Sable Offshore loses bid to lift cease-and-desist on pipeline work

A California judge on Tuesday ruled against Houston-based oil company Sable Offshore’s request to lift the state’s cease and desist order on repairs it had made to an onshore pipeline system linked to the Santa Ynez project.

The tentative ruling from Judge Thomas Anderle in the Superior Court for Santa Barbara County marks a major setback for Sable, whose business is entirely focused on the Santa Ynez project. Its shares fell over 20 per cent to about $14 each in extended trading.

The company in May restarted production from one of the three offshore platforms in that project, nearly a decade after it was shut due to an oil spill under previous owner Exxon Mobil.

Sable also repaired the Las Flores onshore pipeline system that receives crude from Santa Ynez, in the hopes of restarting the line and selling the oil to refiners in the state.

However, since last year, the California Coastal Commission has been trying to stop Sable Offshore from undertaking the repairs, arguing that the company did not have the right permit for it. In April, after a public hearing, the commission issued a cease and desist order against Sable Offshore, among other actions.

The commission’s executive director had issued two similar orders last November and in February.

Sable this year petitioned the Santa Barbara Superior Court and argued the Coastal Commission did not have the authority to issue the cease and desist order. However, the company failed to meet its burden to prove the commission had abused its discretion, Anderle wrote in his tentative ruling.

Anderle will hold a hearing on Wednesday before finalising the decision.

Meanwhile, Sable is expected to change strategies for marketing the crude oil from the Santa Ynez platform. The company last week said delays in the restart of the Las Flores pipeline system will make it fully pivot to using tankers to shuttle crude from Santa Ynez instead of the pipeline.

Sable has sought support from the federal government for the tanker pathway and last week submitted an updated development and production plan for Santa Ynez detailing that route to the US Department of the Interior’s Bureau of Ocean Energy Management, the company said in its filing.

(Reporting by Shariq Khan in New York; Editing by Chris Reese)