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 SAN FRANCISCO, Sept. 9 /PRNewswire/ -- Chevron (NYSE: CHV) has approved investments of nearly $1 billion to equip its two California oil refineries to produce "reformulated gasolines," the company announced today.
 The new fuels will meet environmental standards mandated by the federal Clean Air Act and the California Air Resources Board.
 About $370 million will be spent at the Richmond Refinery, near San Francisco, and another $580 million at the El Segundo Refinery, near Los Angeles, according to Bruce Frolich, vice president of manufacturing for Chevron U.S.A. Products Co. Final permits are being sought for the construction, which will be done over the next three years.
 "These projects, combined with our other initiatives, demonstrate Chevron's commitment to remain a leading gasoline supplier long-term," said Frolich.
 "The projects also show clearly that setting up to make environmentally improved gasolines will be very expensive. We want consumers to recognize that these kinds of mandated investments -- and the higher ongoing costs of making reformulated gasolines -- will likely mean higher fuel prices in the future."
 Frolich noted that a National Petroleum Council (NPC) study released Aug. 30 predicts that in areas which must meet federal Clean Air Act requirements, gasoline costs will rise about 10 cents a gallon in 1995 and another 3 cents by 2000. Cost increases for California -- where even-stricter rules cover the entire state -- could be an additional eight cents.
 The NPC study, prepared at the request of the U.S. Secretary of Energy, said U.S. refinery investments for reformulated gasoline facilities and other environmental projects 1991-2000 will reach $37 billion -- $6 billion more than the current book value of the refineries themselves. This likely will seriously strain all refiners, drive some out of business and force others to consolidate their networks. Chevron, for example, recently announced plans to sell refineries in Philadelphia and Port Arthur, Texas, partly due to mandated environmental investments at its other six refineries.
 Reformulated or "clean" fuels, which produce lower levels of pollutants, are the latest generation of gasolines and diesel fuels. Refined from crude oil, they evolved as regulations reduced or removed components such as lead, sulfur, benzene and aromatics, and added components such as oxygenates.
 "Newer, more efficient cars, and improved gasolines have already been widely credited for helping reduce urban air pollution," said Frolich. "As Chevron and other refiners make the necessary investments for reformulated gasoline, the nation will move into a period where these 'future fuels' will meet most transportation and environmental requirements well into the next century."
 In addition to the two big environmental projects, Chevron also approved a $290 million upgrade of the Richmond Refinery's fluid catalytic cracking ("FCC") unit. The upgraded facility will employ new instrumentation and computer technology to boost yields of gasoline and jet fuel while also improvie?ration and reliability of the refinery. The facility will also use state of the art technology to produce stocks required for the new cleaner-burning fuels.
 The Richmond Refinery is capable of processing up to 235,000 barrels of crude oil daily. The El Segundo Refinery can process up to 255,000 barrels daily. The refineries, among the largest in the nation, together provide about 20 percent of California's gasoline.
 Chevron U.S.A. Products Co., a wholly owned subsidiary of San Francisco-based Chevron Corp, operates one of the nation's largest networks of refineries and service stations.
 -0- 9/9/93
 /CONTACT: Jim Hendon of Chevron, 415-894-0108/

CO: Chevron Corp.; Chevron U.S.A. Products Co. ST: California IN: OIL SU:

TM -- SF008 -- 0354 09/09/93 13:20 EDT
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Publication:PR Newswire
Date:Sep 9, 1993
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