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FOR IMMEDIATE RELEASE

NR 2008-13
June 24, 2008

Contact: Ed Wilson
             Don Drysdale
             Carrie Reinsimar
             916-323-1886


SACRAMENTO -- Record prices have spurred increased oil exploration in California, with many old wells being brought back into production, according to the California Department of Conservation.

Nonetheless, a gradual downward trend in the state’s oil production that began in 1995 continued in 2007, the preliminary annual report of the Division of Oil, Gas, and Geothermal Resources (DOGGR) states.

“Oil production in California is still viable, and will be for many years to come,” said DOC Director Bridgett Luther.  “However, California’s oil fields are mature. Some of them have been pumped for more than 100 years and, like all natural resources, oil fields become depleted over time.”

“No significant new oil pools are being discovered in California. Producers simply are drilling more accurately and using injection to extract the remaining oil,” said State Oil and Gas Supervisor Hal Bopp, head of DOGGR.

California’s 2007 total oil production was 243.2 million barrels (666,000 barrels a day), a decrease of 2.3 percent from 2006 and the state’s lowest production since 1941. The state’s three largest fields (Midway-Sunset, South Belridge and Kern River), all in Kern County, accounted for nearly half of the total production. California oil production peaked at 423,857,903 barrels in 1985.

California ranks fourth nationally among oil-producing states, behind (in order) Louisiana, Texas and Alaska. The state’s onshore wells produced 203.8 million barrels in 2007. Wells in state-controlled offshore fields produced 14.7 million barrels and those in federal offshore fields produced 24.7 million barrels.

DOGGR estimates that there are at least three billion barrels of crude oil in reserve in California. Bopp said that figure is based on what’s “economically feasible” to recover, noting that given the current price, “We might have to adjust that figure upward.”

Even with triple-digit prices for crude oil, DOGGR expects California oil production to stay flat. “Drilling activity has increased significantly, but it’s limited by the number of available drilling rigs and crews, which are in high demand,” Bopp said.
“Also, in acquiring permits for new wells, operators confront challenges in dealing with environmental issues and, in many parts of the state, drilling in urban locations.”

As of December, 2007, California had about 50,900 producing wells compared to 49,900 at the end of 2006. The number of wells drilled and the total footage drilled were up compared to 2006: 3,451 new wells totaling about 9 million feet in 2007 compared to 2,396 wells and 7 million feet in 2006.

“In 2008, the trend toward more activity in the state is continuing,” Bopp said. “It may not be a gold rush, but it’s certainly reflective of the high price of crude. We’re seeing more notices to drill and to rework; that is, to bring old, idle wells back into production.”
As of June 14, 1,978 new drilling notices and 1,609 rework notices had been filed with DOGGR. The totals for the same time frame in 2007 were 1,675 and 1,406, respectively.

Natural gas production in California declined for the sixth consecutive year, falling from 320.7 billion cubic feet in 2006 to 312.2 billion cubic feet in 2007.  DOGGR estimates that California has more than three trillion cubic feet of natural gas in reserve. Peak gas production was 714,894 billion cubic feet in 1968.

California produces about 33 percent of the crude oil and only 15 percent of the natural gas that it consumes. More information about California’s oil and gas production can be found here.

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