Advertisement
YOU ARE HERE: LAT HomeCollections

California

Fate of Phillips' West Coast Oil Fields Uncertain Under a Tosco Merger

February 07, 2001|From Reuters

Regulators essentially gave Phillips Petroleum Co. its huge Alaskan oil fields, but the jury is still out on whether they would take away some West Coast assets to clear the oil company's surprise merger deal with Tosco Corp.

The Bartlesville, Okla.-based oil producer would be the newest integrated oil giant and second-largest oil refiner if regulators approve its $7-billion agreement to buy oil marketer and refiner Tosco, which Phillips announced Sunday.

Overall, industry analysts believe the deal should be left mostly intact by regulators because few of Tosco's and Phillips' assets overlap.

But the merged company would have strong exploration and production and strong refining and marketing operations on the West Coast, where regulators have often hung up previous mergers on concerns of industry concentration.

"Really, the major issue is Phillips' Alaska production and Tosco's California presence. It's going to be a tight call as to whether asset divestitures are forced or not," Simmons & Co. analyst Jeff Dietert said.

Phillips got its Alaskan oil fields for $7 billion when the Federal Trade Commission and the state of California forced BP Amoco to sell off Atlantic Richfield Co.'s Alaska division as a condition of approving BP's Arco takeover.

The Alaska acquisition doubled Phillips' reserves to 4.4 billion barrels of oil equivalent and added daily production of 345,000 barrels of oil equivalent of Alaska North Slope crude.

Complementing that production would be Tosco's three West Coast refineries--one in Wilmington and one near San Francisco--and its refinery in Washington with a total capacity of 324,000 barrels per day.

BP has about 800,000 barrels per day of Alaskan production and 475,000 barrels per day of refining capacity at operations in Wilmington and Cherry Point, Wash.

Because many refiners, like Tosco, are capable of running more economic crude oils than Alaska North Slope, regulators could be convinced that one company's increased control over that market would not have too much of an anti-competitive effect.

Advertisement
Los Angeles Times Articles
|
|
|