Greka Energy, legally HVI Cat Canyon Inc., is a
privately held company
A privately held company (or simply a private company) is a company whose Stock, shares and related rights or obligations are not offered for public subscription or publicly negotiated in their respective listed markets. Instead, the Private equi ...
engaged in
hydrocarbon exploration
Hydrocarbon exploration (or oil and gas exploration) is the search by petroleum geologists and geophysicists for hydrocarbon deposits, particularly petroleum and natural gas, in the Earth's crust using petroleum geology.
Exploration methods
...
principally in
Santa Barbara County, California
Santa Barbara County, officially the County of Santa Barbara (), is a County (United States), county located in Southern California. As of the 2020 United States census, the population was 448,229. The county seat is Santa Barbara, California ...
. Formed in 1999 after the 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 (Spanish language, Spanish for "Mary, mother of Jesus, St. Mary") is a city in Santa Barbara County, California, United States. Located on the Central Coast (California), Central Coast of California, it is approximately northwest o ...
, and is wholly owned by Randeep Grewal.
In May 2011, the company changed its name from Greka Oil & Gas Inc. to HVI Cat Canyon Inc.
In June 2019, the company filed
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...
after federal and state authorities, including the
United States Environmental Protection Agency
The Environmental Protection Agency (EPA) is an independent agency of the United States government tasked with environmental protection matters. President Richard Nixon proposed the establishment of EPA on July 9, 1970; it began operation on De ...
(EPA) and the
United States Department of Justice
The United States Department of Justice (DOJ), also known as the Justice Department, is a United States federal executive departments, federal executive department of the U.S. government that oversees the domestic enforcement of Law of the Unite ...
(DOJ), fined the company for oil spills.
Greka focuses on petroleum extraction and asphalt processing in California, with holdings in Santa Barbara,
Ventura,
Kern
Kern or KERN may refer to:
People
* Kern (surname), includes a list of people with the name
* Kern (soldier), a light infantry unit in Medieval Irish armies
Places
* Kern, Alaska, a ghost town in Alaska
* Kern, Austria, see Sankt Marienkir ...
, and
Orange
Orange most often refers to:
*Orange (fruit), the fruit of the tree species '' Citrus'' × ''sinensis''
** Orange blossom, its fragrant flower
** Orange juice
*Orange (colour), the color of an orange fruit, occurs between red and yellow in the vi ...
Counties. It is the largest onshore oil operator in Santa Barbara County.
In 2008, after several oil spills, the company was referred to by state and federal officials as "California's number one inland oil polluter".
[
]
China-based affiliate
When Greka was still a publicly traded company, in 2002 and early 2003, the China operations were part of the firm; Grewal separated them out later as Green Dragon Gas, a public company (GDG on the London Stock Exchange), which is also majority owned and controlled by Grewal. Green Dragon Gas was incorporated in 2006 in Hong Kong, and mainly extracts coal bed methane in China.
History
Greka 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 1998, with his newly purchased Horizontal Ventures, which was then a private entity, Randeep Grewal acquired the assets of Petro Union, which was just then emerging from its 1996 bankruptcy filing in Indiana. In 1999, Randeep Grewal acquired the assets of Saba Petroleum, which was founded in 1981, changing the company's name to Greka. Grewal formed Greka Energy by combining these entities in 1999.]
In an October 2000 interview with ''The Wall Street Transcript
''The Wall Street Transcript'' is a paid subscription publication and Web site that publishes bi-weekly industry reports that feature equity analyst, money manager and CEO interviews. Reports typically cover two to three industries and express ...
'', Randeep Grewal stated that the company's motto was "Working for Profits".[
Greka acquired Windsor Energy US Corporation and Rincon Island Limited Partnership in 2002, thereby adding assets in Rincon Island in Ventura County. Also in 2002, it 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.][
As of 1999, Greka had holdings in ]Canada
Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...
, Colombia
Colombia, officially the Republic of Colombia, is a country primarily located in South America with Insular region of Colombia, insular regions in North America. The Colombian mainland is bordered by the Caribbean Sea to the north, Venezuel ...
