In the wake of a well blowout and fire that burned for months inthe oil/gas saturated area between Bakersfield and the Elk Hillspetroleum reserve, a flood of small and medium-size Canadianbackers have moved into this old production region 100 miles northof Los Angeles, betting that new significant pools of natural gascan be found with deep-drilling below 15,000 feet.

A relief well drilled to eventually stem the well fire isestimated to be flowing supplies at the rate of 50 MMcf/d,according to independent producer and long-time Bakersfield-basedplayer, Lynn Blystone, president/CEO of Tri-Valley Corp., apublicly held E&P company.

More objective, independent petroleum geological consultantsconfirm that there is a lot of speculation on the deep-lyingsupplies, but they caution the area is located on a “geologic fold”that creates a lot of uncertainty. They think the optimisticspeculation is warranted, but caution that the area is not welldefined.

“This is the biggest onshore oil/gas play in North America righttoday,” said Blystone, whose company has secured $9.5 million,mostly from 10 Canadian partners, for initial exploratory drilling(Project Ekho) that he hopes to start before the end of this month.

Blystone and others confirm that the well blowout last November— stemming from deep drilling — proves there are largepotential oil and gas flows at the greater depths.

Blystone said encouragement also came from earlier drilling atgreat depths at nearby Elk Hills, the former Naval oil reserve nowmajority owned and operated by Occidental Petroleum, and from thefact that it has been a very un-explored part of the huge oil/gasbasin comprising the southern San Joaquin Valley, which stillproduces twice as much oil daily as the state of Oklahoma. (Of morethan 100,000 wells drilled in the Bakersfield area in its nearlycentury-long production history, only 65 of these have been atdepths below 15,000 feet, Blystone said.)

The first exploration group – also with a majority of Canadianbackers and a Denver-based developer/operators, Armstrong Resourcesand PYR Petroleum – is being watched very closely by Blystone’sproject because it is expected to prove up the 50 MMcf/d volumesfrom the first well in the near future, and two adjacent wells alsohave been started.

“Conventional wisdom was that there was no porosity orpermeability below 15,000 to allow a commercial well to come in,”Blystone said. “We found some information that was contrary to thatand we started putting a project together. Then, this other outfit(Armstrong) came in, took a bunch of land from Chevron andencountered super high pressures.”

The prospect of new significant gas supplies here and thegreatly increased gas production at Elk Hills since it was sold toOccidental last year hold an indirect impact on the ongoingstatewide natural gas industry restructuring and the planning forgas-fired merchant power plants in California. State regulators,utilities and various energy developers are keeping a close eye onthe old production fields in the southern end of the state’smassive central valley region.

Richard Nemec, Los Angeles

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