L.A.-Texas Oil Pipeline Wins Permit Extension From Coastal Agency

Pacific Texas Pipeline Co., which seeks to build a 1,000-mile pipeline to carry crude oil from Los Angeles Harbor to Texas, won a crucial battle Wednesday when the California Coastal Commission voted to extend the company’s permit for one year.

The extension was approved over the objections of several critics, who argued, among other things, that the pipeline is not financially feasible.

The firm, known as Pac-Tex, needed the extension because it has failed to begin construction on the $1.7-billion pipeline within the two-year period stipulated in the original permit. The vote for the extension was 9 to 2. Under commission rules, had only one more member voted no, the extension would have been denied and the project would have required an entirely new permit.

The permit, originally approved in March, 1986, allows the company to construct a 106-acre landfill in the harbor for its operations and to lay four miles of pipeline in the coastal zone. The extension will expire in March, 1989.

Several commission members expressed reservations about whether the project will ever be built, citing the delays and Pac-Tex’s financial problems.

“I am very concerned about the fact that there has been no fiscal evidence of progress,” said Commissioner Madelyn Glickfeld. In an interview last month, Coastal Commission Chairman Michael Wornum said he had “grave doubts” that the pipeline would be built. But both voted for the extension.

Pac-Tex President Cecil Owens told the commissioners that he expects to complete the project. “We are still viable, ready, willing and able to accomplish our purpose,” he said.

Pac-Tex suffered a setback last September from the Securities and Exchange Commission. The SEC accused Owens and Pac-Tex of committing stock fraud by allegedly raising $2 million from investors by selling unregistered stock. The complaint was settled immediately, without a denial or admission of guilt by either defendant. Pac-Tex and Owens were enjoined from selling unregistered stock.

Pac-Tex, based in San Pedro, has had to apply for hundreds of local, state and federal permits to move forward with its project. Company officials have said they have obtained all the major permits needed to begin construction.

But the work cannot begin until Pac-Tex secures financing. In the past, company officials said they had obtained an agreement from only one oil company to use the pipeline and that agreement with two companies was crucial to its feasibility. In an interview Wednesday, Owens would say only that “we are very happy with our financial arrangements.”

The 42-inch wide, 1,030-mile-long underground pipeline, which company officials estimate would take about a year to build, could carry 900,000 barrels of crude oil daily to Midland, Tex., where it would enter 14 other pipeline systems for transportation to Gulf Coast, Midwestern and Eastern refineries. The oil would come primarily by ship from Alaska’s North Slope.

Had the extension been denied, it would have generated a new hearing process and possibly raised a broad range of issues about the proposal.

In recommending approval of the extension, the commission’s staff argued that there had been no change in circumstances since the permit was approved.