, Indonesia
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania, between the Indian Ocean, Indian and Pacific Ocean, Pacific oceans. Comprising over List of islands of Indonesia, 17,000 islands, including Sumatra, ...
, and China
China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
, in addition to oil fields and other facilities in California, Texas, New Mexico and Louisiana.
In 2003, Randeep Grewal acquired all outstanding shares of the company for $6.25 per share or $32 million.
In November 2005, Saba Enterprises filed bankruptcy. Neither the producing operations – which included several leases in Santa Barbara County, Rincon Island, Orange County, and Kern County – nor the asphalt plant were included in the liquidation filing.
Greka appointed former Greka CFO, Andrew deVegvar as president in January 2008.
DeVegvar began a "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 its 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 from the trustees of the owners of the mineral rights to several leases on the Cat Canyon Field. Greka paid $5 million to the trustees through Wells Fargo
Wells Fargo & Company is an American multinational financial services company with a significant global presence. The company operates in 35 countries and serves over 70 million customers worldwide. It is a systemically important fi ...
and Union Bank. At issue was the transfer in 2002 of production from Vintage Petroleum, 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 its local operations.
Due to the decline in oil prices during the Great Recession
The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009. , Greka laid off 30 people in March 2009, representing about 20% of its staff in the Santa Maria area.
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 its 1998 merger with Saba Petroleum Corporation. The entity which resulted from this merger was named "Greka Energy", a name which it retained until 2011.
Asphalt refinery
Greka owns and operates an asphalt refinery northwest of Santa Maria. It sits on 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. The refinery is able to separate heavy oil into distillates and heavy fractions at approximately per hour; the company then ships the resulting product out by truck. Products of the refinery, in addition to asphalt, include naphtha
Naphtha (, recorded as less common or nonstandard in all dictionaries: ) is a flammable liquid hydrocarbon mixture. Generally, it is a fraction of crude oil, but it can also be produced from natural-gas condensates, petroleum distillates, and ...
, asphalt
Asphalt most often refers to:
* Bitumen, also known as "liquid asphalt cement" or simply "asphalt", a viscous form of petroleum mainly used as a binder in asphalt concrete
* Asphalt concrete, a mixture of bitumen with coarse and fine aggregates, u ...
emulsion
An emulsion is a mixture of two or more liquids that are normally Miscibility, immiscible (unmixable or unblendable) owing to liquid-liquid phase separation. Emulsions are part of a more general class of two-phase systems of matter called colloi ...
, and gas oil
Diesel fuel, also called diesel oil, heavy oil (historically) or simply diesel, is any liquid fuel specifically designed for use in a diesel engine, a type of internal combustion engine in which fuel ignition takes place without a spark as a re ...
. Some of the distillates are used by regional oil fields as a diluent
A diluent (also referred to as a filler, dilutant or thinner) 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 troublesome, because it might not be ...
, 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
Conoco ( ), formerly known as Continental Oil, is an American Petroleum industry, petroleum brand that is operating under the current ownership of the Phillips 66 Company since 2012 and is headquartered in the Westchase, Houston, Westchase neigh ...
and Saba. Saba took over the refinery in 1994, closing it while it performed equipment upgrades, and reopening it in 1996. In 1999, Greka acquired the refinery along with Saba's other assets as part of its acquisition of Saba. 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.
The asphalt plant functioned as a hedge. When oil prices were high, the company was able to sell on the open market the heavy crude produced from the Cat Canyon, Santa Maria Valley, and North Belridge fields; when the price of oil was low, the company used it instead to make asphalt at its Santa Maria refinery, since asphalt keeps a relatively constant price. In 2002, Greka announced that it had approximately 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, the company mainly pumped from the deeper formations with lighter oil which was more valuable; when the company pulled out of the county in the 1980s and 1990s, it left behind considerable reserves of difficult-to-extract heavy oil, which however made good feedstock for the asphalt refinery.[
]
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, the company actively produced oil from the Santa Maria Valley, Casmalia, Zaca, and Cat Canyon fields. Greka operates wells at the North Belridge Oil Field in Kern County, the Casmalia Oil Field, Cat Canyon Oil Field, Zaca Oil Field
The Zaca Oil Field is an oil field in central Santa Barbara County, California, about 20 miles southeast of Santa Maria, California, Santa Maria. One of several oil fields in the county which produce heavy oil from the Monterey Formation, the fi ...
