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elk hills

As a result of its 1998 acquisition of a majority interest in the giant Elk Hills field, Oxy is the largest natural gas producer and the third largest oil producer in California. Formerly, a U.S. National Strategic Petroleum Reserve, Elk Hills is the seventh largest oil field in the continental United States, with cumulative production exceeding one billion barrels of oil and one trillion cubic feet of natural gas. Since its acquisition, total Elk Hills oil and gas production has been approximately 301 million BOE. At the end of 2006, the property had an estimated 484 BOE of proved reserves, compared to the 425 million BOE that were recorded at the time of the acquisition.

Oxy's operates the Elk Hills oil and gas field in the southern part of California's San Joaquin Valley with an approximate 78 percent interest. In 2006, Oxy made additional acquisitions of oil and gas producing properties near the field as part of an acquisition from Plains. Oil and gas production in 2006 from these properties and the field was approximately 91,000 BOE per day.

During 2006, Oxy performed infill drilling, field extensions and recompletions identified by advanced reservoir characterization techniques resulting in 277 new wells being drilled and 479 wells being worked over. In addition, an air separation unit was installed to enhance oil recovery with nitrogen injection.

As a worldwide leader in EOR technology, Oxy customized a range of recovery techniques—both proven and innovative—to the field’s complex reservoirs to quickly transform this once declining asset into the largest natural gas producer in California. New sales pipelines and upgraded processing plants immediately helped boost gas sales volumes. The introduction of leading-edge technology, such as 3-D reservoir visualization, geosteered horizontal drilling and EOR technology, has significantly increased proved reserves by hundreds of millions of barrels.

Nitrogen (N2) injection is being used to displace residual oil from shallow reservoirs. By cycling large amounts of nitrogen through the reservoirs, Oxy is accelerating oil and natural gas production and increasing total recovery. In tighter, unconventional shale reservoirs, Oxy has had tremendous success in combining horizontal drilling with special completion and stimulation techniques to more than double the zone’s production. In addition, Oxy successfully completed a CO2 injection pilot project, leveraging technology from its Texas operations to increase production at Elk Hills. Centrally located between Northern and Southern California markets, Elk Hills offers optimum flexibility to maximize the value of its gas and natural gas liquids production under changing market conditions.

Oxy also holds a 50-percent interest in Elk Hills Power, a 550-megawatt natural gas-fired power plant that is helping to meet California’s growing energy demands. Located in proximity to its natural gas fuel source, Elk Hills Power is one of the most efficient and cleanest-burning power plants in the world.