A Visit to Chevron’s Kern River Heavy Oil Facility

Recently, I visited Chevron’s Kern River Heavy Oil field, near Bakersfield California, as a guest of the American Petroleum Institute. Kern River is an extremely old field, discovered in 1899. The oil flows a bit on its own (API=13), but really needs to be heated to be easily extracted or to be shipped by pipeline. After more than a hundred years of pumping, most of the available oil has been extracted–a total of a little over 2 billion barrels has been extracted. The additional amount that can be extracted will depend on the price of oil and how well Chevron can minimize costs.

The site produces about 80,000 barrels a day from 8,000 producing wells, meaning that on average, each well produces about 10 barrels of oil a day. In order to make money with this type of operation, Chevron must be very efficient in everything it does–reusing equipment whenever possible, using the best techniques possible to find the remaining pockets of oil, and prioritizing the workload of the employees, based on which activities are most likely to produce a profit, and which activities are not cost effective.

In the recent past, production has been declining at 2% or 3% a year. Chevron’s goal in the near future is to hold the decline rate to 1% per year. No one knows how much additional oil can profitably be produced, but rough guesses were in the 200 to 500 million barrel range. This range equates to 10% to 25% of the oil produced to date as possibly being economically available for extraction.

In this post, I will tell you a little about what I learned on my trip, and also offer some thoughts on whether heavy oil is likely to be a panacea for peak oil.

The Oil Drum