Property

Exxon faces $2 billion loss on sale of California oil property

Exxon Mobil Corp, according to reports, is set to lose about $2 billion when it sells an oil field off California, where an oil spill halted operations in 2015.

The oil giant is expected to sell the offshore oil and gas field to Sable Offshore, which was founded and operated by James Flores, for $643 million.

FILE – Cleanup workers monitor the source of an oil pipeline rupture near Refugio State Beach, north of Goleta, California. The owner of a pipeline that spewed thousands of barrels of crude oil onto Southern California beaches in 2015 has agreed to pa ((AP Photo/Michael A. Mariant, File)/AP Newsroom)

Reuters reported that Flores will borrow 97% of the money for the purchase from Exxon under a five-year loan.

Sable Offshore is a blank check company, or a company that raises funds to acquire businesses.

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The agreement between Flores and Exxon is that it must restart operations at the Santa Ynez field by 2026 or have Exxon resume operations, Reuters reported.

Exxon is selling the oil and gas field after failing to restart operations due to a 2015 pipeline spill that leaked more than 120,000 gallons of oil into the Pacific Ocean.

In its plans to restart operations, Exxon proposed using dozens of trucks to ship oil to refineries, but Santa Barbara officials rejected the plan in March.

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FILE – Workers in protective gear continue to clean up the contaminated beach in Huntington Beach, Calif., October 11, 2021. A pipeline operator has agreed to pay $50 million to California fishermen, tourism businesses and property owners from the South who s (AP Newsroom)

As Flores and his team resume operations, they will seek the necessary permits to pump 28,100 barrels of oil and gas per day from 112 current wells, and potentially 100 more, by 2024, Sable noted. in a presentation.

As part of the sale, Sable will get three oil and gas rigs in the Santa Ynez oilfield, about nine miles offshore, as well as oil and gas processing facilities and a pipeline.

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The field was first exploited in the 1970s and began producing oil in 1981, according to Reuters.

The 2015 spill forced the state of California to close popular beaches due to the burst of oil that traveled for miles.

Oil spill in California

FILE – An oil-covered bird flaps its wings in the middle of Refugio State Beach, north of Goleta, California. The owner of a pipeline that spilled thousands of barrels of crude oil onto Southern California beaches in 2015 has agreed to pay $230 million to settle ((AP Photo/Jae C. Hong, File)/AP Newsroom)

The spill was blamed for the deaths of more than 300 dead animals, including sea lions and pelicans, and sent tarballs drifting more than 10 miles toward Los Angeles beaches.

In the end, Plains All American Pipeline was fined $3.35 million for causing California’s worst coastal spill in 25 years. Prosecutors have asked for $1 billion in fines.

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Plains All American Pipeline apologized for the spill and paid for the cleanup. The company’s 2017 annual report estimated the costs of the spill at $335 million, not including lost revenue.