Occidental Petroleum Announces Significant California Oil and Gas Discovery
31 July 2009
Occidental Petroleum Corporation recently announced a significant discovery of oil and gas reserves in Kern County, California.
Occidental believes there are between 150 million and 250 million gross barrels of oil equivalent (BOE) reserves within the outlined area where Oxy has drilled six wells to date to delineate the discovery. The multi-pay zone discovery area, whose areal geological extent is still being defined, has both conventional and unconventional pay zones. The bulk of the discovery’s producing zones are conventional oil and gas bearing formations.
Occidental’s interest in the discovery area is approximately 80; approximately two-thirds of the discovery is believed to be natural gas.
We believe this to be the largest new oil and gas discovery made in California in more than 35 years. It is probable that there are additional reserves outside the defined area, and it is possible that structures of this type exist elsewhere in Oxy’s 1.1 million net acre position in California. We plan to drill wells to exploit these opportunities over the next 5 to 10 years
—Dr. Ray R. Irani, Chairman and CEO
Oxy is currently the largest natural gas producer and third-largest oil producer in the state of California, where the company has produced oil and gas for more than 50 years. Oxy’s assets in the state include more than 7,500 active wells located in 90 fields, spanning 600 miles. Oxy’s California proved reserves were 708 million BOE at year-end 2008 and represent approximately 24 percent of Oxy’s worldwide reserves.
California supplies 40% of its own oil and Kern County has been a large producer in the state for a long time. One of the big challenges has been getting the thicker late stage oil out of the wells. Injecting steam and hot CO2 have been used, but they add to the cost. Now they have new discoveries to add to the production.
Posted by: SJC | 31 July 2009 at 10:08 AM
Local governments in Texas are raking in a lot of money from production taxes on the wells that produce natural gas...there is little doubt that the California legislature will be slapping Oxy with fees / taxes / royalty requirements soon...but rightfully so - they should do it (within reason).
Posted by: ejj | 31 July 2009 at 05:48 PM
There is nothing inherently wrong with taxes and fees if they are levied in the right places and go to the right causes.
We have been so conditioned to think of the word "tax" as something bad, that we do not see that roads, bridges, schools, law enforcement, fire fighting and lots of other activities we take for granted are funded by those taxes and fees.
Posted by: SJC | 01 August 2009 at 07:43 AM