The Second Factor
The second factor, technology, began simultaneously in the 1990's when independent, entrepreneurial producers opened a new frontier for oil and natural gas exploration in western North America. Recent deep drilling in the Rocky Mountain States and the Western Canadian Sedimentary Basin has successfully demonstrated that previously inaccessible reserves can be recovered with new drilling practices and technologies. Drilling beneath historic and current oil and gas fields, they found deeper, richer deposits in Alberta and the Rocky Mountain States. The San Joaquin Valley is a prime candidate for deep oil and gas. It's one of the deepest basins on the continent with a thickness of 35,000 to 45,000 feet. Since the end of the Second World War, sporadic attempts have been made to unlock its deep petroleum reservoirs, none have been successful. Deeper Kern County zones are an exciting, primary frontier for huge reserve potential, and it's right in the middle of a premium market, California, the world's 7th largest economy.
The third factor, discovery, is demonstrated by what occurred on November 23, 1998. History repeated itself when the East Lost Hills Bellevue #1 well, probing the Temblor Formation below 17,600 feet where it dips deep in the center of the valley, struck a high-pressure natural gas zone. However, it went out of control and ignited. In a few moments, drillers were faced with the largest blow-out in recent California history. The well raged out of control for two weeks. Even under restricted flow, during the six months that it took to drill a relief well and plug off the wildcat, the Bellevue #1 discharged 10 million cubic feet of gas per day (MMCFD) and more than 400 barrels of condensate per day.
Through this spectacular blow-out, Mother Nature announced that one of American petroleum's old reliables, Kern County, has yielded another of its secret treasures, a deep, high-pressure natural gas and petroleum liquids exploration target with the promise of the awakening of a sleeping energy giant in California's San Joaquin Basin.
On May 29, 2000 a new well named the Berkley #1 was completed two miles to the northwest of the blow-out well. Published reports by Berkley Petroleum claim the Berkley #1 well is capable of producing 25 million cubic feet per day of natural gas and 1,875 barrels per day of condensate during full production. This gives the Berkley #1 well potential revenues of more than US $62-million per year, based on today's prices for natural gas and condensate.
Together with Berkley, new oil and gas companies have begun to unleash the massive potential of the deep oil and gas basin of the San Joaquin Valley. The opportunities exist now for a high risk/ high reward scenario during this fertile stage of exploration.