, and Santa Maria Valley Oil Field in Santa Barbara County, and the Richfield Oil Field in Orange County.
Rincon Island former operations
Rincon Island, California, is a small artificial island about a mile offshore from Punta Gorda in Ventura County. It is in state waters in the eastern portion of State PRC Lease 1466 in the Rincon Oil Field
The Rincon Oil Field is a large oil field on the coast of southern California, about northwest of the city of Ventura, and about east-southeast of the city of Santa Barbara. It is the westernmost onshore field in a series of three fields whi ...
. Greka acquired it in 2002 with the purchase of Rincon Island Ltd. Partnership; the island itself dates from 1958.
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.
At the beginning of 2009, there were 20 active oil wells within the approximately area enclosed by the berm. Rincon Island Limited Partnership, the subsidiary of the company that held the assets in Rincon Island, filed bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...
in 2016 to block California from forcing the company to perform extensive remediation on its wells amid environmental concerns. In December 2017, the bankruptcy trustee gave ownership of the property to the state via quitclaim deed
Generally, a quitclaim is a formal renunciation of a legal claim against some other person, or of a right to land. A person who quitclaims renounces or relinquishes a claim to some legal right, or transfers a legal interest in land. Originally a c ...
.
Oil spills and environmental compliance issues
In 1999, Greka began operations in Santa Barbara County by acquiring the aging infrastructure left behind by companies that were pulling out of the county to pursue better opportunities. In 2009, only Chevron Corporation
Chevron Corporation is an American multinational energy corporation predominantly specializing in oil and gas. The second-largest direct descendant of Standard Oil, and originally known as the Standard Oil Company of California (shortened t ...
was left of the major companies; Aera Energy LLC
Aera Energy LLC (or simply Aera) is a natural gas, oil exploration and production company started as a joint venture between Shell plc (through Shell USA) and Mobil (which later merged to form ExxonMobil). Headquartered in Bakersfield, Californ ...
, a joint venture of Shell and Mobil, also retained some operations at the Cat Canyon Oil Field.
Between 1999 and 2008, the Santa Barbara County Fire Department
The Santa Barbara County Fire Department (SBCFD) provides fire protection and emergency response services for the unincorporated areas of Santa Barbara County, California, and for multiple cities within the county. Together, these areas compose ...
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. In 2008, a Fish and Game official called Greka the worst inland oil polluter in California.[
On June 1, 2006, The EPA fined Greka $127,500 for improperly disposing of industrial wastewater by injecting it into disposal wells on its Union Sugar and Morganti Leases in the Santa Maria Field, not far from its refinery. 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.
In June 2007, the company was fined $1 million for violating the Safe Drinking Water Act. The EPA and the DOJ determined that Santa Maria Refining Company disposed of contaminated wastewater into wells that were not permitted for that use, posing a risk to groundwater supplies. The company was also sentenced for making false statements to the EPA.
On December 7, 2007, Greka spilled over of oil at its Bell Lease in the East Cat Canyon Oil 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.
A spill occurred on January 5, 2008 at the Zaca-Davis tank battery in the ]Zaca Oil Field
The Zaca Oil Field is an oil field in central Santa Barbara County, California, about 20 miles southeast of Santa Maria, California, Santa Maria. One of several oil fields in the county which produce heavy oil from the Monterey Formation, the fi ...
, along Zaca Station Road. Approximately of oil and produced water overflowed the containment area – escaping the large secondary containment through an open drainage pipe – and contaminated about one mile (1.6 km) of Zaca Creek. Greka claimed that this spill was also the result of sabotage.
