Greka Energy
Encyclopedia
Greka Energy, currently also known as HVI Cat Canyon Inc. is a private United States oil and gas
company operating principally in southern and central California, centered on Santa Barbara County
. Formed in 1999 after acquisition and merger of several smaller firms, it is a subsidiary of Greka Integrated, Inc., a holding company headquartered in Santa Maria, California
, and is wholly owned by Randeep Grewal. The United States operations of Greka consist of four units: Greka Oil & Gas, Alexi Realty, Santa Maria Refining Company, and Rincon Island Limited Partnership. They focus on petroleum extraction and asphalt processing in California, with holdings in Santa Barbara, Ventura
, Kern
, and Orange
Counties. As of 2009, they had approximately 200 employees, and were the largest onshore oil operator in Santa Barbara County. In May 2011, Greka changed its name to HVI Cat Canyon Inc.
In addition to its United States operations, Grewal runs further Greka operations in China, including Green Dragon Gas
, which is a publicly traded company (GDG on the London Stock Exchange), and of which Grewal owns a controlling interest. Green Dragon Gas was incorporated in 2006 in Hong Kong, and mainly extracts coal bed methane in China. It is a part of Greka Energy International, B.V., a Netherlands Company headquartered in the Cayman Islands. While Grewal owns both a controlling interest in Green Dragon, and all of Greka Energy in California, and the two companies use the same logo, as of 2009 the two companies are separate legal entities.
In an October 2000 interview with Wall Street Transcript, Randeep Grewal stated that the company's motto was "Working for Profits": "...[these] are the three words that define what keeps me excited and that's primarily what each of my employees and I focus on. Being profitable drives every decision we make, hence our company’s slogan 'Working for Profits.'" While a publicly traded firm, Greka continued to grow, acquiring Windsor Energy US Corporation and Rincon Island Limited Partnership in 2002, thereby adding Rincon Island
in Ventura County to their portfolio; and in that same year they acquired the properties of Vintage Petroleum
in northern Santa Barbara County, which included about 110 producing wells on portions of five oil fields, principally in the Santa Maria Valley and the surrounding hills.
During the time that Greka was a public company, it had holdings worldwide, including in Canada
, Colombia
, Indonesia
, and China
, in addition to its United States operations, which at the time of its creation in 1999 included oil fields and other facilities in California, Texas, New Mexico and Louisiana.
Randeep Grewal took the firm private in 2003. Until that year, Greka was traded on the NASDAQ as GRKA. Grewal bought all outstanding shares for $6.25 per share, which was a 69% premium over the $3.70 per share closing price, for a total of about $32 million. Grewal split out several entities prior to filing Saba for bankruptcy in 2005. Three parts of Greka, including Greka, Petro Union, and Horizontal Ventures, were included in that filing, in which the firm in its petition estimated assets of $0–$50,000 and estimated debts of $10–$50 million. Neither the producing operations – which include several leases in Santa Barbara County, Rincon Island, Orange County, and Kern County – nor the asphalt plant were included in this liquidation filing.
Greka appointed former Greka CFO,Andrew deVegvar as president in January 2008. Shortly after beginning his new job DeVegvar began a new "Greka Green" campaign to counter the perception that the company was environmentally careless. The company also hired corporate security consultant, Tom Parker, a former Sr. FBI agent and Deputy Chief of the Los Angeles Regional Office of the FBI, in order to investigate alleged sabotage at their facilities in late 2007 and early 2008 seemingly timed to coincide with the political meetings regarding Greka.
On August 20, 2008, Greka settled a lawsuit brought against them by the trustees of the owners of the mineral rights to several leases on the Cat Canyon Field. They paid $5 million to the trustees through Wells Fargo Bank and Union Bank. At issue was the transfer in 2002 of production from Vintage, the original operator hired in 1992, to Greka, which allegedly took place without the trustee's permission. According to Greka, the operations on the three leases on the field were only a small part of their local operations.
On January 21, 2009, Greka sued the County of Santa Barbara, alleging that it used its "repeat offenders" rule to shut down non-polluting facilities along with polluting ones, a situation Greka maintained was unconstitutional. The County agreed with Greka that the retroactive application of the rule would be unconstitutional. The remaining claims were dismissed by a U.S. District Court.
Citing declining oil prices and a deteriorating economic climate, Greka laid off 30 people in March 2009, representing about twenty percent of its staff in the Santa Maria area.
