Arco Considers Pulling Out of Oil Pipeline Consortium

Atlantic Richfield Co. is considering backing out of a consortium of four oil companies planning to construct a 130-mile underground pipeline from oil fields in Santa Barbara and the San Joaquin Valley to refineries in the South Bay, a company spokesman said Wednesday.

Spokesmen for Arco and two of the three other partners in the consortium said they could not predict what impact a withdrawal by Arco would have on the project, which has generated protests from residents along two proposed routes for the pipeline. Both routes would run the 30-inch pipeline through Los Angeles.

Arco, which is taking the management role in designing and constructing the $225-million pipeline, has an equal financial share in the project with the three other companies, Chevron, Texaco and Shell, according to Arco spokesman Al Greenstein.

Greenstein said the company is reconsidering its role in the project, because projected crude oil production from its San Joaquin Valley and offshore Santa Barbara fields fell below expectations. The company is producing about 8,500 barrels a day from fields in the area and was given a 40,000-barrels-a-day allotment in the pipeline project, Greenstein said.

“We are still in the program. We are still a partner in the project,” Greenstein said. “We are, however, considering dropping out of the project.”

The project is currently in the environmental review stage and is not expected to be completed until late 1988. Greenstein said Arco will decide whether to drop its managerial role in the project by the end of the month but probably will not decide whether to completely pull out of the project until March, 1987, when the environmental review is completed and the company is asked to make a substantial monetary investment.

“Until then, there’s a relatively small investment required to keep the project going, and we plan to remain active during that process,” Greenstein said.

Spokesman for Shell and Texaco declined to comment on the impact a withdrawal by Arco would have on the project.

“If any one of the four companies would drop out, we would have to reconsider our position,” Shell Oil Co. spokesman Bill Devereux said. “That’s all we can say at this point.”

Chevron Oil officials could not be reached for comment.