Sable’s Santa Ynez offshore storage proposal in California to reportedly cost $1.7bn

Sable Offshore is exploring the option of using an offshore storage and treating vessel to market oil produced from the Santa Ynez project in waters off the coast of California. Last week, two sources familiar with the matter told Reuters that pursuing this strategy would require around $1.7bn in funding.

This comes amid an ongoing dispute between Sable and Californian regulators over the restart of Santa Ynez, which was shut in 2015 by previous owner ExxonMobil following an oil spill. Sable bought the project from ExxonMobil in 2024 and restarted production from one of its three platforms in May this year.

However, Sable’s efforts to restart the Las Flores onshore pipeline system, which receives crude from Santa Ynez, have run into regulatory roadblocks. The California Coastal Commission has said that Sable did not have the right permit to carry out repairs to the pipeline system and has issued a cease and desist order against the company, among other actions. Sable had sought to have the order overturned in court, but in mid-October, the Superior Court for Santa Barbara County sided with the California Coastal Commission.

Despite saying that the ruling would have no impact on the resumption of petroleum transportation through the Las Flores system, Sable has said it intends to appeal against it.

The company’s plans were dealt a further blow when the California Office of State Fire Marshal (OSFM) said in late October that Sable had not met the conditions required for the restart of the Las Flores pipeline. Sable said it “strongly disagrees” with the allegations, adding in an October 23 response to the OSFM that the agency’s conclusions were “in error” and “inconsistent with numerous discussions” between the regulator and the company.

A proposal to use floating storage for crude from Santa Ynez, which Sable unveiled to investors last month, represents an alternative to marketing the oil by pipeline, according to Reuters’ sources. The estimated cost of floating storage has not been previously reported, according to the news service.

The sources said Sable's estimates included the refinancing of a $900mn loan from ExxonMobil to acquire the Santa Ynez project. They added that around $450mn in funding would be required for purchasing or converting the offshore storage and treatment vessel itself and that a further $300mn would go towards operational expenses including general and administrative costs.

According to the sources, Sable has also been in talks with the US government for financing for the project, which could include a federal loan guarantee.