Prior to going private in 2003, CEO Randeep Grewal stated that the firm was positioned so as to make a profit whether the price of oil was low or high. The asphalt plant functioned as a hedge. When oil was high, the company was able to sell on the open market the heavy crude they produced from the Cat Canyon, Santa Maria Valley, and North Belridge fields; when the price of oil is low, they used it instead to make asphalt at their Santa Maria refinery, since asphalt keeps a relatively constant price. In 2002, Greka announced that they possessed approximately 800 Moilbbl of heavy crude oil recoverable with current technologies. Greka was able to capture this resource since the heavy oil existed in a shallower, neglected reservoir, primarily the contained in the Sisquoc Formation
. When the major oil companies – Union, Conoco, Shell, and others – extracted oil in the Santa Maria Valley from the 1920s to the 1980s, they mainly pumped from the deeper formations with lighter oil which was more valuable; when they pulled out of the county in the 1980s and 1990s, they left behind considerable reserves of difficult-to-extract heavy oil, which however made good feedstock for the asphalt refinery.
Greka operates wells at the North Belridge Oil Field
in Kern County, the Casmalia, Cat Canyon, Zaca
, and Santa Maria Valley Fields in Santa Barbara County, and through a subsidiary the Rincon Island in the Santa Barbara Channel south of Carpinteria, and the Richfield Oil Field in Orange County.
, asphalt
emulsion
, and gas oil. Some of the distallates are used by regional oil fields as a diluent
, aiding in oil recovery.
The refinery was constructed in 1935, prior to the creation of zoning laws in the county, which accounts for its unusual position as an isolated industrial parcel within a mostly agricultural area. Previous owners of the refinery included Conoco and Saba. Saba took over the refinery in 1994, closing it while they performed equipment upgrades, and reopening it in 1996. In 1999, Greka acquired the refinery along with Saba's other assets as part of their takeover of that firm. In the early 2000s the facility was subject to numerous safety audits and facility upgrades, completed in 2004. In 2005 Greka shut the plant down temporarily in a planned 10-year turnaround to upgrade the equipment further, and in November of that year received a permit to process wastewater, which is now used to irrigate surrounding cropland.
field, and in Orange County they ran their largest single production operation on the Richfield field. Their only producing site in Ventura County was Rincon Island
, which still used the Rincon Island Limited Partnership banner. pp. 130, 148, 150.
, a small artificial island about a mile offshore from Punta Gorda in Ventura County, is Greka's only offshore oil operation. It is in state waters in the eastern portion of State PRC Lease 1466 in the Rincon Oil Field
. Greka acquired it in 2002 with the purchase of Rincon Island Ltd. Partnership; the island itself dates from 1958. At the beginning of 2009 there were 20 active oil wells within the approximately 1.5 acres (6,070.3 m²) area enclosed by the berm. Greka continues to run it under the banner of their subsidiary, Rincon Island Ltd. Partnership, and reports out their production to the State Department of Conservation under that name.
, a joint venture of Shell and Mobil, also retained some operations at the Cat Canyon Oil Field. Greka became, by 2009, the largest oil producer in the County, without drilling a single new well.
It was not long before Greka came to the attention of regulators in Santa Barbara County, where the majority of its operations are concentrated. Between 1999 and 2008, the Santa Barbara County Fire Department responded to over 400 waste leaks and spills at Greka. According to EPA Superfund Division employee Robert Wise, speaking to the Associated Press, "I've been in the hazardous materials business for 20 years and this is the worst oil company I've ever seen."
Fines, legal action, and EPA investigations have all resulted from the numerous releases at Greka facilities. A Fish and Game official called Greka the current worst inland oil polluter in California.
The EPA fined Greka $127,500 for improperly disposing of industrial wastewater by injecting it into disposal wells on their Union Sugar and Morganti Leases in the Santa Maria Field, not far from their refinery, in June 2006. While some water disposal is permitted in wells – indeed, wastewater is often used to recharge oil reservoirs to improve recovery – industrial wastewater is considered to be a greater danger to drinking water and must be treated differently, and can only be injected into wells meeting specific criteria. Injecting such water into Class II wells is a violation of the federal Safe Drinking Water Act of 1974.
On December 7, 2007, Greka spilled over 58000 gallons (219.6 m³) of oil at their Bell Lease in the Cat Canyon Field along Palmer Road southwest of Santa Maria. Greka's attorney, however, claimed that some of the recent spills were the work of an eco-terrorist at large. Pipes and wires were cut, valves were opened, and alarms disabled. Some of the wires had been cut with a crimping device. Attorney Robert O'Brien also emphasized that Greka is meticulous in its reporting of the exact amount spilled, unlike other operators in the county.
