Chevron Will Sell Offshore Oil Properties

Chevron Corp. said Monday that it has agreed to sell its share of the Point Arguello offshore oil project--the center of a decade-long fight with environmentalists in the 1980s and early ‘90s--along with the rest of its California offshore properties.

The sale to privately held Venoco Inc. marks the end of a saga for Chevron that began in 1981 with one of the largest U.S. offshore finds ever, off Santa Barbara, and led to a landmark struggle between the oil industry and environmentalists.

Terms of the sale were not disclosed, though analysts estimated the price tag at as much as $40 million.

San Francisco-based Chevron said the sale, which includes other offshore fields, associated pipelines and two onshore processing plants, will bring an end to its production from fields off the California shoreline.

“When the sale is complete, we will no longer have any offshore production in California,” Chevron spokesman Edward Spalding said.

Chevron, the fourth-largest U.S. oil company, will continue its onshore California operations in the San Joaquin Valley, where it produces about 122,000 barrels a day of oil equivalent.

Chevron also said Monday that it has agreed to sell its natural-gas-producing properties in the Gulf of Mexico to Houston Exploration Co. for about $85.3 million in cash.

Chevron shares fell 88 cents to close at $82.44 on the New York Stock Exchange.

The $2.6-billion Point Arguello project, one of the largest U.S. offshore finds ever with initial recoverable reserves estimated at 300 million barrels, became a symbol of the fight between environmentalists and the oil industry over drilling off California’s coast.

Discovered in 1981, the Point Arguello field was ready to start up by December 1987, but that was delayed until mid-1991 by local opposition to the use of tankers to carry the oil.

Using tankers to carry the oil to onshore refineries was hotly contested by residents of Santa Barbara, mindful of a huge 1969 oil spill from a Unocal Corp. well in the Santa Barbara Channel.

That opposition kept production below maximum levels as oil companies were forced to fight for space on local pipelines. Chevron eventually won approval to use tankers temporarily before switching to an overland pipeline.

At its peak in 1993, the field produced more than 80,000 barrels a day of oil equivalent, but that has since fallen to about 27,700 barrels.

Chevron said the sale includes its interests in five offshore oil platforms and associated pipelines, along with two onshore processing plants.

Chevron said the sale is part of the company’s strategy to focus on its core operations. Earlier Monday, Chairman and Chief Executive Kenneth Derr said capital expenditures would drop to $5.5 billion this year and stay at that level next year because of low oil prices.

Chevron holds about a 26% interest in the Point Arguello field. The other partners include Phillips Petroleum, Texaco Inc. and Pennzoil Co.

Santa Barbara-based Venoco produces oil from fields in California, Colorado, Texas and Mississippi--and from the grounds of Beverly Hills High School.

Venoco currently derives nearly half of its daily production of 10,500 barrels from offshore California fields.