Oxy moves fast, keeps mum on oil discovery
| Thursday, Jul 23 2009 07:33 PM
Last Updated Thursday, Jul 23 2009 07:36 PM
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As new details emerged Thursday about Occidental Petroleum Corp.'s discovery of a large new oil field in Kern, local oilmen voiced optimism that the find could stimulate local drilling work -- including among independents hoping to strike it rich.
Oil producers anxious to learn the field's location still had little to go on, though a spokesman for Chevron, indicated late Thursday that it's in western Kern County. Chevron owns a 20 percent stake in the find.
Earlier in the day, Los Angeles-based Oxy suggested that it plans to move quickly to tap the field, drilling an additional 17 wells (costing roughly $4 million apiece) this year. It said in a morning conference call that "lifting" the site's oil and gas reserves will cost the company "significantly less" than $10 a barrel -- a price considered very low in the industry.
Oxy's oil and gas production at the site more than doubled between the first and second quarters of this year to surpass the equivalent of 17,000 barrels of oil a day, company executives said in the conference call.
Oxy's discovery is believed to be the largest in California in more than 35 years. It is expected to provide jobs for oil workers at many levels. The industry estimates that every well drilled supports 70 jobs.
County Assessor Jim Fitch said the find could also generate millions of dollars a year in new property tax revenues for Kern, though he added county officials have a lot to learn about the property's potential before a value can be set.
Some speculated Thursday that Oxy tipped its hand slightly by saying that it plans to expand its Elk Hills gas processing plant to accommodate added volume from the site.
"I would think it would be in the vicinity" of Elk Hills, said Alan Pounds, local director of business development at Nabors Well Services Co. "They wouldn't want to ship gas very far."
Others said that's not necessarily true. Oxy could establish a long pipeline to the plant, which some said might be less expensive than building a new plant closer to the site.
"Pipelines could go a long way," said Les Clark, vice president of Bakersfield's Independent Oil Producers Agency.
Local oil producers are anxious for any details about the site's location in hopes that they might be able to drill nearby. Oxy has said there may be additional reserves to be found in adjacent properties.
Said Pounds: "Once they (Oxy) disclose where it's at, operators that own properties around it will definitely pay close attention."
Oxy's reticence to provide details about its discovery is not surprising, said Joe Sparano, president of the Western States Petroleum Association trade group.
"This is not unusual at all, in my experience," he said, "that a company is very careful and smart about what they release and what they tell."