Yet another spill occurred on January 5, 2008, this one at the Zaca-Davis tank battery in the Zaca Oil Field, along Zaca Station Road. Approximately 8400 gallons (31.8 m³) of oil and produced water overflowed the containment area – escaping the large secondary containment through an open 12 inches (304.8 mm) drainage pipe – and contaminated about one mile (1.6 km) of Zaca Creek. Greka claimed that this spill was the result of sabotage as well.
Also in early January 2008, Greka through Rincon Partnership voluntarily shut down the causeway leading to the Rincon Island facility so that it could repair damage to the pilings caused by the El Nino storms. Consequently, production from the Rincon Island was suspended (as no other method of moving oil to shore was available). Rincon Partnership has promised to repair the causeway.
On January 15, 2008, the Santa Barbara County Board of Supervisors held a hearing to discuss the company, their record, and their future. A large group of Greka employees attended the meeting, in which the supervisors, the California Department of Fish and Game, the Santa Barbara County Fire Department, and the U.S. EPA all reported on the situation. Greka had spilled approximately 500000 gallons (1,892.7 m³) of liquids in the county – both oil and produced water, a total of about 12000 barrels (1,907.8 m³) – in the four years from 2003, when the company went private, to the end of 2007, while it also had the largest number of active wells. The second-largest spill total went to Sierra Resources, a small operator active in the Casmalia Oil Field, which spilled only 16800 gallons (63.6 m³) of liquids.
Shortly after this meeting, on January 29, 2008, Greka distributed a Media Briefing packet to provide the media with a source for its side of the story regarding environmental issues. Also, Greka launched a "Greka Green" initiative, intending to establish itself as an environmental leader in the Santa Barbara County petroleum industry. As part of this initiative, it would repair or remove much of the decaying infrastructure which had been responsible for many of the leaks, spills, and releases that had brought the company to the attention of regulators and the public. Andrew deVegvar, the recently-appointed company president, stated: "I am making it my primary task to ensure that this Company is doing everything it can to be as environmentally aware as possible and as good a corporate citizen as possible; we are going to be a leader." In addition to repair and removal of old equipment, the initiative included berm reinforcement, creek protection, and other measures designed to exceed the environmental standards the company believes it had already met.
The United States Environmental Protection Agency
(EPA) removed Greka's contractor from the cleanup effort in February 2008, stating that Greka and its contractors were inefficient and incompetent, and repeatedly "failed to meet federal standards." In particular, the EPA found that Greka employees were covering spilled oil in the creek with fresh soil, rather than removing it; therefore EPA removed them from the cleanup exercise. Greka dismissed their cleanup contractor in March, and the contractor they hired to replace them failed the EPA's Hazardous Waste Operations and Emergency Response Standards (HAZWOPER), so EPA dismissed them, and carried out the cleanup themselves. On the same day that the EPA dismissed Greka from its own cleanup, February 1, Congresswoman Lois Capps wrote in a letter to the EPA: "Given the apparent haphazard manner in which the Greka sites are managed and the devastating effects this mismanagement is having on the local environment, it is crucial that EPA continue working with appropriate federal, state, and local agencies to put an end to this intolerable situation." Greka countered with a statement through Sitrick and Company
, their public relations consultant, claiming that EPA's action had effectively prevented them from finishing their own cleanup efficiently and on time.
In October 2008, EPA took over the cleanup of a Greka spill for the third time, this one at the Gato Lease in the Cat Canyon Oil Field. They stated that they would seek to have Greka reimburse their expenses, and could not delay due to the imminent start of the rainy season, which could push the contamination farther down the streambeds. In southern and central California, many streambeds are dry prior to the beginning of the rains in late autumn.
When the Board of Supervisors reconvened on the issue of Greka's violations in May 2008, however, they determined that there were further problems since January. In the County, there had been a total of 48 waste spills since the last meeting on January 15; of these, 41 had been at Greka facilities. The company claimed in a letter that most of the spills were benign in nature, and not a threat to public health; and the Board also suggested that perhaps not enough time had been alloted to Greka to correct the problems.
The California Regional Water Quality Control Board, meeting in Watsonville, California on July 10, 2009, recommended Greka be referred to the state Attorney General for prosecution due to its repeated waste spills. In 2008 alone, Greka had spilled more than 157000 gallons (594.3 m³) of waste (oil and produced water); Greka had spilled more than a 500000 gallons (1,892.7 m³) since going private in 2003, resulting in over 400 hazardous materials teams responses; the firm had been fined more than $2.6 million by the different regulatory agencies during this time. Rather than criticizing the Board's decision, Greka president Andrew DeVegvar said that he welcomed a review of his company by the State Attorney General, for the findings would likely be in Greka's favor. "99 percent [of Greka's spills] have been very minor and they’ve been on private property and have not done any environmental damage."
