(Bloomberg) -- A pipeline the oil market had all butforgotten resurfaced like a painful memory last week, spilling 500barrels of heavy oil into the Pacific Ocean.

Line 901. A quarter century ago, it was a pipeline full ofpromise. Today, it’s full of -- not much, really. Before it leakedon May 19, pouring viscous crude into the waters off California’scoast, the 24-inch line was schlepping 28,800 barrels a day, mostlyto a small refinery near Santa Barbara, at less than a fifth of itscapacity.

It’s a relic from another time, an era that peaked in the 1990swhen drillers dove into the waters off California’s coast chasingbillions of barrels lying beneath the ocean floor. The state wasproducing so much crude back then that a larger pipeline was builtto send California’s offshore oil to Texas. Today, KinderMorgan Inc. has a plan to revive that link -- to sendTexas oil to California’s refiners.

“This line is a remnant, from when huge volumes ofCalifornia oil were supposed to materialize and neverdid,” David Hackett, president of energy consultant StillwaterAssociates in Irvine, California, said of the Plains All AmericanPipeline LP system that leaked. “Now the shale revolution’s changedeverything. We’re seeing dramatic increases in productionelsewhere.”

In 1969, a blowout at a Union Oil platform dumped anestimated 80,000 barrels of crude off the coast of Santa Barbara inwhat was then the worst spill in U.S. history. Ensuingmoratoriums helped cut the state’soffshore oil production to a fourth of its August 1995peak at 204,000 barrels a day.

‘Finite Resources’

“There are a number of reasons production falls, but there areplatforms that have shut since then, and these are finiteresources,” Sheri Pemberton, chief of external affairs for theCalifornia State Lands Commission, said by phone May 26.

California’s total oil production peaked at 1.11million barrels a day in February 1986. Environmental battles andthe unique challenge of boring through uneven layers of rock havecurbed new drilling as flows from legacy fields peter out.

Last week’s spill may be another blow toCalifornia oil production, with environmentalistsincluding Food & Water Watch calling on policy makers to phaseout drilling in the state altogether. Plains All American spokesmanBrad Leone declined to comment, saying the company is focused onits response to the spill.

Total Output

The drop in oil production in state waters has slowedin the past few years and actually rose in 2013 by 3,000 barrels aday to about 40,000, state data show. Companies have been usingtechnological improvements such as directional and extended-reachdrilling to keep platforms alive, according to the CaliforniaEnergy Commission.

West Texas Intermediate for July delivery added 21 cents to$57.72 a barrel in electronic trading on the New York MercantileExchange at 1:34 p.m. Singapore time.

“Bringing additional wells online can and did increase totaloutput from state waters,” Gordon Schremp, a senior fuelsspecialist at the energy comission, said by e-mail on May 26.

Those wells face stiffer competition than they did 25 years ago.California’s oil refiners have brought in record volumesof cheap oil by rail and barge from shale formations suchas North Dakota’s Bakken and Colorado’s Niobrara. In 2012, NorthDakota surpassed California and Alaska to become the nation’ssecond-biggest oil producer.

Canadian Oil

Crude from Canada’s oil sands is also showing up atCalifornia’s plants, as well as the occasional Texas barrel.

That’s where Kinder Morgan’s Freedom pipeline comes in, theproject that would revive the path that once carriedCalifornia oil to Texas. Kinder hasn’t provided an updateto the market on the Freedom project since saying it was gauginginterest from potential customers and shippers, company spokesmanRichard Wheatley said May 27.

“It’s interesting how these pieces of pipe in the ground getrepurposed, isn’t it?” Hackett asked. “If this one’s actually done,it’s going to be just one in a long line of pipes that are beingrepurposed in ways that nobody could have ever anticipated.”

--With assistance from Robert Tuttle in Calgary and Esme E.Deprez in Santa Barbara.

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