ExxonMobil is writing down values of some operations based in California by about $2.6 billion because of a challenging regulatory environment, according to a Securities and Exchange Commission filing made by the company Jan. 4.
The company’s oil drilling platforms offshore near the coastal community of Santa Barbara, north of Los Angeles, were shut down in 2015 after an oil pipeline, owned by a separate company, ruptured.
The incident resulted in more than 100,000 gallons of crude spilled—which subsequently flowed into storm drains and onto a beach nearby, according to the National Oceanic and Atmospheric Administration.
“While the corporation is progressing efforts to enable a restart of production, continuing challenges in the state regulatory environment have impeded progress in restoring operations,” the filing reads.
And investments in the Santa Barbara area that didn’t do as well as expected due to restrictive regulations are to blame for the devaluation, according to the document.
Once the largest taxpayer in the region, contributing more than $4 million in 2014, according to county tax filings, some local chambers of commerce have lobbied to allow the firm to restart drilling.
Company officials presented plans in 2021 to restore operations using trucks to transport oil instead, which local and state regulators have not approved, according to the company.
Highlighting the potential that exists in the region, with the county ranked as one of the largest oil producers in the state, the company suggests a revitalization of the industry would benefit the area.
“All the infrastructure is already in place to help California meet the demands domestically rather than import oil every day,” ExxonMobil’s website reads.
Noting significant investments in the area totaling hundreds of millions of dollars in 2014 alone, the company said that restarting operations would bring jobs and economic prosperity.
But with no approvals in sight, the oil giant declared in its recent filing that billions of dollars are at stake.
The news comes two days after Chevron, announced similar concerns devaluing itself by between $3.5 billion and $4 billion in its own securities filing.
In a scathing letter to state regulators in December, Andy Walz, Chevron’s president of products, informed the California Energy Commission that investments in the state are deemed “perilous” by the industry due to an “increasingly harsh regulatory environment” that has existed for decades.
Oil companies and the state are at odds following new price gouging laws and a lawsuit claiming environmental negligence filed by Gov. Gavin Newsom and Attorney General Rob Bonta in September.
State leaders accuse “Big Oil” of taking advantage of consumers by increasing prices while allegedly polluting the environment and causing harm to Californians.
ExxonMobil did not respond to requests for comment on deadline.