In 2008, Assembly Bill 1960 was introduced in the state legislature, largely in response to spills at Greka.
Greka changed its name to HVI Cat Canyon, Inc. in May 2011, going back to a name it had used prior to 1999 for its operations on the East Cat Canyon Oil Field. The name "HVI Cat Canyon Inc." had been the name of a small subsidiary of Horizontal Ventures, Inc. prior to their 1998 merger with Saba Petroleum Corporation. The entity which resulted from this merger was named "Greka Energy", a name which it retained until 2011.
On June 17, 2011, the U.S. Department of Justice, California Department of Fish and Game, and California Regional Water Quality Control Board filed suit against Greka in Federal court in Los Angeles for having failed to comply with the requirements of the Clean Water Act, citing 21 oil and contaminated water spills between 2005 and 2010. The amount sought was in excess of $2.4 million.
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
company operating principally in southern and central California, centered on Santa Barbara County
Santa Barbara County, California
Santa Barbara County is a county located in the southern portion of the U.S. state of California, on the Pacific coast. As of 2010 the county had a population of 423,895. The county seat is Santa Barbara and the largest city is Santa Maria.-History:...
. Formed in 1999 after acquisition and merger of several smaller firms, it is a subsidiary of Greka Integrated, Inc., a holding company headquartered in Santa Maria, California
Santa Maria, California
Santa Maria is a city in Santa Barbara County, on the Central Coast of California. The 2010 census population was 100,062, putting it ahead of Santa Barbara for the first time and making it the largest city in the county...
, and is wholly owned by Randeep Grewal. The United States operations of Greka consist of four units: Greka Oil & Gas, Alexi Realty, Santa Maria Refining Company, and Rincon Island Limited Partnership. They focus on petroleum extraction and asphalt processing in California, with holdings in Santa Barbara, Ventura
Ventura County, California
Ventura County is a county in the southern part of the U.S. state of California. It is located on California's Pacific coast. It is often referred to as the Gold Coast, and has a reputation of being one of the safest populated places and one of the most affluent places in the country...
, Kern
Kern County, California
Spreading across the southern end of the California Central Valley, Kern County is the fifth-largest county by population in California. Its economy is heavily linked to agriculture and to petroleum extraction, and there is a strong aviation and space presence. Politically, it has generally...
, and Orange
Orange County, California
Orange County is a county in the U.S. state of California. Its county seat is Santa Ana. As of the 2010 census, its population was 3,010,232, up from 2,846,293 at the 2000 census, making it the third most populous county in California, behind Los Angeles County and San Diego County...
Counties. As of 2009, they had approximately 200 employees, and were the largest onshore oil operator in Santa Barbara County. In May 2011, Greka changed its name to HVI Cat Canyon Inc.
In addition to its United States operations, Grewal runs further Greka operations in China, including Green Dragon Gas
Greka China
GREKA China Ltd., a subsidiary of Green Dragon Gas, a publicly listed company on the London Stock Exchange , currently provides operational rights pursuant to production sharing contracts with China United Coal Bed Methane and Petro-China...
, which is a publicly traded company (GDG on the London Stock Exchange), and of which Grewal owns a controlling interest. Green Dragon Gas was incorporated in 2006 in Hong Kong, and mainly extracts coal bed methane in China. It is a part of Greka Energy International, B.V., a Netherlands Company headquartered in the Cayman Islands. While Grewal owns both a controlling interest in Green Dragon, and all of Greka Energy in California, and the two companies use the same logo, as of 2009 the two companies are separate legal entities.
