Kern Gusher Blog

Thursday, Jun 26 2014 07:53 PM

Oil conference focuses on overlooked Kern resource

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    By Casey Christie / The Californian

    An oil pump jack is hard at work around sunset next to the bike path in Bakersfield.

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BY JOHN COX Californian staff writer jcox@bakersfield.com

The often-overlooked stars of California oil production -- diatomaceous rock formations responsible for billions of barrels produced in Kern County alone over the past century -- stole the spotlight at an industry event Thursday in Bakersfield.

Oil and gas representatives who had learned Wednesday during the first day of the two-day conference about the little understood Monterey Shale oil formation, turned their attention Thursday to the vast potential of fields such as Belridge, Cymric, Lost Hills and Midway-Sunset.

Though long valued locally for containing many millions if not billions of barrels of crude, the nation's oil industry has tended to forget what's known locally as the diatomites. That's partly because they're tricky to exploit, but some suspect it's also because fewer than a dozen companies produce oil on them.

Thursday, though, representatives of Chevron and Santa Barbara County-based Santa Maria Energy showcased technological advancements that have made the diatomites safer and cleaner to work on amid expectations of new regulations.

The Texas chairman of the third annual Tight Oil Reservoirs California 2014 conference in Bakersfield was impressed. Drawn to California because of the "dangling carrot" that is the Monterey Shale, he said he was surprised to learn so few companies have invested in the diatomites.

Calling Midway-Sunset and other local fields "sort of a niche investment," Timothy Smith, the president of Houston-based Petro Lucrum, said he planned to look more closely at the diatomites.

"The question is, what are the barriers to entry?" he said.

While much of the acreage has been tied up by companies like Chevron and Bakersfield's Aera Energy LLC, an executive with Santa Maria Energy said there is reason to believe diatomaceous formations remain to be tapped in western Kern.

The diatomites are so named because of the tiny marine organisms -- diatoms -- deposited millions of years ago in western Kern County and Santa Barbara County.

Geologists believe these relatively shallow deposits gradually filled with oil from the Monterey Shale, a much deeper "source rock" that has attracted substantial investment in Kern County in recent years thanks to an official estimate that it contains some 14 billion barrels of oil. Federal experts recently slashed that estimate by 96 percent, though local companies maintain the formation will be lucrative.

Producing in the diatomites is tough because it generally requires an unconventional approach. At Midway-Sunset, for example, the most common technology is called cyclic steaming, also known as "huff and puff," or "steam fracking." The process injects steam at high pressure over a several-day period, lets it soak for a few days and then draws oil from the same well.

The technique became a focus of state oil regulators about 2011, initially because steam used in the procedure was rising to the surface and carrying with it oil and rocks that in some cases were flying hundreds of feet away.

A Chevron construction supervisor was killed at Midway-Sunset that same year when ground beneath him suddenly gave way and he was sucked into a sinkhole. State investigators linked his death to nearby cyclic steaming, a faulty oil well and attempts to drain oil that had seeped to the surface. They issued emergency orders including constant monitoring of steam injection pressures.

State regulators plan to introduce a comprehensive set of rules for cyclic steaming within the next two years. In the meantime, oil engineers have come up with their own solutions, including some discussed Thursday by a Chevron engineer.

Petroleum engineer Ramon Elias, a vice president at Santa Maria Energy, said his company has experienced almost no seeping at its project in Santa Barbara County. He called the Chevron supervisor's death an isolated event that would not happen with techniques used now.

Elias said California's diatomites could contain as much as 80 billion barrels of oil, though he estimated their reserves at closer to 25 billion. He said Santa Maria hopes to partner with outside investors on a major expansion of its work on the coast.

He offered a simple explanation of why the formations have not generated much interest outside California.

"Because it's so tightly held by a few companies," he said, "there's not as much talk about it."

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