CRISIS IN THE PERSIAN GULF : Oil Interests Push to Start Pumping at Point Arguello

TIMES STAFF WRITER

The oil industry is using the current Middle East crisis to heighten the pressure on Santa Barbara County to permit the start-up of the much-delayed $2-billion Point Arguello offshore oil project, which sits idle despite its completion two years ago.

In congressional testimony, radio call-in shows, private meetings and public statements, oil officials are pointing to the Point Arguello project--with its three platforms 10 miles off Point Conception and 55 miles northwest of Santa Barbara--as an example of how government has impeded domestic oil development.

Industry executives estimate that the project, which taps into an undersea oil reserve with as much as 300 million barrels of recoverable oil, would eventually produce up to 100,000 barrels of oil a day once final approvals are given. That would reduce America's dependence on imported oil, such as that from Iraq and Kuwait, they argue.

In the days since the Iraqi invasion, the federal Department of Energy has gotten into the act by calling the Santa Barbara County Resource Management Department. Federal officials wanted to "ask us where we are, what's going on and what does it take to start the project up," said Robert Almy, the Santa Barbara department's deputy director.

But county officials remain unimpressed by the new spotlight on the project and blame some of the delays on Chevron Corp., the lead partner in the project. Chevron could begin production soon if it would choose to move the oil by pipeline instead of tanker, they said.

For their part, local environmentalists and community activists continue to oppose allowing oil to be shipped by tanker from the project--oil crisis or no.

"I think (the oil companies) are just taking advantage of the situation," said Henry Feniger, president of Get Oil Out, a Ventura community group that opposes offshore oil drilling. "We can't go crazy every time someone in the Middle East raises a ruckus."

The Iraqi invasion, which caused oil prices to rise sharply, raised new questions about the availability of domestic oil reserves, particularly in offshore and wilderness areas now off-limits to oil production.

Despite the current crisis, the Bush Administration has given no indication that it plans to back off from its policy of restricting oil drilling off the coasts of California and Florida.

With regard to Point Arguello, "there's not much we can do, but we're certainly in touch with (Chevron) and (Santa Barbara) County," said Philip Keif, a spokesman for the Energy Department. He hastened to add: "We're not putting pressure on (the county) . . . We're not going to take sides."

But that hasn't stopped oil executives from applying pressure to spotlight the Point Arguello project, which is financed by a consortium of 18 oil companies.

On Monday morning, Kenneth T. Derr, chairman of Chevron, discussed the project on a live call-in show on San Francisco radio. "We have tried the process of negotiating over the last five years with environmentalists . . . (But) we still don't produce the oil," Derr said at a press conference after the show. "We would hope that the events of the past week would make the process a little easier."

At a news conference in New York, meanwhile, Charles J. DiBona, president of the American Petroleum Institute, the industry's main trade group, urged swift approval of oil production at Point Arguello. DiBona had also mentioned the project in testimony before a House subcommittee last week.

Santa Barbara County officials deny causing the delays. They blame them instead on Chevron, saying that the project could begin production of oil from Point Arguello as soon as November if Chevron simply would ship the oil by pipeline instead of tanker. Chevron already has permits to move the oil by pipeline, which the county considers environmentally safer, though more expensive.

"We have all this delay because Chevron is trying to save transportation costs," said Santa Barbara County Supervisor William Wallace. "We're certainly all in favor of the Chevron (project) operating as long as they commit to moving it by pipeline out of here," he added.

Chevron argues that any pipeline transport alternative would be far costlier, impractical, in some cases unworkable, and could still require the use of tankers.

In any case, county officials say they will not be swayed in their deliberations by the press of events. The Santa Barbara County Board of Supervisors will consider a formal response to the Energy Department at a meeting today.

The Point Arguello project, which was started more than 10 years ago, is built and requires only permits to transport the oil from an onshore terminal at Gaviota to refineries in Los Angeles.

A permit to move the oil by tanker, granted by Santa Barbara County in 1989, was revoked by the California Coastal Commission after an appeal by community groups.

The matter was sent back to the county, which is planning to issue a new environmental report on tankering as early as next week. A final county vote on a new tanker permit request is scheduled for November, though appeals could delay final approval for several months after that. Meanwhile, a Chevron lawsuit against the Coastal Commission is pending.

Chevron spokesman G. Michael Marcy estimated that if approval were given today, it would take six months to de-mothball the project and begin production of about 20,000 barrels of oil a day. It would take another year to reach 50,000 to 75,000 barrels a day, and another three to six months to reach maximum output of 100,000 barrels a day, he said.

Despite the industry's pressure, it is unlikely that the current crisis will resolve the decade-long argument, observers said. "I'd be surprised if this played much of a factor in getting offshore California production on stream any faster," said Frederick P. Leuffer Jr., senior oil analyst with C. J. Lawrence, Morgan Grenfell Inc. in New York.

Times staff writer Martha Groves in San Francisco contributed to this story.

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