New Chevron Plan for Point Arguello Oil Is Turned Down

Despite last-minute federal efforts to settle the dispute, Santa Barbara County Supervisors voted 4-1 Monday to deny Chevron Corp.’s request to ship oil by tanker from the $2-billion Point Arguello offshore project.

The much-delayed project--whose fate now will be appealed to the state Coastal Commission and potentially the courts--is one of the largest untapped remaining U.S. oil reserves.

But because of a dispute over how to transport its supplies to Los Angeles-area refineries, Point Arguello has generated no oil, despite its completion nearly three years ago.

At a packed hearing Monday, county officials and local environmental groups said they want the oil transported by pipeline, which they consider environmentally safer than tankers. But Chevron officials argued that their plans to ship the oil by tanker are safe and will save millions of dollars.

“Chevron’s bottom line is to maximize profits,” said County Supervisor Tom Rogers. “Our policy is to maximize the use of the pipeline. Chevron has a pipeline. . . . But they tell us they don’t want to use it.”

Rick Hughes, a Chevron district land supervisor, said the company will appeal the county decision to the state Coastal Commission; if that appeal is denied, Chevron will file a lawsuit. “The county can’t simply close its ports to tankers,” he said. “We feel that’s illegal.”

Kenneth T. Derr, Chevron’s chairman, said in Chicago that if county supervisors rejected the Point Arguello plan, it would be “unconscionable. If they vote it down, I guess we’ll have to settle in court. . . . They don’t give us any alternatives.”

The county Energy Division staff recently issued a report recommending that supervisors reject Chevron’s plan to tanker oil. But Hughes said the report “distorts the facts and confuses the law. . . . The staff is wrong.”

Because of the Middle East crisis, which raises the possibility of a big loss of oil supplies, the federal Department of Energy took the unusual step late last week of seeking to mediate the county-Chevron dispute. It hoped to remove the last obstacle to producing up to 75,000 barrels of oil daily from the project, federal officials said.

But supervisors rejected Chevron’s plan, based on key points raised in the Energy Division report. They contended that Chevron provided insufficient information about a new plan for a Gaviota-to-Los Angeles pipeline--this time using railroad rights of way to avoid local municipalities’ opposition. Because Chevron’s supplemental environmental impact report did not include this plan, supervisors termed it incomplete.

They also contended that some oil could be moved via Goodyear Tire and Rubber Co.’s All American Pipeline to Bakersfield, then transferred to another line for shipment to Los Angeles. That option would require blending heavy Point Arguello crude with a lighter oil to make it easier to move.

But Hughes of Chevron said the process is too expensive. It would cost $314 million over the life of the project, he said. It also is impractical, he said, arguing that some oil still would need to be transported by tanker because of pipeline capacity limits.

Santa Barbara has been a center for anti-oil activism since January, 1989, when a “blow-out” erupted below Unocal Corp.’s drilling platform Alpha, spewing 3 million gallons of crude onto local beaches and killing more than 10,000 birds. The disaster spawned many local anti-oil groups.

In the 1970s, offshore oil drilling in the area was limited. When the Reagan Administration opened for development vast stretches of coast near Santa Barbara, local environmentalists again went into action.

“We all remember the oil spill in ‘69,” Henry Feniger, president of Get Oil Out, said in a pre-hearing interview. “With tankers going through the channel, there’s a much greater chance of environmental disaster than with a pipeline.”

Oil was discovered in the Point Arguello area in 1981. A consortium of 18 companies, led by Chevron Corp., invested more than $2 billion to build three platforms, oil and gas pipelines, onshore treatment plants and a marine terminal.

In May, 1989, it appeared that full production would finally begin--when county supervisors issued a permit to allow oil tankering from the Gaviota terminal to Los Angeles refineries.

But after the Exxon Valdez oil spill in Alaska, California’s Coastal Commission revoked that permit after it was appealed by the Santa Barbara League of Woman Voters and Get Oil Out.

Chevron sued the Coastal Commission in October, 1989, and later filed a new request with the county for an interim tankering permit. Last month, after a county planning commission meeting, county staff recommended rejection. Times staff writer Patrick Lee contributed to this report.