W. COAST TANKERING VS. PIPELINES TIFF REVIVED

The tankering vs. pipelines controversy has flared anew on the U.S. West Coast.

Units of ARCO and Celeron Corp. have offered still more claims that their onshore pipeline systems are viable alternatives to tankering in moving crude from giant Point Arguello field off Santa Barbara County, Calif., to Los Angeles refineries.

However, Chevron Corp., lead partner in the Point Arguello project, has again insisted the pipelines' proposals are infeasible and pose a greater environmental threat.

The $2.5 billion Point Arguello project, which would produce as much as 1000,000 b/d of oil, has been stymied for more than 3 years in a dispute with county and state officials over how the crude would be shipped to market (OGJ, Dec. 3, 1990, p. 25).

Meantime, Trans Mountain Oil Pipe Line Corp. will pursue permitting for its proposed $550 million crude pipeline to serve northern Puget Sound refineries and eliminate crude tankering in the sensitive area off Washington (OGJ, Feb. 11, Newsletter).

ARCO CLAIMS

ARCO unit Four Corners Pipe Line Co. said its 14 in., 118 mile Line 63 will be able to transport Arguello crude from the San Joaquin Valley to Los Angeles basin refineries by midyear start-up.

The line has been operating at substantially less than throughput capacity for several years because of declining San Joaquin Valley production. Four Corners said Line 63 could accommodate 40,000 b/d of blended crude from the coast.

Arguello crude could be moved from the Gaviota area in Santa Barbara County to the San Joaquin Valley via Celeron Corp.'s All American Pipeline (AAPL). After blending at AAPL's Pentland station in Kern County, Line 63 would take Arguello crude at its Kelley pump station south of Bakersfield.

This week Four Corners will file a tariff for blended Outer Continental Shelf crude. It proposes a tariff of 79/bbl from Kelley pump station to the Chevron El Segundo refinery on the common carrier Line 63.

Further, Four Corners proposes a long term solution enabling pipeline transport of unblended OCS crude to the Los Angeles area. It would reverse and modify another common carrier system, Line 90, at a cost of about $30 million to accommodate crude from Point Arguello and Exxon Corp.'s expanded development of Santa Ynez Unit. The Line 90 proposal could be available within 3 years, Four Corners said.

Four Corners currently moves about 70,000 b/d of blended San Joaquin Valley crude to the Los Angeles basin via Line 63 and the smaller Line 1. With modifications, the 110,000 b/d capacity system could handle 40,000 b/d of blended Arguello crude using surplus capacity and could move another 10,000 b/d with further modifications, Four Corners said. It expects Arguello crude to be blended with lighter crudes, condensates, or natural gas liquids by other parties prior to delivery to Four Corners.

Line 90 is a 16 in. system moving Alaskan North Slope (ANS) crude from southern California to the Midcontinent and U.S. Gulf Coast. Four Corners expects the surplus of ANS crude delivered to the West Coast will disappear within the next 3 years, making Line 90 available for moving OCS crude.

A modified Line 90 could transport about 100,000 b/d of unblended OCS crude from an existing link with AAPL at near Cadiz, Calif., to the Los Angeles basin. Four Corners said expansion of Line 90 capacity to 150,000 b/d is feasible. Peak Point Arguello output is expected to be at least 80,000 b/d. Santa Ynez Unit production is expected to reach 90,000 b/d.

Meantime, Celeron cited a study by SRI International, Menlo Park, Calif., it contends supports Santa Barbara County's position that pipeline transportation of Arguello crude is a reasonable alternative to tankering.

Celeron also disputed Chevron claims that blending Arguello crude would create problems in Kern County, contending diluents are commercially available and widely accepted.

CHEVRON REBUTTAL

Chevron blasted Four Corners' proposal as "nothing new" and "reminiscent of bait and switch tactics, only this time the environment suffers."

Chevron claims the Four Corners proposal not only would not accommodate maximum Arguello output, but would "guarantee significant adverse environmental impacts endangering the health and safety of residents of Kern and Los Angeles counties."

"Four Corners' proposal scrupulously avoids stating where the diluent blend stock will be obtained to make their scheme work. Representatives of AAPL, who have yet to obtain permits for, let alone build a connection between the two pipelines, have acknowledged that due to scarcity of blend stock in the San Joaquin Valley, they would import foreign condensates on tankers, offload those tankers in Los Angeles or Long Beach, and then use tanker trucks-thousands a year-traveling through the streets of Los Angeles and up the already crowded interstate freeways to Kern County," Chevron said.

"The alternative, using scarce volumes of San Joaquin Valley crude, has already been objected to by independent oil producers and elected officials in Kern County, because it would lead to artificially high prices for that blend stock, causing independent producers either to shut in existing production of their heavy crudes or use tanker trucks rather than pipelines to transport their oil to Los Angeles, adding still further truck traffic in Kern and Los Angeles counties."

Chevron cited an environmental assessment of the blending scheme by Radian Corp. It concluded the scheme during 4 years could result in "numerous deaths and injuries" from the 28 trucks/day expected to carry displaced heavy crude from the San Joaquin Valley to Los Angeles. Further, emissions of nitrogen oxides and sulfur dioxide would add to air pollution levels in both counties, Chevron said.

PUGET SOUND LINE

Trans Mountain will proceed with an application to Washington to construct a line that will eliminate crude oil tankering in northern Puget Sound.

The company said its outlays of $1.5 million on environmental and feasibility studies support its contention the pipeline project is economically feasible, technically achievable, and environmentally preferred to crude tankers in Puget Sound.

Trans Mountain plans to submit its formal application to the state Energy Facility Site Evaluation Council (Efsec) by November 1991.

Trans Mountain's Low Point pipeline project calls for installing two offshore terminals for tanker loading and offloading at Low Point, 18 miles west of Port Angeles, Wash. From Low Point, it would lay a 36 in. inbound line supplying ARCO's 164,000 b/cd Cherry Point refinery, Texaco Refining & Marketing Inc.'s 117,000 b/cd Anacortes refinery, Shell Oil Co.'s 85,000 b/cd Anacortes refinery, and BP America Inc.'s 77,000 b/cd Ferndale refinery. Trans Mountain would lay a parallel 24 in. outbound line to tie into its existing pipeline system from Edmonton, Alta., at Burlington, Wash. The outbound line would deliver Alberta crude currently tankered from Vancouver to Low Point and thus eliminate Canadian tanker traffic in the hazardous waters around the San Juan Islands of Puget Sound.

Trans Mountain expects to spend $10 million during the Efsec permit process, with much of that earmarked for studies of pipeline construction and safety features.

Efsec has 1 year from application date to evaluate the project and make its recommendation to the governor, who has final approval.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.