Kettleman Middle Dome
The Kettleman Middle Dome project is the largest of the three project areas and likely holds the highest revenue potential. The project area is located roughly 50 miles north of Bakersfield, California just west of Interstate 5 Freeway. The lease area covers 11,360 acres situated along the northwest-southeast axis of an anticlinal structure that hosts the Kettleman North Dome field (>450 MMBO) and the Lost Hills field (>400 MMBO).
The Kettleman ‘Middle’ Dome, as the name suggests, is a located directly in the middle of this long northwest-southeast anticlinal structure, and is sandwiched between these two prolific fields. The 11,360 acre lease area straddles the best portion of this middle dome area centered along the axis of the anticline.
An anticline, or dome, is generally the favored geologic trapping structure for oil reservoir accumulation. Within the Kettleman Middle Dome (KMD), drilling and 3D seismic surveys have identified several oil bearing horizons within the underground substrata, from top to bottom these are; the Monterey Shale formation; the Temblor Formation; the Vaqueros sandstones; the Kreyenhagen Shale; and the McAdams Sandstone Formation.
At present about 2,600 acres of the Monterey Shale formation has been mapped at the KMD area. The Monterey Shale formation at the KMD ground includes an untested 1,200 foot sandy part of the formation, interbedded with the shale, which is presently interpreted to be turbidic in origin. The increased permeability of the sandy turbidite regions within the Monterey may lead to the formations’ best oil productivity. Further 3D seismic surveys will be conducted over the KMD acreage and will help to further define this exciting target for our future wells.
At present the main oil bearing target is the over 1,000 foot thick McAdams sandstone formation.
To the north the same geologic strata found at the KMD area underlies the Kettleman North Dome. Within the North Dome, the McAdams formation was the target of over 200 drilled wells. On average the McAdams wells produced over 2 million barrels per well. Such per-well production is extremely rare. The productive area of the Kettleman North Dome ultimately produced over 400 million barrels of oil and over 2.9 trillion cubic feet of gas.
3D Seismic and previous drilling into the McAdams at the Middle Dome area has shown that the formation is over 1,000 feet thick in the region. A well drilled in the mid 1950’s into the McAdams formation revealed over 500 feet of oil saturated sandstone, however, technical problems were experienced that the well was abandoned. Despite the failure, there is clearly substantial oil within the KMD McAdams formation.
The shallower prospective horizons at the project area will be the subject of intense review and planning for further development at the KMD lease area. Production from the Kreyenhagen Shale formation has already occurred on the KMD as Standard Oil’s 38-19 well was completed with the Kreyenhagen and has produced an impressive 500,000 barrels.
The Elk Hills project is located south of the KMD project approximately 20 miles west of Bakersfield.
The Elk Hills anticline has been one of the largest oil and gas producing surface anticlines in North America with over 1.3 Billion barrels of oil and 700 Billion cubic feet of gas production.
The Elk Hills project is an excellent opportunity to develop significant reserves at a relatively small cost. The 360 acre project is surrounded by production by Occidental Petroleum Corp. (OXY), which is stimulated by their massive gas injection program at the site.
OXY’s gas injection program combined with gravity has had the effect of forcing the oil down-dip and driving it into the Elk Hills lease areas at the edge of the anticline. The oil potential at the lease area has been shown to exist from similarly located down-dip ‘edge’ wells adjacent to the lease. Production from 23 such wells has totaled approximately 4.2 million barrels of oil and 1.3 billion cubic feet of gas. These ‘edge’ wells have averaged 185,000 barrels per well.
All of the Elk Hills wells will be drilled to a depth of 3,500 feet at an approximate cost of $600,000 per well. As production of oil decreases on these wells the project will produce abundant natural gas due to OXY program. There will be a high resale value to OXY when at the gas break-through point.
South Tapo Canyon
The South Tapo Canyon project is an 800 acre leasehold in a producing field adjacent to Unocal production. The project is located northwest of the city of Los Angeles in the Simi Valley, Ventura County. South Tapo has been a significant production zone since the early 1900’s.
The initial target reservoir will be the Terry reservoir zone at approximately 2,500 feet at a cost of roughly $500,000 per well. Several infill wells need to be drilled to this oil zone which are estimated to produce 150,000 barrels per well.
Additionally, there is a 500 foot thick oil zone at a depth of 500 feet that has never been developed at South Tapo Canyon. This shallow reservoir may have up to 4 MMBO recoverable.
The main known reservoir of the field, the Sespe sandstone at 6,000 feet depth has never been drilled in the leasehold area and provides additional upside potential.