Occidental Petroleum Corp., the fourth-biggest U.S. oil producer by market value, is drilling exploratory wells in California in a bet that deposits there hold hundreds of millions of barrels of crude.
Occidental is counting on prospects near Long Beach and in other parts of the state to drive “meaningful” reserves and output growth in the next decade, Chief Executive Officer Ray Irani said. The company will drill 20 exploratory wells this year on sites ignored by rivals that quit searching California in the 1970s in favor of the North Sea and South America.
“While Texas is a big base for us that over the next 10 years will continue to grow modestly, California is going to grow in a meaningful way,” Irani, the longest-serving CEO of a major U.S. oil company, said yesterday in an interview at Occidental’s headquarters in Los Angeles.
Chief Financial Officer Stephen Chazen said the company is targeting fields with oil and natural-gas reserves equivalent to at least 150 million barrels of crude each. That would be about one-third the size of Chevron’s deepwater Tahiti field in the Gulf of Mexico, which began production in May.
“We’re very excited about California because it’s a very under-explored area,” Chazen said in the same interview. “You are not going to find Prudhoe Bay, but I think you’ll find sizeable fields here left in California.”
Occidental has been quietly amassing leaseholds on California land for the past five years with a view to tapping reserves that were overlooked or dismissed by other companies, said Irani, 74. Those leases now encompass 1.1 million acres, an area three times the size of New York City.