Oxy sees major growth in US shale liquids

By OGJ editors
-- Occidental Petroleum Corp. said it derives more than 25% of its California production from shales and that its California shale development program could become the company’s largest business unit within 10 years.

Oxy said the California shales, in formations it didn’t name, contain predominantly oil and liquids and may be richer in hydrocarbon resources than many of the better-known US shales.

The company owns at least 870,000 acres in California with strong potential for shale projects and which encompass a favorable thermal regime.

Oxy said, “The company is undertaking a 4-year development program for its shale production. Program elements include appraisal of more than 15 identified areas; 10 to 15 test wells/year on Oxy’s acreage…and the largest 3D seismic program in the history of California.

“The 3D seismic program is designed to identify ‘sweet spots’ in the shale plays and Oxy plans to initially target one or two areas, including the Kern County discovery (OGJ Online, Feb. 23, 2010).”

Oxy said it is the “most active oil and gas company operating ‘unconventional’ shale projects in California.” It said it started shale development at supergiant Elk Hills field in 1998 and presently produces 40,000 b/d of oil equivalent from what is regarded as shale assets.

The company said its conventional and unconventional California operations encompass 7,500 active wells in 90 producing fields and more than 3,700 drilling locations on more than 1 million net acres. It expects to boost its California output to 212,000-300,000 boe/d in 2014 from existing assets on a risk-adjusted basis from 151,000 boe/d in 2010.

Oxy’s largest California operation is Elk Hills, which at 538 million boe holds 70% of the company’s proved reserves in the state.

Oxy’s most recent growth in California comes from its 2009 major discovery in Kern County, which resulted from its conventional exploration program. The company estimates that gross potential reserves identified in the area could total 500 million boe by the end of 2010 as Oxy analyzes its areal extent.

The field has 24 wells capable of producing 45,000 boe/d, and Oxy is drilling 20 wells in 2010. Extension opportunities lie to the north, south, and west.

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