Chevron Loses New Round at Point Arguello

In the latest setback to Chevron Corp. and its partners, the California Coastal Commission on Wednesday denied the oil company permission to ship crude oil by tanker from the long-idle Point Arguello offshore project, throwing into question the project’s future oil production.

The 8-3 ruling by the Coastal Commission upholds a decision by the Santa Barbara County Board of Supervisors in November rejecting tanker shipments and arguing that the only environmentally safe way to move the oil was by pipeline.

Chevron officials said their only recourse may be filing suit against the county or the Coastal Commission. C. L. (Lew) Blackwell Jr., the oil company’s Point Arguello project manager, said the partners would announce in the next week whether they intend to go to court.

Chevron and its 17 partners have been seeking permission to transport oil to Los Angeles-area refineries from the $2.5-billion project 10 miles off Point Conception, which has yet to produce a drop of oil despite completion more than three years ago. The transportation issue is the main obstacle to full production from the project.

At issue Wednesday was whether it is economically and environmentally feasible to ship the crude oil by pipeline, the method preferred by the project’s critics.

The project, which includes three offshore platforms and a processing center at Gaviota, was approved by Santa Barbara County supervisors only on the condition that Chevron transport the oil by pipeline if that option were feasible.

In its appeal from that decision, Chevron had asked the Coastal Commission for a ruling that would allow the companies to use tankers to ship some of the project’s oil production for the next four years. The tankers would travel in established shipping lanes between the coastline and the environmentally sensitive Channel Islands.

After four years, Chevron officials said, a proposed pipeline would be completed and all of the project’s oil production--up to 100,000 barrels a day--could be shipped overland.

But Coastal Commission staff members contended that Chevron could begin shipping oil by pipeline immediately, thinning the viscous oil with a lighter grade of crude and moving it through existing unheated pipelines.

That was in keeping with the current permit issued by Santa Barbara County, which requires Chevron and the oil companies to move their oil by pipeline until they exhaust the capacity of existing lines. Those lines can carry about 40,000 barrels a day.

For their part, Chevron officials maintain that the company cannot profitably use existing pipelines to move oil. “This pipeline scheme is just not an option for us,” said Richard J. Harris, Chevron’s assistant general counsel.

At a meeting attended by about 500 people, coastal commissioners and community activists said they did not trust Chevron’s promise to build a pipeline.

“They promised us to use a pipeline in 1983,” said Thomas W. Gwyn, chairman of the commission. “I am not convinced this is a good-faith offer.”

Shipping oil by pipeline is far safer than shipping by oil, commission staff and oil industry critics said.

“If we choose hazardous and pollution-intensive tankering rather than an environmentally safer alternative--simply because it is cheaper for Chevron--we will set a precedent that will call for further environmental sacrifices along the same lines,” said Henry Feniger, a spokesman for Get Oil Out, a community group that opposes tanker shipments.