight of the Paso del Mar."
The Chumash Indians were once the largest cultural group in California. They were native inhabitants of what is today Ventura County, which was formed by splitting apart Santa Barbara County in 1873.
In the 1900s a plank causeway built just south of Rincon Point, sometimes on pilings over the ocean, completed the highway between Santa Barbara
Santa Barbara, California
Santa Barbara is the county seat of Santa Barbara County, California, United States. Situated on an east-west trending section of coastline, the longest such section on the West Coast of the United States, the city lies between the steeply-rising Santa Ynez Mountains and the Pacific Ocean...
and Ventura
Ventura, California
Ventura is the county seat of Ventura County, California, United States, incorporated in 1866. The population was 106,433 at the 2010 census, up from 100,916 at the 2000 census. Ventura is accessible via U.S...
. The first oil production in the Rincon Beach area took place in 1928.
Usable land
Approximately one acre of usable space on Rincon Island lies within the depressed interior of the island which is surrounded by a perimeter bermBerm
A berm is a level space, shelf, or raised barrier separating two areas. Berm originates in the Middle Dutch and German berme and came into usage in English via French.- History :...
, approximately 30 feet (9.1 m) high on the ocean/weather side and slightly lower on the land side. This berm is planted with scattered palm trees. The island's total area at ground surface is about 2.5 acres (10,117.2 m²), rising from a base of 6 acres (24,281.2 m²) on the sea floor. Oil production facilities are partially hidden from view within the island's interior acre, and also partially shielded by the palm trees. A one-lane causeway, 3000 feet (914.4 m) long, connects the Island to shore at Punta Gorda.
Environment
The local physical environment consists of the Pacific OceanPacific Ocean
The Pacific Ocean is the largest of the Earth's oceanic divisions. It extends from the Arctic in the north to the Southern Ocean in the south, bounded by Asia and Australia in the west, and the Americas in the east.At 165.2 million square kilometres in area, this largest division of the World...
, local coastal mountains, U.S. Highway 101, several beach homes and a hotel located approximately 3000 feet (914.4 m) north near the Mussel Shoals exit along Highway 101, the nearby community of La Conchita, and other nearby petroleum production facilities.
In 1978, a study was conducted on the impact of the island, "Ecological Effects of an Artificial Island, Rincon Island." The study documented marine ecological conditions. Habitat features associated with the armor rock and concrete tetrapods surrounding the island support a microecosystem which differs in biotic composition from surrounding natural bottom areas, according to the study.
In general, the findings of the 1978 study indicated a rich and varied fauna and flora associated with the high-relief solid substrate of the island which differs substantially from the more depauperate natural bottom habitats in the area.
Rincon Oil Field
The offshore leasing of the Rincon Oil FieldRincon Oil Field
The Rincon Oil Field is a large oil field on the coast of southern California, about ten miles northwest of the city of Ventura, and about 20 miles east-southeast of the city of Santa Barbara. It is the westernmost onshore field in a series of three fields which follow the Ventura Anticline, an...
began from 1929 to 1931 with the issuance of leases for the lands and ended in 1955 with the issuance of a new state lease, PRC 1466. Several different oil companies have held these leases over the years. By the end of the 1980s, Atlantic Richfield Company (ARCO) and Berry Petroleum Company held all the various state leasehold interests at Rincon, except one small portion owned by Energy Development Corporation.
In 1992, the California State Lands Commission
California State Lands Commission
The California State Lands Commission is a unit of state government that is responsible for management and protection of natural and cultural resources, as well as public access rights, on some of California's publicly owned lands....
approved the assignment by ARCO to Berry of all its interests in the Rincon leases. When approving that assignment, the Commission required that ARCO remain liable for removing Rincon Island and the causeway leading to it. British Petroleum (BP), which acquired ARCO, now has this liability. In 1995, the Commission approved the assignment of Berry’s interest in the Rincon leases to RILP with the condition that Berry remain liable for removing the Island and the causeway.
Production
In early 1997, Calgary, Alberta-based Windsor Energy Corp., whose principal property was the Rincon Island property, completed its second long reach well on its Rincon Island lease. Here production increased from about 200 barrels (31.8 m³) of oil equivalent per day (BOEPD) in 1995 to about 3,000 BOEPD by 1998.When Windsor acquired the Rincon Island Field, 16 wells were producing and 51 wells were shut-in. Windsor quickly brought six of the shut-in wells back into production, abandoned six considered non-commercial, and drilled 19 new commercial wells. The wells at Rincon produced from depths between 1,700 and 2800 feet (853.4 m) from the Miley sands of the Upper Pliocene-aged Pico Formation in an anticline, which plunges from the west towards the east.
Rincon's production profile is similar to Hermosa Beach, California
Hermosa Beach, California
Hermosa Beach is a beachfront city in Los Angeles County, California, United States. Its population was 19,506 at the 2010 census, up from 18,566 at the 2000 census....
, which also uses directional drilling
Directional drilling
Directional drilling is the practice of drilling non-vertical wells. It can be broken down into three main groups: Oilfield Directional Drilling, Utility Installation Directional Drilling Directional drilling (or slant drilling) is the practice of drilling non-vertical wells. It can be broken down...
techniques. The targeted formations are shallow, between 2,000 and 3000 feet (914.4 m) deep, and on the up-dip end of the structure.
