Texas Oil Firm Fights California to Restart Offshore Platforms

A Houston-based oil company, Sable Offshore Corp, is engaged in a legal struggle with the state of California over the resumption of crude oil production from three offshore platforms located in federal waters near Santa Barbara. Under the leadership of industry veteran James Flores, Sable is attempting to restart operations after purchasing the platforms from ExxonMobil in 2021 for $625 million. The platforms have been inactive since 2015, following a significant oil spill caused by a corroded pipeline.

The company’s plan to restore and launch a pipeline from its offshore fields to the coast has sparked considerable opposition from California’s regulatory agencies and Attorney General Rob Bonta. As a workaround, Sable has proposed transporting oil using shuttle tankers that would operate solely in federal waters, thereby circumventing California’s state regulations. Despite the backing of the previous Trump Administration for federal oil projects, Sable faces a growing number of lawsuits from California, raising concerns about its financial viability. Analysts warn that the company could exhaust its funds and default on loans before overcoming the regulatory hurdles, which are particularly daunting in California, known for its stringent environmental regulations.

Sable Offshore’s acquisition of the platforms included financing from ExxonMobil, which provided part of the deal through a loan. In the wake of the oil spill that led to operational shutdowns, Sable is now under increased scrutiny. The company argues that the planned onshore pipeline would deliver “immediate economic relief to California residents” and stabilize local refineries, but California officials remain unyielding in their opposition.

In September, following a lawsuit from the Santa Barbara County District Attorney for alleged environmental violations, Sable introduced an alternative strategy termed the Offshore Storage and Treating Vessel (OS&T) approach. This would enable the firm to seek federal approval for transporting oil via shuttle tankers while avoiding state authorizations that California has refused to grant. The company asserts that this strategy would allow it to market its production beyond the state, which has been a significant barrier.

California has since filed additional lawsuits against Sable, including one from Attorney General Bonta. In this lawsuit, Bonta claims that Sable “intentionally ignored its obligations under California Water Code” while rushing to meet a July 1, 2025, deadline imposed by the California Office of State Fire Marshal. Bonta further alleges that Sable prioritized profits over environmental protection, resulting in regulatory breaches during pipeline repair efforts.

Sable is also contesting a fine of $18 million imposed by the California Coastal Commission for non-compliance with state orders. In response, the company has filed a lawsuit against the commission, seeking damages exceeding $347 million for what it describes as unlawful delays and damages related to the restart of the Las Flores Pipeline System.

The persistence of Sable Offshore Corp to resume oil production in California raises eyebrows within the industry, as many companies have exited the state due to regulatory challenges. Robert Collier, CEO of offshore decommissioning firm BlueLift, remarked, “Offshore oil in California is a nightmare. The regulatory and reputational risks are off the charts.”

Experts in litigation and regulatory practices indicate that Sable may face prolonged legal battles with California agencies, complicating its path to actual production. Elmer Danenberger, an independent expert with extensive experience in the Interior Department’s offshore oil and gas program, described the situation as “bleak” for the company’s future prospects.

As Sable Offshore strives to navigate this complex landscape, the implications of its actions could significantly affect California’s energy sector, amid growing competition and regulatory scrutiny.