History
The oldest component firm making up Greka, Saba Enterprises, was founded in 1981. Greka itself was originally named Kiwi III, Ltd, and was created as a Colorado corporation in 1988. This firm, renamed to Petro Union, Inc., filed for bankruptcy in 1996. In 1999, Randeep Grewal, the current owner of the Greka companies, acquired the assets of Saba Petroleum, changing the company's name to Greka; and previously in 1998, with his newly-purchased Horizontal Ventures, which was then a private entity, he acquired the assets of Petro Union, which was just then emerging from its 1996 bankruptcy filing in Indiana. Grewal formed Greka Energy by combining these various entities in 1999.In an October 2000 interview with Wall Street Transcript, Randeep Grewal stated that the company's motto was "Working for Profits": "...[these] are the three words that define what keeps me excited and that's primarily what each of my employees and I focus on. Being profitable drives every decision we make, hence our company’s slogan 'Working for Profits.'" While a publicly traded firm, Greka continued to grow, acquiring Windsor Energy US Corporation and Rincon Island Limited Partnership in 2002, thereby adding Rincon Island
Rincon Island, California
Rincon Island is an artificial island located off Rincon Beach in Ventura County, California on public land leased from the California State Lands Commission . The island is situated approximately offshore in of water. The island was constructed in 1958 for the specific purpose of well drilling...
in Ventura County to their portfolio; and in that same year they acquired the properties of Vintage Petroleum
Occidental Petroleum
Occidental Petroleum Corporation is a California-based oil and gas exploration and production company with operations in the United States, the Middle East, North Africa, and South America...
in northern Santa Barbara County, which included about 110 producing wells on portions of five oil fields, principally in the Santa Maria Valley and the surrounding hills.
During the time that Greka was a public company, it had holdings worldwide, including in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, and China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, in addition to its United States operations, which at the time of its creation in 1999 included oil fields and other facilities in California, Texas, New Mexico and Louisiana.
Randeep Grewal took the firm private in 2003. Until that year, Greka was traded on the NASDAQ as GRKA. Grewal bought all outstanding shares for $6.25 per share, which was a 69% premium over the $3.70 per share closing price, for a total of about $32 million. Grewal split out several entities prior to filing Saba for bankruptcy in 2005. Three parts of Greka, including Greka, Petro Union, and Horizontal Ventures, were included in that filing, in which the firm in its petition estimated assets of $0–$50,000 and estimated debts of $10–$50 million. Neither the producing operations – which include several leases in Santa Barbara County, Rincon Island, Orange County, and Kern County – nor the asphalt plant were included in this liquidation filing.
Greka appointed former Greka CFO,Andrew deVegvar as president in January 2008. Shortly after beginning his new job DeVegvar began a new "Greka Green" campaign to counter the perception that the company was environmentally careless. The company also hired corporate security consultant, Tom Parker, a former Sr. FBI agent and Deputy Chief of the Los Angeles Regional Office of the FBI, in order to investigate alleged sabotage at their facilities in late 2007 and early 2008 seemingly timed to coincide with the political meetings regarding Greka.
On August 20, 2008, Greka settled a lawsuit brought against them by the trustees of the owners of the mineral rights to several leases on the Cat Canyon Field. They paid $5 million to the trustees through Wells Fargo Bank and Union Bank. At issue was the transfer in 2002 of production from Vintage, the original operator hired in 1992, to Greka, which allegedly took place without the trustee's permission. According to Greka, the operations on the three leases on the field were only a small part of their local operations.
On January 21, 2009, Greka sued the County of Santa Barbara, alleging that it used its "repeat offenders" rule to shut down non-polluting facilities along with polluting ones, a situation Greka maintained was unconstitutional. The County agreed with Greka that the retroactive application of the rule would be unconstitutional. The remaining claims were dismissed by a U.S. District Court.
Citing declining oil prices and a deteriorating economic climate, Greka laid off 30 people in March 2009, representing about twenty percent of its staff in the Santa Maria area.
Strategy and operations
Sisquoc Formation
The Sisquoc Formation is a sedimentary geologic unit widespread in Southern California, both on the coast and in mountains near the coast. Overlying the Monterey Formation, it is of upper Miocene and lower Pliocene age...
. When the major oil companies – Union, Conoco, Shell, and others – extracted oil in the Santa Maria Valley from the 1920s to the 1980s, they mainly pumped from the deeper formations with lighter oil which was more valuable; when they pulled out of the county in the 1980s and 1990s, they left behind considerable reserves of difficult-to-extract heavy oil, which however made good feedstock for the asphalt refinery.
Greka operates wells at the North Belridge Oil Field
North Belridge Oil Field
The North Belridge Oil Field is a large oil field along California State Route 33 in the northwestern portion of Kern County, California, about 45 miles west of Bakersfield. It is contiguous with the larger South Belridge Oil Field to the southeast, in a region of highly productive and mature fields...
in Kern County, the Casmalia, Cat Canyon, Zaca
Zaca Oil Field
The Zaca Oil Field is an oil field in central Santa Barbara County, California, about 20 miles southeast of Santa Maria. One of several oil fields in the county which produce low-grade heavy oil from the Monterey Formation, the field is within a region of rolling hills containing horse ranches and...
