Arco Lowers Cost Estimate of Stricter Clean Air Rules : Pollution: Company cuts $200 million from cost of upgrading its L.A. refinery to meet 1996 deadline.

Atlantic Richfield Co. has lowered by as much as $200 million the estimated cost of improving its Los Angeles refinery to meet stricter clean air standards.

Arco and other refiners face substantial costs to modify their Southern California facilities to produce cleaner-burning reformulated gasolines to meet a California-mandated deadline of March, 1996.

Refineries also face capital costs to meet more stringent air-pollution standards imposed by the federal government and the South Coast Air Quality Management District.

“Our estimates . . . have been progressively and materially declining,” Arco Chairman and Chief Executive Lodwrick M. Cook said at the company’s annual shareholders meeting in Los Angeles.

Arco estimated in 1991 that it would have to spend $800 million to $1 billion through 1995 to upgrade its Los Angeles refinery. Cook said “the picture is a little clearer” now as to how the laws will be applied, allowing the company to lower its projected costs to no more than $700 million between now and 1997.

Bill Sessa, a spokesman for the state Air Resources Board, said other refiners have also been projecting lower costs for meeting clean air rules. “We’ve been lowering our estimates too . . . as much as 50% from when we made the rule.”

Sessa noted that refiners have leeway to produce a reformulated gasoline that can most efficiently be made by their particular refinery, as long as it meets ARB’s pollution standards. Also, improvements in refining technology have cut costs since ARB adopted the reformulated gasoline requirements.

Original ARB estimates were that reformulated gasoline would cost 12 cents a gallon more for refiners to produce. ARB has now lowered that to 6 cents a gallon, Sessa said.

As to air emissions, Bill Kelly, a spokesman for the AQMD, said that in part because of complaints by Arco, “there has been some refinement of the method by which the emissions are measured or estimated.”

Overall pollution-reduction goals are the same. But each refiner has now been assigned an individual reduction rate, based on past emissions history and recent efforts to improve.

“They’re pleased with where they came out, with where they were before,” Kelly said.