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Oxy California Spin Off Drops Drilling Plan in SoCal Suburb

Citing depressed oil prices, California Resources Corp. (CRC), the recently spun off statewide operations of Occidental Petroleum Corp. (Oxy), decided Monday to pull the plug on a controversial proposal to step up directional drilling from a small wellsite in the Los Angeles suburb of Carson, CA.

With U.S. crude prices down more than 50% since last June, CRC officials decided to withdraw plans before the Carson City Council that dated back to 2012 and have alternately fostered backlash and the renewed support from local residents (see Daily GPI, May 2, 2014).

Last year, while still part of Oxy, CRC officials told Carson residents that hydraulic fracturing (fracking) was not a part of their plans to drill up to 202 new wells (two test, 130 production, 65 saltwater injection, four saltwater production, and one slurry injection) and build an oil/gas treatment facility and various water infrastructure on a 6.5-acre site.

Carson City Manager Nelson Hernandez told NGI on Tuesday that the city council had not made a decision on CRC's drilling project, and that it would not have any comments regarding the exploration and production (E&P) company's decision to withdraw the project. There are no plans for the council to pursue the issue any further, Hernandez said.

Carson sits over the mature Dominguez Oilfield, which has had more than 600 wells drilled and 270 million bbl of crude produced since its founding in 1923. Originally proposed by Oxy, CRC proposed to drill more than two miles deep and horizontally, estimating it could produce up to 6,000 b/d of oil and 3 MMcf/d of gas in the old field as it has been doing in recent years in the nearby Wilmington Field (see Daily GPI, March 20, 2014).

In its original proposal, the E&P said that directional drilling techniques would be used to pinpoint oil reservoirs at depths of 4,000 to 13,500 feet, and no fracking was planned.

"CRC has concluded that our proposed Dominguez energy project is no longer practical in the current commodity price environment, and we are asking the city to stop processing the project," said Margita Thompson, CRC's vice president for communications. The company intends to maintain its 700-employee work force in the region, Thompson said.

Last March, Carson's city council set a 45-day ban on oil/natural gas drilling as it considered Oxy’s plans. The ban could have extended up to two years, but ultimately was dropped.

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