Key party bankruptcies
On August 20, 1998, Rincon Island Limited Partnership (RILP) and its managing general partner, Canada's Windsor Energy filed a voluntary petition in the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code. In Jan. 29 of that year, Stanton Capital Corp., a private investment firm, agreed to buy about half of the parent's assets, including the Rincon Island partnership, for approximately $170 million. On May 13, the parent announced that the proposed sale had fallen through because low product prices rendered Stanton's plan to add capital to the assets and take them public unfeasible.Pursuant to a confirmed plan of reorganization, Rincon continues to operate the state leases, subject to the continuing jurisdiction of the Bankruptcy Court. Compass Bank, the principal creditor of RILP, held a first priority lien on the assets of RILP, the stock of RILP's managing general partner, Windsor, and the partner's equity interest in RILP.
In June 2001, Compass Bank foreclosed on all of the stock of Windsor and the partner's interest in RILP, thereby assuming indirect control of RILP. RILP, under the indirect control of Compass Bank, continues to operate the state leases on an interim basis. Compass Bank has indicated to staff that it acquired RILP with the intent of disposing of the limited partnership, or all of the assets, as quickly as possible. Compass Bank has actively been seeking a buyer for the properties.
Rincon acquired
In October 2002, Greka Energy Corp.Greka Energy
Greka Energy, currently also known as HVI Cat Canyon Inc. is a private United States oil and gas company operating principally in southern and central California, centered on Santa Barbara County...
, then a publicly-traded company based in New York, bought the Rincon Island operation, which included 56 wells, and assumed about $1.7 million of debt. Greka's current primary areas of activity are in California, where it has interests in heavy oil fields and an asphalt plant. A separate Greka entity, also owned by CEO Randeep Grewal is active in China, where it has signed production agreements for coalbed methane
Coalbed methane
Coalbed methane or Coal Bed Methane, coalbed gas or coal mine methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries...
properties.
Greka is Santa Barbara County's largest onshore oil producer and is also a major employer in Santa Maria
Santa Maria, California
Santa Maria is a city in Santa Barbara County, on the Central Coast of California. The 2010 census population was 100,062, putting it ahead of Santa Barbara for the first time and making it the largest city in the county...
. Greka also owns and operates the only asphalt plant in the county, producing asphalt for most of the area's roads, highways and parking lots.
Greka was formed in 1999 after the merger of two publicly traded companies, Saba Petroleum Company and Horizontal Ventures. In May 2003, Greka chairman and chief executive officer Randeep S. Grewal formed Alexi Holdings Ltd. to effect a reverse merger with Greka, taking the company private. Prior to the buyout, he held a 14.3% stake in the company. The price paid for the buyout was a 69% premium over the $3.70 closing price for Greka's stock May 19, 2003, the day before Grewal announced his intent to take the company private. CIBC World Markets advised Greka on Grewal's offer.
In 2005, Greka Energy filed for voluntary Chapter 7 bankruptcy liquidation in New York, beset by legal judgments, state environmental litigation and a federal criminal probe. Greka's Nov 30, 2005, bankruptcy filing, under the name Saba Enterprises and including Greka, Horizontal Ventures and Petro Union, listed debts of up to $50 million but assets of less than $50,000 and Greka listed unsecured creditors including Chevron's UNOCAL arm.
As all petroleum extracted from California state lands is subject to a royalty, Greka has paid the state about $143,000 for oil and gas pumped from Rincon Island during the first half of 2007.
Controversy
Rincon Island's production history is controversial, due to spills and safety issues. In February 1998, the Los Angeles TimesLos Angeles Times
The Los Angeles Times is a daily newspaper published in Los Angeles, California, since 1881. It was the second-largest metropolitan newspaper in circulation in the United States in 2008 and the fourth most widely distributed newspaper in the country....
reported the island facility spilled 130 gallons of crude oil.
Starting in 1999, the Santa Barbara Air Pollution Control District inspected Greka facilities 855 times and issued about 300 violations. During a nine-year period, more than 200 Greka spills threatened or polluted state waters 20 times, according to published reports.
On January 3, 2008 the California State Lands commission shut down Rincon Island due to unsafe conditions at the bridge which pipes the oil from the island to the shoreline.
Greka resumed oil production, and by the beginning of June 2008 Greka had produced 240 barrels of oil at Rincon Island.
As of October 2008 production was again suspended at Rincon Island when testing showed that serious structural deficiencies exist with the causeway to the island. Employees use a golf cart to reach the island because vehicle traffic is deemed too dangerous. As of the end of 2008 the lease has produced 2,622 barrels of oil for the year. The gross revenue to the State of California for 2008 is under $20,000. As indicated by the State Lands Commission Audit Program, the cost of enforcement and monitoring by the State Lands Commission of the Rincon Island 1466 lease is well in excess of $100,000 per year.
On March 17th 2011 Greka agreed to pay Santa Barbara County over $2 million in fines due to spills at other Greka operations in the area near Santa Maria (60 miles away).
On June 17th 2011 the federal government sued Greka for over over $2.4 million in cleanup costs.