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Hundreds of Permits Obtained Over 5 Years : More Delays Block Start of Oil Pipeline

April 10, 1988|SHERYL STOLBERG | Times Staff Writer

Pacific Texas Pipeline Co., which plans to build a thousand-mile pipeline to carry crude oil from Los Angeles Harbor to Texas, must seek an extension of its permit from the California Coastal Commission because it has failed to begin construction on the $1.7-billion project.

Officials of Pac-Tex, as the Long Beach-based company is called, say that obtaining the one-year extension is simply another in a series of obstacles--including a brush with the Securities and Exchange Commission last year and the procurement of hundreds of government permits--that the firm has had to overcome since proposing the pipeline more than five years ago.

But some observers, like Coastal Commission Chairman Michael Wornum and Peter Grenell, executive officer of the California Coastal Conservancy, say the delays are a signal that the pipeline may never be built.

"I just have grave doubts that it will ever happen," Wornum said in a recent interview, although he said he does not object to granting Pac-Tex an extension.

"I certainly don't see any immediate activity," said Grenell, whose agency, along with a state bonding authority on which he serves, gave Pac-Tex preliminary approval for a $500-million bond issue several years ago. "Frankly, I don't know what the company is up to at this point."

"The company's response," replied Pac-Tex spokesman Phillip Myers, "is that it has been working on this project for several years and after going through the process of obtaining all of these permits it intends to go through with the project."

The 42-inch-wide, 1,030-mile-long underground pipeline, which Myers said would take about a year to build, could carry 900,000 barrels of crude oil per day to Midland, Tex., where it would enter 14 other pipeline systems for transportation to Gulf Coast, Midwestern and Eastern refineries.

The oil would come primarily from Alaska's North Slope but also from the California outer continental shelf, onshore sources and Pacific Rim countries, according to a recent statement by Pac-Tex.

However, Myers acknowledged that the company does not know when construction will begin because Pac-Tex cannot obtain financing until it obtains one more agreement from an oil company to use the pipeline.

Myers said the company already has one such agreement and is negotiating for a second, as well as for financing with "some major financial institutions." He would not disclose particulars.

Yet as early as December, 1982, Pac-Tex said it was in the "final stages" of securing financing for its project, which at that time called for the pipeline to begin at Long Beach Harbor rather than in Los Angeles Harbor. At the time, company president Cecil B. Owens said the company hoped to begin construction in early 1984 and complete it as soon as 14 months later.

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