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Chevron Chief Talks of West Coast Plans

August 02, 2003|Elizabeth Douglass | Times Staff Writer

David J. O'Reilly, chairman and chief executive of ChevronTexaco Corp. since the merged company was created in October 2001, spoke with reporters Friday about the company's outlook. Here are excerpts from that discussion, edited for clarity:

Question: What are your thoughts on California's Jan. 1 ban on the gasoline additive MTBE for environmental reasons and the required addition of ethanol?

Answer: Everyone benefits from backing off of MTBE. But it's questionable whether you benefit from adding ethanol. In California, you don't need it. California gasoline meets all of the air quality requirements, and it's the cleanest gasoline in the world. But politics require that there be ethanol in gasoline, to put it bluntly, so it's going to be in gasoline.

Q: Can you elaborate on declining [gasoline] sales in California?

A: This year one of the issues on the West Coast has been lower demand, because of the economy. The consumer demand hasn't dropped. But if you don't have economic activity, you don't have trucks buying diesel, you don't have trains rolling. There's [also] a lot lower demand for jet fuel because of the reduction in ... flights. With the economy, and with SARS, [air travel] got hit pretty badly in the first half of the year.

Q: Will most of the North American properties for sale be in California?

A: No. They're mostly in the mid-continent area and some in the Gulf of Mexico area. In California, we're the No. 1 producer in the San Joaquin Valley. We have two or three very large fields there, such as Kern and Midway Sunset. Those are very important parts of our business.

Q: You said you hope to make an announcement soon on building a West Coast import terminal for natural gas. What's behind that?

A: From a U.S. policy standpoint, we need to provide ways to connect to the global natural gas markets. That means we need import terminals. I would hate to see the West Coast isolated from the global markets like it is in the case of gasoline. That's where we will be headed if we don't provide for import facilities.

Do we want to be isolated, and subjected to higher costs and more volatility?

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