Arco to Offer Its State Oil Output to Mobil-Shell Venture

California’s small club of oil producers has lost another long-standing member, boosting the market power of a Mobil-Shell joint venture and leaving the smaller local companies with fewer growth opportunities, industry experts said Wednesday.

In a swap announced Tuesday, the state’s fifth-largest producer, Atlantic Richfield Co., agreed to trade most of its California production to Mobil Corp. for offshore fields in the Gulf of Mexico. The move is the latest in a series of acquisitions and departures to hit the state, whose annual production has dropped 20% since its peak more than a decade ago.

Aera Energy LLC, Mobil’s joint production venture with Shell Oil Co., will acquire Arco’s 40,000 barrels a day of California output, giving it more than 300,000 barrels a day of output. That is more than twice the production of its nearest rival, Texaco Inc., and double the output of all small independents producers combined.

“There’s less of an opportunity for other independents to grow,” said Dan Kramer, executive director of the California Independent Producers Assn. “In California, you grow not by exploration but by acquisitions.”

Kramer said Aera also would look to acquire more fields in California. Aera spokeswoman Susan Hersberger declined to comment on specific plans but said, “The market is changing in such a way that there is room for all types of producers.”

Arco still has an extensive refining and marketing operation on the West Coast--its main retail market--and has no plans to shift its headquarters from Los Angeles.

In general, declining production and a recession in the early 1990s have forced a decade of consolidation upon the state’s oil producers and refiners.