Amoco Oil Co., which announced last January that it was putting its 83-year-old refinery and all of its Rainbo retail gas stations up for sale, said Tuesday that it has decided to keep those operations after all and even invest $50 million in upgrading them.

William G. Lowrie, president of Amoco, said buyer interest "did not match the value Amoco places on the operations." As a result, he said, Amoco plans to invest about $50 million over the next two years in order to meet environmental regulations on particulate matter, on-highway diesel desulfurization standards and other projects "to sustain current operations."Those operations include a 42,000-barrel-per-day refinery, three marketing terminals and 39 Rainbo gasoline outlets. Lowery said they are profitable and are expected to generate "positive cash flow . . . over the near term."

Over the long term, he said, the company would would continue to evaluate its options.

"Like many other refiners, we remain concerned about the long-term profitability of U.S. refineries due to the costly current and contemplated environmental regulations - many of which are ineffective and not based on sound science," said Lowrie.

"However, we are hopeful that through studies like the one just completed at our Yorktown, Va., refinery, we will be able to work more closely with government on regulations that are not only environmentally effective, but cost-effective as well."

Amoco employs 245 people at the refinery and three marketing terminals, as well as 70 full-time employees at its Rainbo operation. In addition, 80 jobbers in Utah, Idaho, Wyoming, Nevada, Colorado, Washington and Oregon are supplied petroleum products produced at the refinery. Employees were told Tuesday that Amoco would continue to own and operate the facilities.

"We very much appreciate the dedication of our employees and the support of our customers over the past few months," said Salt Lake Business Unit Manager Randall L. Couch. "We are going to continue to need their help as we all work very hard to be sure this remains a profitable operation for Amoco."

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In a letter to employees, Couch said the economic viability of the oil industry is being threatened by the extensive capital investments required to meet environmental regulations.

"Amoco is a staunch supporter of effective environmental protection. However, we are very concerned about regulations that are extremely costly but bring little or no benefit. The challenge we face as a nation is to be sure that we are spending our environmental capital on projects that will truly bring benefits," he said.

In January, Couch said the Salt Lake operations are "on the fringe" of Amoco's primary marketing and refining territory and might have more value to a company with a stronger focus in this region. Most of Amoco's refineries are in the Midwest and Southeast.

The nation's fifth largest oil company, Amoco said earlier it plans to spend $3 billion companywide to comply with federal health, safety and environmental laws.

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