, and Santa Maria Valley Fields in Santa Barbara County, and through a subsidiary the Rincon Island in the Santa Barbara Channel south of Carpinteria, and the Richfield Oil Field in Orange County.
Asphalt refinery
Greka owns and operates an asphalt refinery northwest of Santa Maria. It sits on 30 acres (121,405.8 m²) of land surrounded by an agricultural area, but within the still-operational portion of the Santa Maria Valley oil field. Greka's heavy oil operations in North Belridge and elsewhere provide feedstock to the refinery, especially when the price of oil is low. Currently the refinery is able to separate heavy oil into distillates and heavy fractions at approximately 125 barrels (19.9 m³) per hour; they then ship the resulting product out by truck. Products of the refinery, in addition to asphalt, include naphthaNaphtha
Naphtha normally refers to a number of different flammable liquid mixtures of hydrocarbons, i.e., a component of natural gas condensate or a distillation product from petroleum, coal tar or peat boiling in a certain range and containing certain hydrocarbons. It is a broad term covering among the...
, asphalt
Asphalt
Asphalt or , also known as bitumen, is a sticky, black and highly viscous liquid or semi-solid that is present in most crude petroleums and in some natural deposits, it is a substance classed as a pitch...
emulsion
Emulsion
An emulsion is a mixture of two or more liquids that are normally immiscible . Emulsions are part of a more general class of two-phase systems of matter called colloids. Although the terms colloid and emulsion are sometimes used interchangeably, emulsion is used when both the dispersed and the...
, and gas oil. Some of the distallates are used by regional oil fields as a diluent
Diluent
A diluent is a diluting agent.Certain fluids are too viscous to be pumped easily or too dense to flow from one particular point to the other. This can be problematic, because it might not be economically feasible to transport such fluids in this state.To ease this restricted movement, diluents...
, aiding in oil recovery.
The refinery was constructed in 1935, prior to the creation of zoning laws in the county, which accounts for its unusual position as an isolated industrial parcel within a mostly agricultural area. Previous owners of the refinery included Conoco and Saba. Saba took over the refinery in 1994, closing it while they performed equipment upgrades, and reopening it in 1996. In 1999, Greka acquired the refinery along with Saba's other assets as part of their takeover of that firm. In the early 2000s the facility was subject to numerous safety audits and facility upgrades, completed in 2004. In 2005 Greka shut the plant down temporarily in a planned 10-year turnaround to upgrade the equipment further, and in November of that year received a permit to process wastewater, which is now used to irrigate surrounding cropland.
Onshore oil production
As of the beginning of 2009, Greka ran onshore oil production facilities in four California counties: Santa Barbara, Kern, Ventura, and Orange. In Santa Barbara county, they actively produced oil from the Santa Maria Valley, Casmalia, Zaca, and Cat Canyon fields. In Kern County, they produced from the large North BelridgeNorth Belridge Oil Field
The North Belridge Oil Field is a large oil field along California State Route 33 in the northwestern portion of Kern County, California, about 45 miles west of Bakersfield. It is contiguous with the larger South Belridge Oil Field to the southeast, in a region of highly productive and mature fields...
field, and in Orange County they ran their largest single production operation on the Richfield field. Their only producing site in Ventura County was Rincon Island
Rincon Island, California
Rincon Island is an artificial island located off Rincon Beach in Ventura County, California on public land leased from the California State Lands Commission . The island is situated approximately offshore in of water. The island was constructed in 1958 for the specific purpose of well drilling...
, which still used the Rincon Island Limited Partnership banner. pp. 130, 148, 150.
Offshore production: Rincon Island
Rincon IslandRincon Island, California
Rincon Island is an artificial island located off Rincon Beach in Ventura County, California on public land leased from the California State Lands Commission . The island is situated approximately offshore in of water. The island was constructed in 1958 for the specific purpose of well drilling...
, a small artificial island about a mile offshore from Punta Gorda in Ventura County, is Greka's only offshore oil operation. It is in state waters in the eastern portion of State PRC Lease 1466 in the Rincon Oil Field
Rincon Oil Field
The Rincon Oil Field is a large oil field on the coast of southern California, about ten miles northwest of the city of Ventura, and about 20 miles east-southeast of the city of Santa Barbara. It is the westernmost onshore field in a series of three fields which follow the Ventura Anticline, an...
