California issued the final approval needed for Venoco Inc., Denver, to install the onshore portion of a pipeline to transport crude oil from the company’s South Ellwood field in the Santa Barbara Channel.
The pipeline project, 3 years in the permitting process, will eliminate the use of a barge and should allow the company to add at least 7 million bbl of currently unbooked reserves, Venoco said. The company is ready to begin laying the pipeline.
Tim Marquez, Venoco chairman and chief executive officer, said, “Once we have the pipeline in service and new contracts in place, we expect to realize $5-$7/bbl more on the approximately 2,000 b/d of production.” The price differential results from reduced transportation costs and a greater number of refineries to which Venoco can market the oil.
Meanwhile, Venoco hiked its capital spending forecast to $250 million from $200 million to include costs associated with construction of the pipeline and retaining drilling rigs in West Montalvo field, Sevier prospect, and in the Sacramento basin for the rest of the year. No production impact is seen until 2012.