Sable Offshore Eyes $1.7 Billion Funding as California Regulators Block Pipeline Restart
Sable Offshore will need about $1.7 billion to pursue a floating storage and treatment strategy for its Santa Ynez oil project off California, sources said. The plan follows a state ruling blocking the restart of its Las Flores pipeline, forcing the company to seek alternative export options and financing support.
(Reuters) - Sable Offshore will need roughly $1.7 billion in financing to advance its Santa Ynez oil project off the coast of California after state regulators again blocked the company’s effort to restart its Las Flores crude pipeline, according to sources familiar with the matter.
The Las Flores Pipeline System, which once transported oil from Sable’s offshore platforms near Santa Barbara to onshore storage and regional refineries, has remained idled since 2015, when a spill forced its shutdown under previous operator ExxonMobil. Sable, which acquired the assets through a $900 million loan from ExxonMobil, has sought to repair and restart the line to resume normal transportation operations.
However, a series of regulatory rulings in recent weeks has set back those plans. A California judge tentatively ruled against Sable’s request to lift a cease-and-desist order issued by the California Coastal Commission, which halted pipeline repair activities. Soon after, the Office of the State Fire Marshal (OSFM) said Sable had failed to meet conditions required under state waivers for a restart.
In an Oct. 22 letter, OSFM told the company that repair work was not completed to approved specifications. Sable, in a formal response, disputed the findings.
“Sable strongly disagrees with the allegations, which are inconsistent with the plain language of the waivers,” the company said, adding it looks forward to “quickly resolving this misunderstanding.”
While the regulatory impasse continues, Sable has proposed an alternative oil export strategy using a floating storage and treatment vessel (FSO) to market crude directly offshore. That plan would require roughly $450 million for vessel purchase or conversion and another $300 million for operating costs.
The offshore option is intended to serve as a temporary workaround while Sable pursues an appeal of the state’s decisions and seeks potential federal financing or loan guarantees to support the broader Santa Ynez restart effort.
If successful, the restart of the Las Flores system would restore a key segment of California’s midstream crude infrastructure, connecting offshore production to regional refineries along the central coast.