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6 Oil Firms Give Up on Tankers, Opt for Pipeline : Energy: The companies break away from a partnership headed by Chevron in a major concession to Santa Barbara County officials.

May 09, 1991|MILES CORWIN | TIMES STAFF WRITER

SANTA BARBARA — Six oil companies announced that they will apply this week for permits to transport oil by pipeline from the Point Arguello offshore project, a major concession to Santa Barbara County officials who had rejected tanker shipment and argued that the only environmentally safe way to move the oil is by pipeline.

In making the move, the firms broke away from a partnership of 18 oil companies, headed by Chevron, that had been insisting on the need to transport the oil by tanker, a method they said is cheaper.

The announcement means that a significant amount of oil could soon be transported from the project, one of the largest untapped oil reserves in the country. Until now, the dispute has prevented the project from producing a drop of oil, despite its completion more than three years ago.

"There's been no movement on this issue for years. . . . This is the first step toward transporting some of this oil out of the county," said Mary Ann Scott, a planner with the Santa Barbara County Energy Division.

Chevron officials were not happy about the defection but denied that it constituted a breakup of the oil consortium.

"It's thrown some cold water on the unity and camaraderie of the partnership, but the partnership's still intact," said G. Michael Marcy, a spokesman for Chevron. "These six companies still own a percentage of the production. It's their decision what they choose to do with the oil."

Environmentalists, however, were in support of the proposed project.

"This is a crack in the dike. . . . It shows not all the partners go along with Chevron's hard-line position," said Henry Feniger, president of Get Oil Out, a local organization formed to oppose off-shore oil development. "It's definitely a step in the right direction."

The Chevron partners had been unsuccessful in their numerous attempts to obtain permits to bring the oil in by tanker. They experienced their latest setback last month when the Coastal Commission upheld a 1990 decision by the Santa Barbara County Board of Supervisors, rejecting tankering shipments.

The Coastal Commission decision was a major reason the six oil companies split off and formed the Mariposa Pipeline Co., said Jeffrey Nelson, an attorney for the pipeline company. This company plans to build a 3/4-mile pipeline that will connect to another one nearby.

The oil could be transported and processed in Bakersfield or eventually moved through other pipelines to Southern California refineries. It could take up to a year to obtain permits for the project and another six months for construction, Nelson said.

The six companies control about 30% of the Point Arguello project's oil. At capacity, the project is expected to produce about 80,000 barrels of oil a day.

Many people don't realize that the partners are all "competing oil companies," Nelson said. Once the oil is extracted from the ocean, each partner "must make decisions to benefit his own position."

Chevron officials still have not decided what approach to take since the Coastal Commission's rejection of their appeal, Marcy said. The company, he said, has until Monday to decide whether to file suit against Santa Barbara County.

The six firms that formed Mariposa are among the smallest oil companies in the partnership. The short pipeline that they intend to build would move oil from the processing plant in Gaviota to a pump station and then to the All American Co. pipeline, where it would be transported to Bakersfield.

"Where this oil eventually ends up hasn't been decided," Nelson said. "That's up to each oil producer."

Because this plan would eliminate the need for the partners to store the oil at a terminal facility in Gaviota, they would save $1.10 a barrel, Nelson said.

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