Sable Offshore Stock Tumbles. Its California Pipeline Faces More Questions.

Sable Offshore is vying to restart a 124-mile pipeline system that begins off the California coast. (Eric Thayer/Bloomberg)

Key Points

• Sable Offshore’s shares plummeted 13% after environmental groups sued to prevent the restart of a California pipeline.
• The lawsuit challenges the U.S. Transportation Department’s approval for the Las Flores pipeline system, citing corrosion concerns.
• The pipeline, acquired by Sable in 2024, was the source of a 2015 oil spill off the Santa Barbara coast.

Shares of Sable Offshore plummeted Friday after environmental groups filed a lawsuit against a federal agency to prevent the oil and gas producer from restarting a pipeline in central California.

Organizations including the Environmental Defense Center and Sierra Club asked the U.S. Court of Appeals for the Ninth Circuit to review the U.S. Transportation Department’s go-ahead for the Las Flores pipeline system. On Monday, the agency’s Pipeline and Hazardous Materials Safety Administration, or PHMSA, issued an emergency special permit approving Sable’s restart plan, boosting the stock that session.

Sable shares tumbled 13% on Friday, bringing the stock back roughly to where it started the week.

Sable Offshore and the Transportation Department didn’t immediately respond to a request for comment.

The pipeline system in question starts off the coast of California’s Santa Barbara county, and runs more than 124 miles through San Luis Obispo and Kern counties. In 2015, a leak in the system led to an oil spill off the coast of Santa Barbara. Sable Offshore acquired the pipeline in 2024 from Exxon Mobil, which itself had bought the system from Plains All American after the spill.

Sable’s permit from the PHMSA waived the requirement to evaluate and remedy corrosion in the pipeline, as long as the company abided by requirements around issues like temperature and pressure. Last Friday, Sable had requested expedited review of its application, citing President Donald Trump’s declaration of a national energy emergency.

“The Approval allows the 120-mile Pipeline System to operate despite its lack of protection from corrosion the root cause of the 2015 oil spill,” the plaintiffs said in Wednesday’s lawsuit.

“PHMSA bypassed the required public notice, opportunity for public participation, statement of reasons for its decisions, and other conditions generally required for pipeline safety regulation waivers under the federal Pipeline Safety Act,” the plaintiffs said.

The lawsuit is a setback for the Sable, which had been expected to benefit from California taking a more lenient stance toward oil and gas this year.

Write to Nate Wolf at nate.wolf@barrons.com