Business

Thursday, Aug 02 2012 05:56 PM

Berry's diatomite oil operations 'beginning to work again'

BY JOHN COX Californian staff writer jcox@bakersfield.com

Berry Petroleum Co. reported Thursday that oil production in its Kern County diatomite properties "is beginning to work again" as it refines new approaches to drilling and steam injections in the area.

President and CEO Robert Heinemann said in an earnings conference call that not one well in the area has failed in the last four months -- a positive change from earlier in the year, when its steam work was causing oil and other fluids to seep to the surface, forcing multiple well closures.

Word of progress with the new technology is particularly welcome as the company works to increase its Western Kern diatomite production by 11 percent this year. It has drilled 300 new wells in the area this year as part of a "redesign" of its operations in the area.

Denver-based Berry is a major player in Kern's oil industry; it was based in Bakersfield until 2008 and still has substantial operations in the county.

On a day when Berry lowered its 2012 production target between 2.6 percent and 5 percent due to setbacks largely unrelated to its diatomite operations, Heinemann reported that the company has developed new ways of monitoring and controlling its diatomite steam work.

Among these are real-time well surveillance, including mechanical integrity checks, and new monitoring that allows the company to make sure steam is going to the intended injection zone.

Heinemann also said the company has recently been able to optimize the size and frequency of steam injection cycles in ways that minimize stress on wells.

Cyclic steaming, also known as steam "fracking," injects steam underground at high pressure to accomplish dual objectives: The high pressure breaks up petroleum locked in the area's diatomaceous soil, while the steam heats up and wets the ground in a way that promotes the flow of oil.

Such work in Kern's diatomite formation has been a focus of Sacramento regulators since a Chevron Corp. supervisor died in a sinkhole outside Taft in June 2011. The death brought attention to instances of seepage and oil "eruptions" in the area.

Among the measures taken by regulators after the worker's death was a ban on cyclic steaming within 150 feet of a seeping well. Later, under new leadership in Sacramento, regulators lifted the ban and allowed steaming near failed wells, providing Berry could show that the process does not cause seeping.

Even under the revised rules Berry was having trouble. It reported in April that it was unable to restart production near wells that had been shut down. It also said that turning off steam near a failed well "exacerbated the stress on the surrounding wells and locally increased the incidence of additional failures."

On Thursday, however, Heinemann reported that the shutting down of wells has not been necessary, even when drilling new wells nearby.

"We are working with other engineering companies to develop this capability that will give us full development flexibility going forward and eliminate the need to stop injection in neighboring areas as we drill new wells or replacement wells," he said.

"So in summary, our results indicate that the diatomite is starting to work again as we deliver consecutive monthly production increases in the second quarter."

Have something to share? Comment on this story
Today's Daily Deal
from
Bakersfield.com
$7.50
Daily Deal Image
Star's Cafe
$15 of Food for only $7.50 from Stars Cafe
  • Value
    $15
  • Savings
    $7.50
  • Bought
    19
Buy Now