Spurred by $20-plus/barrel oil prices, robust economic growthand a deep-well exploratory blowout that lasted for months,optimism is growing in California’s central valley oil patch inKern County near Bakersfield.

How much, if any, new gas supplies will emerge is anyone’sguess, but the outlook seems promising with majors such asOccidental, Chevron, Texaco and others joining independentsbankrolled by Canadians who have long eyed this part of the Westfor new supplies.

“Certainly this last quarter has been extremely active,particularly compared to the first quarter when oil prices were atall-time lows,” said David Clark, a principal permitting officialin the state’s oil/gas department. “Twenty-dollar-plus-a-barrel oilnow means there is a lot more confidence in the industry. The priceis up and has stayed up.”

A private sector petroleum geologist who has worked extensivelywith Elk Hills and the larger Kern County production fields said itis logical that the “very market-oriented” independents and thesecrecy-oriented majors both have reason to be optimistic about theprospect for additional supplies in one of the nation’s oldest andmost thoroughly drilled regions. While deep drilling (below 15,000feet) has been the focus in recent months, no one knows whatprecise depths are being looked at, according to the LosAngeles-based petroleum-geology consultant.

“In general, the Lost Hills well [with blowout at depths below18,000 feet] has created a lot more interest in the area,” thegeologist said. “There is a lot of new technology available thathelps narrow down the prospects (even in reworked, older wells),but there is still no guarantee, although certainly things haveimproved.” Occidental Petroleum’s officials at Elk Hills aredownplaying any optimism at this point, confirming that they haveentered a suspended exploration well – a 1970s 24,000-footstructure – and they are drilling a developmental well in anexisting reservoir. “It sounds exciting, but there is not much toit,” said Oxy’s Elk Hills spokesperson.

The geology consultant said Oxy has “nothing to lose andeverything to gain” from reworking some of the formations thatalready had been looked at since the incremental cost to do so isvery minimal. “If on a second look they find there is someproduction to be made, it is all profit. Occidental has done somestuff up-hole; turned it into horizontal drilling in an area calledthe Stevens at the shallower levels (under 10,000 feet),” thestate’s Clark said.

“We have seen a lot of new drill activity in thewell-established fields. I think with the horizontal drillingtechnological improvements, we are seeing a lot of re-entry. Thetechnology alone has grown in leaps and bounds in recent years.”Nevertheless, in classifying the really deep prospects for new gassupplies, Clark refers to them as “highly speculative” potentialnew supplies. The major question is what the well blowout reallymeans? Everyone agrees that gas blowouts can be “misleading.”

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