2 Senators Accuse U.S. of Draining Strategic Oil Pool

Two senators charged today that they have uncovered the “smoking gun” proving that the Department of Energy is jeopardizing the nation’s strategic oil reserve by pumping oil too fast from a California well.

Sens. Lloyd Bentsen (D-Tex.) and Albert Gore (D-Tenn.) called a news conference to release a Department of Energy inspector general’s report that charged the department is producing oil at California’s Elk Hills Reserve at far too fast a rate.

The overproduction, they said, could lead to the loss of 91 million to 128 million barrels at the reserve because the rapid rate of production is causing the oil to thin out and drain into pools from which it might not be recovered.

Gore speculated that the reason for the overproduction is the Reagan Administration’s desire “to maximize short-term revenue” during a time of huge deficits. He also said that Chevron, which owns 22% of the Elk Hills reservoir and has 50% of the voting rights, was pressuring the government to keep production high.

The two senators released letters they wrote to U.S. Comptroller General Charles A. Bowsher, asking him to investigate the situation, and to Energy Secretary John S. Herrington, asking him to suspend production at Elk Hills pending the outcome of the investigation.

“Never before have we had the smoking gun, and this IG report is the smoking gun,” Gore said. “This is a major outrage.”

They said that since 1979, the department has produced oil from Elk Hills at rates that far exceed the maximum effective rate of production that had been determined by its own consultants and engineers.

“This excessive production is damaging reservoirs and isolating reserves, causing the recovery of from 91 million to 128 million barrels of oil at Elk Hills to be placed at risk,” Bentsen said. “One-half that total, from 45 (million) to 65 million barrels of oil, with a value of at least $600 million at today’s depressed oil prices--has already been lost.”

Gore added that production rates at Elk Hills are now at about 120,000 barrels a day when they should be at about 30,000 barrels a day.

“I don’t understand why the department has continued overproduction against the advice of its own technical experts and in the midst of on oil glut,” Gore said.

He called the production levels “mismanagement of the worst sort” and said that whoever made the decision to pump so much oil from the reserve “had abominable judgment.”