Complications from a series of state-ordered well closures have disabled some of Berry Petroleum Co.'s operations in the Taft area and forced the company to lower its 2012 production target.
The Denver-based producer reported last week that it has been unable to restart production near wells that were shut down because of failure, meaning oil and other fluids were escaping to the surface.
"The requirement to shut in the surrounding wells reduced the number of (well) completions that we were able to bring back online," Berry stated in a Friday filing to the U.S. Securities and Exchange Commission. The filing reiterated statements attributed to Berry President and CEO Robert Heinemann in a quarterly earnings news release Thursday.
The disclosures suggest state regulators may be having substantial and potentially long-lasting effects on local oil production as they work to address seepage problems in the aftermath of last year's sinkhole death in the prolific Midway-Sunset field.
Neither Berry nor state regulators responded to requests for comment Monday.
Berry's filing does not speculate about why the peripheral wells have not come back online. But one possibility is that some have essentially frozen up after being taken off heat.
Berry employs cyclic steaming at its Midway-Sunset operations. This process, known informally as "steam fracking," injects steam underground at high pressure to accomplish dual objectives: The high pressure breaks up petroleum locked in the area's diatomaceous soil, while the steam heats up and wets the ground in a way that promotes the flow of oil.
Former state regulator Michael Stettner theorized Monday that when Berry turned off the steam, the surrounding rock may have expanded, closing off fractures.
"It's totally reasonable that what did open up would close and you may not be able to achieve that again," he said.
Stettner, a former top regulator of oil field injection projects at the state Division of Oil, Gas and Geothermal Resources, said there is always a chance that taking an injection well offline even temporarily will reduce its productivity over the long term.
"That could happen in any injection well, but particularly in diatomaceous earth formations," he said.
In another sign that DOGGR's action has had wide consequences, Berry's Friday SEC filing states that shutting down some wells but continuing cyclic steaming nearby has put additional wells out of commission.
Turning off steam near a failed well "exacerbated the stress on the surrounding wells and locally increased the incidence of additional failures," Berry stated.
The company wrote that it still expects to boost production in Midway-Sunset this year. But because of the problems relating to the failed wells, the increase will be less than it had projected by about 400 barrels a day, or 1 percent.
Another factor affecting Berry's recent production volume, according to the filing, is a "redesign" that included the drilling of 90 new wells in the Taft area since early last fall. The company wrote that when those wells were being drilled, it had to take others offline. Berry stated that these wells have since been returned to production.
In February, new leadership at DOGGR lifted a ban that had prohibited Berry from cyclic steaming within 150 feet of any seeping wells at Midway-Sunset. At least two other oil producers in that field, including Chevron Corp., have had to shut down production near wells that had been seeping or, in some cases, erupting. DOGGR has linked such activities to the sinkhole accident still under investigation by the agency.
Before Berry could resume cyclic steaming there, the company had to show that the steam does not cause oil and other fluids to seep to the surface. When it resumed production additional wells failed, and every well within 150 of that one had to be shut down as well.
In its Thursday earnings report, Berry stated that it produced 2 percent less oil and 8 percent less natural gas in the first three months of this year than during the final three months of 2011.