July 23, 2009

Occidental finds major oil, gas field

Occidental Petroleum Corp. says it discovered a major new oil and gas field in one of California's oldest oil-producing regions.

The field contains the equivalent of 150 million to 250 million barrels of oil and gas, the company said.

Chairman and Chief Executive Officer Ray Irani called the find the largest new oil and gas discovery made in California in more than 35 years.

Located near Bakersfield, in a southern Central Valley county that first began producing oil in 1899, the field contains about one-third oil, which brings a higher price than gas, Occidental said.

Oil prices have risen 47 percent since January, while natural-gas prices are down 33 percent, The Wall Street Journal reported.

Occidental, which said the find could add up to 6.7 percent to its oil and gas reserves, owns 80 percent in the Kern County field. Chevron Corp. of San Ramon, Calif., owns the rest.

An Oppenheimer & Co. analyst called the oil and gas field all the more valuable to Occidental, of Los Angeles, because they don't have to travel far.

They don't have to negotiate complicated agreements with foreign governments, senior energy analyst Fadel Gheit told the Los Angeles Times. Basically, they will be drilling in their own backyard.

Occidental is California's third-largest oil producer and top natural-gas producer.

The company said it believed similar fields probably existed elsewhere on the 1.1 million acres it controls in the state.

California oil production has fallen 46 percent from its 1985 peak of nearly 1.1 million barrels a day, the Journal reported. Natural-gas production has fallen 38 percent.