. Greka acquired it in 2002 with the purchase of Rincon Island Ltd. Partnership; the island itself dates from 1958. At the beginning of 2009 there were 20 active oil wells within the approximately 1.5 acres (6,070.3 m²) area enclosed by the berm. Greka continues to run it under the banner of their subsidiary, Rincon Island Ltd. Partnership, and reports out their production to the State Department of Conservation under that name.
Environmental compliance issues
When Greka moved in to Santa Barbara County in 1999, most of the major oil companies had already pulled out, or were in the process of doing so. Opportunities were better elsewhere, including in inland California, such as Kern County, with its huge oil fields and somewhat more relaxed regulatory climate. Greka and other small companies purchased the aging infrastructure left behind by companies that had been operating since the early 20th century. In 2009, only Chevron was left of the major companies; Aera Energy LLCAera Energy LLC
Aera Energy LLC is a natural gas, oil exploration and production company jointly owned by Shell and ExxonMobil headquartered in Bakersfield, California...
, a joint venture of Shell and Mobil, also retained some operations at the Cat Canyon Oil Field. Greka became, by 2009, the largest oil producer in the County, without drilling a single new well.
It was not long before Greka came to the attention of regulators in Santa Barbara County, where the majority of its operations are concentrated. Between 1999 and 2008, the Santa Barbara County Fire Department responded to over 400 waste leaks and spills at Greka. According to EPA Superfund Division employee Robert Wise, speaking to the Associated Press, "I've been in the hazardous materials business for 20 years and this is the worst oil company I've ever seen."
Fines, legal action, and EPA investigations have all resulted from the numerous releases at Greka facilities. A Fish and Game official called Greka the current worst inland oil polluter in California.
The EPA fined Greka $127,500 for improperly disposing of industrial wastewater by injecting it into disposal wells on their Union Sugar and Morganti Leases in the Santa Maria Field, not far from their refinery, in June 2006. While some water disposal is permitted in wells – indeed, wastewater is often used to recharge oil reservoirs to improve recovery – industrial wastewater is considered to be a greater danger to drinking water and must be treated differently, and can only be injected into wells meeting specific criteria. Injecting such water into Class II wells is a violation of the federal Safe Drinking Water Act of 1974.
On December 7, 2007, Greka spilled over 58000 gallons (219.6 m³) of oil at their Bell Lease in the Cat Canyon Field along Palmer Road southwest of Santa Maria. Greka's attorney, however, claimed that some of the recent spills were the work of an eco-terrorist at large. Pipes and wires were cut, valves were opened, and alarms disabled. Some of the wires had been cut with a crimping device. Attorney Robert O'Brien also emphasized that Greka is meticulous in its reporting of the exact amount spilled, unlike other operators in the county.
Yet another spill occurred on January 5, 2008, this one at the Zaca-Davis tank battery in the Zaca Oil Field, along Zaca Station Road. Approximately 8400 gallons (31.8 m³) of oil and produced water overflowed the containment area – escaping the large secondary containment through an open 12 inches (304.8 mm) drainage pipe – and contaminated about one mile (1.6 km) of Zaca Creek. Greka claimed that this spill was the result of sabotage as well.
Also in early January 2008, Greka through Rincon Partnership voluntarily shut down the causeway leading to the Rincon Island facility so that it could repair damage to the pilings caused by the El Nino storms. Consequently, production from the Rincon Island was suspended (as no other method of moving oil to shore was available). Rincon Partnership has promised to repair the causeway.
On January 15, 2008, the Santa Barbara County Board of Supervisors held a hearing to discuss the company, their record, and their future. A large group of Greka employees attended the meeting, in which the supervisors, the California Department of Fish and Game, the Santa Barbara County Fire Department, and the U.S. EPA all reported on the situation. Greka had spilled approximately 500000 gallons (1,892.7 m³) of liquids in the county – both oil and produced water, a total of about 12000 barrels (1,907.8 m³) – in the four years from 2003, when the company went private, to the end of 2007, while it also had the largest number of active wells. The second-largest spill total went to Sierra Resources, a small operator active in the Casmalia Oil Field, which spilled only 16800 gallons (63.6 m³) of liquids.
Shortly after this meeting, on January 29, 2008, Greka distributed a Media Briefing packet to provide the media with a source for its side of the story regarding environmental issues. Also, Greka launched a "Greka Green" initiative, intending to establish itself as an environmental leader in the Santa Barbara County petroleum industry. As part of this initiative, it would repair or remove much of the decaying infrastructure which had been responsible for many of the leaks, spills, and releases that had brought the company to the attention of regulators and the public. Andrew deVegvar, the recently-appointed company president, stated: "I am making it my primary task to ensure that this Company is doing everything it can to be as environmentally aware as possible and as good a corporate citizen as possible; we are going to be a leader." In addition to repair and removal of old equipment, the initiative included berm reinforcement, creek protection, and other measures designed to exceed the environmental standards the company believes it had already met.