On January 15, 2008, the Santa Barbara County Board of Supervisors held a hearing and 25 Greka employees attended. Greka had spilled approximately of liquids in the county – both oil and produced water, a total of about – 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.
In 2008, Greka launched the "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.
The 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 its cleanup contractor in March, and the contractor the company 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
Lois Ragnhild Capps (née Grimsrud; January 10, 1938) is an American politician who served as the U.S. representative for from 1998 to 2017. She is a member of the Democratic Party. The district, numbered as the 22nd District from 1998 to 200 ...
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 that the EPA's action had effectively prevented the company from finishing its 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 and stated that it would seek to have Greka reimburse its expenses.
In February 2008, Assembly Bill 1960 was introduced in the state legislature, largely in response to spills at Greka. It was approved in September 2008.[
On January 21, 2009, Greka sued ]Santa Barbara County, California
Santa Barbara County, officially the County of Santa Barbara (), is a County (United States), county located in Southern California. As of the 2020 United States census, the population was 448,229. The county seat is Santa Barbara, California ...
, 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.
On July 10, 2009, the California Regional Water Quality Control Board, at a meeting in Watsonville, California
Watsonville is a city in Santa Cruz County, California, in the Monterey Bay Area of the Central Coast (California), Central Coast of California. The population was 52,590 at the 2020 United States census, 2020 census. Predominantly Latino and ...
, recommended Greka be referred to the Attorney General of California
The attorney general of California is the state attorney general of the government of California. The officer must ensure that "the laws of the state are uniformly and adequately enforced" ( Constitution of California, Article V, Section 13). ...
for prosecution due to its repeated waste spills. In 2008 alone, Greka had spilled more than of waste (oil and produced water); Greka had spilled more than a 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.
In March 2011, 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 1,700 violations. Additionally, Greka promised to improve its infrastructure to make future spills less likely, including reinforcing containment structures.
On June 17, 2011, the DOJ, California Department of Fish and Wildlife
The California Department of Fish and Wildlife (CDFW), formerly known as the California Department of Fish and Game (CDFG), is an American state agency under the California Natural Resources Agency. The Department of Fish and Wildlife manages ...
, 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
The Clean Water Act (CWA) is the primary federal law in the United States governing water pollution. Its objective is to restore and maintain the chemical, physical, and biological integrity of the nation's waters; recognizing the primary respo ...
, citing 21 oil and contaminated water spills between 2005 and 2010. The amount sought was in excess of $2.4 million.
In Santa Barbara County, from 2015 through 2017, there 161 notices of violation of which, 145 were directed toward Greka, which also received 35 of the 36 fines that were levied.
In May 2018, the company was fined $12.5 million for 1,500 operating violations at an oil field located in Orange County. It was the highest fine ever levied in the history of the California Department of Conservation
California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...
.
In December 2018, EPA officials served search warrant
A search warrant is a court order that a magistrate or judge issues to authorize Police, law enforcement officers to conduct a Search and seizure, search of a person, location, or vehicle for evidence of a crime and to Confiscation, confiscate an ...
s at Greka facilities on Sinton Road. In February 2019, the EPA ordered the company to conduct sampling to determine whether its operations resulted in contaminated local soil and groundwater.
In August 2019, the company had a leak from a tank at its asphalt refinery on Sinton Road.
In November 2019, up to 10 barrels of oil leaked from a facility of the company on Black Road in Santa Barbara County.
Public relations
In Santa Barbara County, the company has occasionally hired retired County Supervisor Mike Stoker as a spokesman.[ In 2018, Stoker went to work for the EPA.][ In 2008, the company hired Tony Knight from the public relations firm Sitrick and Company.]
References
{{reflist, 1
Oil companies of the United States
Oil fields in Santa Barbara County, California
Petroleum in California
Companies based in Santa Barbara County, California
Santa Maria, California
Non-renewable resource companies established in 1999
American companies established in 1999
1999 establishments in California