REGIONAL REPORT : Oil Field Resurrection : Energy: The Mideast crisis presents an opportunity for smaller, independent firms to regain share. Many once-capped operations are pumping again.

The Persian Gulf tension that catapulted oil prices into orbit has yet to send drills grinding into the California earth, but oil producers are thinking about renewed drilling and are resurrecting wells idled by a plunge in crude oil prices five years ago.

The price of California crude, a thick grade that requires more refining and in normal times fetches $5 to $9 a barrel less than Texas crude, has more than doubled since the beginning of August. However, California producers are awaiting signs that the higher prices will be sustained before committing new dollars to tapping the state’s tar-like reserves.

“There is considerable uncertainty among producers about whether prices will remain at the current levels,” said Chris Hall, president of Drilling & Production Co., a Torrance company with about 70 active wells. “Having exhausted much of their capital reserve over the last five years, companies have to be reasonably certain current price levels will continue before they will risk any capital investment.”

Walloped by a steep slide in oil prices in 1985 and 1986, producers say prices must hover around today’s levels for three to six months before they renew large-scale drilling, exploration and advanced recovery techniques.

A 42-gallon barrel from the Kern River field in the San Joaquin Valley, California’s most prolific reserve and one of the nation’s five largest, sold for about $22 last week, compared to $9 before Iraq overran Kuwait.

“It’s likened to you getting a 10% raise for two weeks,” said Carol Currie, spokeswoman for the California Independent Petroleum Assn. in Yorba Linda. “Are you going to run out and buy a swimming pool?”

Another problem is that lenders are acting cautious. Banks that financed oil exploration and production 10 or 15 years ago were badly burned when prices fell in the 1980s. They do not appear eager to commit themselves again.

But producers are scrambling to revive wells that fell victim to California crude prices, which plummeted from about $21 a barrel in 1985 to as low as $7 a barrel in 1986. Prices had peaked at $26 a barrel in 1981.

Facing recovery costs of $8 to $10 a barrel, oil producers idled marginal wells, abandoned more expensive secondary recovery methods using water and steam, and shelved exploration plans. Many slashed payrolls and became more familiar with red ink than black crude.

“Producers have been in the survival mode for the last five years,” said Hall, who described the period as “hell.”

Hall, whose company draws about 300 barrels a day of crude from Kern County reserves, closed about a sixth of his wells after prices skidded in 1985-86. He cut wages 20% and slashed staff by about a third.

The ill effects reverberated through the oil industry of California, which produces about a sixth of the crude pumped in the United States and is the fourth-largest oil-producing state.

After peaking in 1985 at around 1.15 million barrels a day, the state’s production fell sharply in subsequent years, sliding to about 1 million barrels a day last year. By March, the most recent month for which figures are available, California production had fallen to about 968,000 barrels daily.

As production declined, the number of idled wells increased. By March, more than 40% of the state’s 70,000-plus wells sat idle, up from about 30% in 1985.

But the surge in prices, if lasting, could reverse the decline, observers said. And the independent producers, more agile than integrated giants such as Chevron or Shell Oil, probably will benefit first as they beat larger competitors to the oil fields.

“We can actually operate a little more economically than the majors, and decisions are made with fewer people,” explained Terry Smith, general manager of Tidelands Oil Production Co. in Long Beach. “We have morning staff meetings when we can plan the day’s activities or the following day’s activities and start work the next day.”

By last week, Tidelands, an independent company that produces about 10,000 barrels a day--mostly from the Long Beach Harbor area--had scrambled to restart 10 wells and was preparing about eight more. Still, about 30% of its 640 wells were inactive, Smith said.

Larger companies, although restricted by the need for longer-range planning, had also reacted by last week. Chevron, California’s second-largest producer, said it will spend $20 million by year-end to drill new wells and update others in its California fields. The effort, designed after the Iraqi invasion of Kuwait on Aug. 2, is part of a $100-million nationwide program to boost production.

Prospects of a quick recovery for independents and majors, however, are dimmed by an infrastructure already straining under renewed demand. After atrophying for the past five years, it can’t provide enough drilling equipment or revive shut-down wells fast enough.

“You don’t just all of a sudden start throwing oil rigs out there,” a Chevron spokesman said.

Experienced oil workers also are scarce.

“We’ve been trying to hire, but there are just no qualified people,” said Tideland’s Smith, whose company pared its payroll from 350 employees in 1985 to 250 today. “We would like to be running three more crews on our rigs, but we cannot find qualified people to fill the positions.”

Sustained high oil prices could prove a savior for independents such as Tideland, which have lost chunks of market share to the majors in the past decade. Although the big, integrated companies could subsidize lagging production during a downturn with everything from refining jet fuel to selling candy bars at service stations, the independents have been captive to depressed well prices.

That has left the independents providing less than 20% of the state’s production, down from about a third in 1981. But the surge in oil prices is likely to help the smaller companies, at least in the short term.

“For a long time, a lot of our producers were either breaking even or in the red,” said Currie, the spokeswoman for California independents. “The increase in prices is allowing them to pay their bills.”

CALIFORNIA OIL PRODUCTION Average daily production, in thousands of 42-gallon barrels August average: 967,867 Source: Conservation Committee of California Oil Procueders

CALIFORNIA CRUDE OIL PRICES, Los Angeles Times Price of Midway Sunset crude oil in dollars per 42-gallon barrel August average: $16,226 Source: Drilling & Production Co.