press release

Chevron Seeks Permission To Continue Tanker Shipments from Point Arguello


SANTA BARBARA, Jan. 21, 1994 -- Chevron yesterday asked the California Coastal Commission to allow short-term tankering of crude oil from the Point Arguello offshore project to Los Angeles beyond Feb. 1, due to damage to a key crude oil pipeline system caused by the Northridge earthquake.

The quake damage forced a change in Chevron's plan to suspend tankering Feb. 1 to comply with conditions of the project's permit, issued by the Coastal Commission last year. The permit allows tankering until Jan. 1, 1996, but requires suspension of tankering Feb. 1 until the Point Arguello oil producers sign an agreement that a pipeline developer can use to finance construction of a new line.

"We've been negotiating diligently for many months, but this matter is very complex and we expect to be unable to finish by Feb. 1," said Lew Blackwell, Chevron's project manager. "We notified the commission last week that we would suspend tanker shipments unless we achieved a last-minute breakthrough on the pipeline agreement.

"But reduced capacity of the pipelines that carry crude oil to Los Angeles has forced us to request a temporary extension of tankering during this emergency," he said.

Meanwhile, Chevron is continuing negotiations with pipeline operators about building a permanent line to Los Angeles.

"We're focusing our efforts on the proposed Pacific Pipeline system, which is the most environmentally compatible and commercially viable," Blackwell said. "We hope to finalize a pipeline agreement soon, and then we will seek commission approval to resume tankering through 1995. After that, all oil will move by pipeline."

Chevron and the other Point Arguello producers have spent more than $7 million in efforts to support engineering, environmental and permit studies for several proposed pipeline projects.

The 300-million-barrel Point Arguello Field, managed by Chevron on behalf of 13 partners, began producing oil in 1991. Pipeline availability onshore limited production to about 60,000 barrels a day, or about two-thirds of capacity. Tankering began last August, allowing double-hulled tankers to take on 250,000 barrels of oil three to four times a month from the field's processing plant at Gaviota. That boosted output to more than 80,000 barrels a day.

The field, which was developed at a cost of more than $2.6 billion, is the largest U.S. discovery of oil since the huge Prudhoe Bay field in Alaska. Chevron and the operators have agreed to more than 200 separate conditions with dozens of governmental agencies to protect environmental and socioeconomic resources.

Updated: January 1994