Greka - Environmental Compliance Issues

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 LLC, 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 58,000 US gallons (220 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 8,400 US gallons (32 m3) of oil and produced water overflowed the containment area – escaping the large secondary containment through an open 12-inch (300 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 500,000 US gallons (1,900 m3) of liquids in the county – both oil and produced water, a total of about 12,000 barrels (1,900 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 16,800 US gallons (64 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 157,000 US gallons (590 m3) of waste (oil and produced water); Greka had spilled more than a 500,000 US gallons (1,900 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 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.