The United States Environmental Protection Agency
United States Environmental Protection Agency
The U.S. Environmental Protection Agency is an agency of the federal government of the United States charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress...
(EPA) removed Greka's contractor from the cleanup effort in February 2008, stating that Greka and its contractors were inefficient and incompetent, and repeatedly "failed to meet federal standards." In particular, the EPA found that Greka employees were covering spilled oil in the creek with fresh soil, rather than removing it; therefore EPA removed them from the cleanup exercise. Greka dismissed their cleanup contractor in March, and the contractor they hired to replace them failed the EPA's Hazardous Waste Operations and Emergency Response Standards (HAZWOPER), so EPA dismissed them, and carried out the cleanup themselves. On the same day that the EPA dismissed Greka from its own cleanup, February 1, Congresswoman Lois Capps wrote in a letter to the EPA: "Given the apparent haphazard manner in which the Greka sites are managed and the devastating effects this mismanagement is having on the local environment, it is crucial that EPA continue working with appropriate federal, state, and local agencies to put an end to this intolerable situation." Greka countered with a statement through Sitrick and Company
Sitrick and Company
Sitrick and Company is a Los Angeles-based public relations firm started by Mike Sitrick in 1989. It would go on to establish offices in New York, Miami, San Francisco, and Silicon Valley...
, their public relations consultant, claiming that EPA's action had effectively prevented them from finishing their own cleanup efficiently and on time.
In October 2008, EPA took over the cleanup of a Greka spill for the third time, this one at the Gato Lease in the Cat Canyon Oil Field. They stated that they would seek to have Greka reimburse their expenses, and could not delay due to the imminent start of the rainy season, which could push the contamination farther down the streambeds. In southern and central California, many streambeds are dry prior to the beginning of the rains in late autumn.
When the Board of Supervisors reconvened on the issue of Greka's violations in May 2008, however, they determined that there were further problems since January. In the County, there had been a total of 48 waste spills since the last meeting on January 15; of these, 41 had been at Greka facilities. The company claimed in a letter that most of the spills were benign in nature, and not a threat to public health; and the Board also suggested that perhaps not enough time had been alloted to Greka to correct the problems.
The California Regional Water Quality Control Board, meeting in Watsonville, California on July 10, 2009, recommended Greka be referred to the state Attorney General for prosecution due to its repeated waste spills. In 2008 alone, Greka had spilled more than 157000 gallons (594.3 m³) of waste (oil and produced water); Greka had spilled more than a 500000 gallons (1,892.7 m³) since going private in 2003, resulting in over 400 hazardous materials teams responses; the firm had been fined more than $2.6 million by the different regulatory agencies during this time. Rather than criticizing the Board's decision, Greka president Andrew DeVegvar said that he welcomed a review of his company by the State Attorney General, for the findings would likely be in Greka's favor. "99 percent [of Greka's spills] have been very minor and they’ve been on private property and have not done any environmental damage."
In 2008, Assembly Bill 1960 was introduced in the state legislature, largely in response to spills at Greka.
Events of 2011
In March 2011 Santa Barbara County announced details of an agreement reached with Greka after approximately two years of contentious negotiations. Greka agreed to pay $2 million between 2011 and 2014 as compensation for the series of spills which occurred in late 2007 and early 2008, events which included more than 1700 violations of County regulations. Additionally, Greka promised to improve their infrastructure to make future spills less likely, including reinforcing containment structures. The agreement brought Greka into full compliance with the County's codes governing oil and gas.Greka changed its name to HVI Cat Canyon, Inc. in May 2011, going back to a name it had used prior to 1999 for its operations on the East Cat Canyon Oil Field. The name "HVI Cat Canyon Inc." had been the name of a small subsidiary of Horizontal Ventures, Inc. prior to their 1998 merger with Saba Petroleum Corporation. The entity which resulted from this merger was named "Greka Energy", a name which it retained until 2011.
On June 17, 2011, the U.S. Department of Justice, California Department of Fish and Game, and California Regional Water Quality Control Board filed suit against Greka in Federal court in Los Angeles for having failed to comply with the requirements of the Clean Water Act, citing 21 oil and contaminated water spills between 2005 and 2010. The amount sought was in excess of $2.4 million.