State’s Oil, Gas Production Plunge : Energy: Ample supplies of OPEC crude, which is cleaner and cheaper to refine, have pushed California’s output to 1981 levels.
A market flooded with OPEC crude oil has resulted in a dramatic drop in California oil and gas production, according to the state’s Division of Oil and Gas.
In a report released Tuesday, the state said 1988 crude oil production slipped to the 1981 level of 387 million barrels, compared to 397 million barrels in 1987 and 407 million barrels in 1986.
“No one is certain how long this pricing instability will continue, but it is not conducive to investment in the (California) oil industry,” said William Guerard, technical services manager for the Department of Conservation’s Division of Oil and Gas.
California crude oil, which is dirtier and requires more costly refining than OPEC crude, is currently selling for about $13 a barrel, down from a peak price of $25 in 1981. In contrast, the United Arab Emirates’ Dubai Light closed Tuesday at $15.80 a barrel. (A barrel contains 42 gallons.)
Virtually all of the oil and gas produced in California is sold and consumed here, according to Guerard. He said the substantial decrease in statewide oil production is worrisome because California already imports about 40% of the oil products it needs. Any disruption in the flow of oil from members of the Organization of Petroleum Exporting Countries or Alaska could have a serious impact on Californians, who last year consumed 565.8 million barrels of refined oil products, according to the California Energy Commission.
The depressed domestic oil prices also put a damper on the drilling of new oil wells. According to the state’s oil and gas report, the number of new oil, gas, service and exploratory wells drilled decreased to 2,539 in 1988. from 2,638 in 1987. The number of new production wells completed dropped to 1,739 in 1988 from 2,110 in 1987.
Shell Oil Tops List
Unlike some Saudi Arabia wells, which produce 22,000 barrels of oil a day, California’s oil wells produce an average of 22 barrels a day, according to Guerard.
California’s natural gas production dropped to 403.2 billion cubic feet in 1988 from 427.4 billion cubic feet in 1987. The decrease was primarily due to a decline in the production of gas from gas fields rather than the gas that is produced along with crude oil, the report said. Although dozens of big and small oil companies have drilling operations throughout California, Shell Oil topped the list in terms of total production in 1988. Shell produced 84.8 million barrels, followed by Texaco with 49.6 million barrels and Chevron with 47.5 million, according to the division.
“About 75 to 80% of Shell’s oil is produced in Kern County through enhanced recovery methods,” said Bill Gibson, spokesman for Shell Western Exploration and Production Inc. in Bakersfield. In the most common form of enhanced recovery, steam is injected into the wells to heat up the oil and increase its flow.
