Arco to Unveil Its Cleanest Gasoline Yet : Energy: Industry observers say the company is trying to control the debate over environmental standards.

Atlantic Richfield Co. on Thursday is expected to unveil its cleanest gasoline yet--the first such fuel capable of meeting the strictest standards expected from the federal Clean Air Act and the state of California, air quality officials said Tuesday.

Officials at Arco, which has won praise for the development of cleaner-burning gasolines, declined to comment on its “EC-X� reformulated unleaded gasoline. EC-X is not expected to go into commercial production until the mid-1990s.

But officials at the South Coast Air Quality Management District who have been briefed on test data for the fuel praised it.

“We’re very encouraged by the results we’ve seen,� said Alan Lloyd, chief scientist at the AQMD. “It reduces emissions across the board; not only hydrocarbons, but also (oxides of nitrogen, a precursor to ozone). It will be a major accomplishment if they can mass-produce it.�

Lloyd did not discuss the level of possible emissions reductions.

Development of the fuel, said to burn as cleanly as some methanol-gasoline mixtures, keeps Arco ahead of the industry pack in the race to come up with lower-emission fuels. Arco was the first oil company to market a cleaner gasoline, EC-1, in 1989.

But industry observers accused Arco of trying to seize the high ground in the debate over what will be required by law to go into the gasolines of the late 1990s.

Settling on a precise formulation is tricky, because changing one component affects the rest, air quality officials said. But the stakes are high: It will cost hundreds of millions of dollars to modify the nation’s oil refining system to meet the new rules. Because every refinery is different, the amount an individual refiner will pay will depend on which formula wins.

“We and the industry agree on the ingredients, but not on the recipe,� said Bill Sessa, a spokesman for the California Air Resources Board, which sets standards for auto emissions. “If this were cookies, it would be Famous Amos against Mrs. Fields. . . . It remains to be seen how close to or far from Arco’s formulation we get with our own set of standards.�

Arco’s formulation, presumably, would require the least drastic changes to its own refining system while fulfilling the regulations. Industry observers estimated that the changes would add about 14 to 17 cents a gallon to the cost of producing Arco gasoline.

State regulators are just now studying possible recipes for regulations to be enacted in September or October. Meanwhile, the Environmental Protection Agency is developing its own regulations designed to implement provisions of the Clean Air Act passed by Congress last year.

Arco’s gasoline anticipates changes that may be required by the California Air Resources Board. The board’s requirements will exceed current and proposed federal standards. Some of Arco’s changes appear to contradict findings of other industry groups, air officials and industry sources said. For example:

* Arco’s gasoline adds 2.7% oxygen, which promotes more efficient combustion, air quality officials said. The Clean Air Act will require gasolines to have oxygen; the state has not decided whether the addition of oxygen will improve or harm air quality.

A joint auto-oil industry task force researching possible gasoline formulations last month said oxygen does not necessarily reduce net emissions of pollutants. Moreover, refiners worry that there is limited capacity to produce the necessary oxygen components, such as methyl tertiary butyl ether.

* Arco’s gasoline reduces so-called aromatics, reactive hydrocarbons that contribute to the formation of ozone, to 21.6% from an industry average of about 35%, air quality officials said. The state has discussed a cap of around 25%; the Clean Air Act similarly requires reductions in the chemicals. The auto-oil task force also questioned the value of aromatics reductions.

* The gasoline would cut levels of benzene, a carcinogen, to 0.8%, compared to an industry average about twice that. The state has discussed a requirement around 0.8%.

* The gasoline would reduce sulfur to 41 parts per million, compared to an industry average of about 350 ppm. The state is eyeing a requirement of around 150 ppm.

* Vapor pressure, a measure of volatility, would be cut to 6.7 pounds per square inch, compared to industry averages around 9 to 10 psi. The state is discussing a requirement of around 7 psi.

* Olefins, another reactive hydrocarbon, would be cut to 5.5%, compared to an industry average of around 10%. The state is mulling a standard of around 10%.