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Calif. Field Goes from Rush To Reflection of Global Limits

Steven Mufson
Washington Post Staff Writer
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Tuesday, July 29, 2008

BAKERSFIELD, Calif.

In May 1899, a pair of oil prospectors wielding picks and shovels dug into a bank of the Kern River where some gooey liquid had seeped to the surface. About 45 feet down, they hit oil, and when the local newspaper printed the news, it set off an oil rush that swept up hundreds of fortune seekers, oil companies, a big railroad and even some enterprising school districts that bought up tracts in hope of turning a profit.

Today, on an arid square of land the size of Manhattan, thousands upon thousands of black derricks crowd the landscape, bobbing gently up and down and sipping crude oil from the field discovered a century ago. The wells aren't gushers these days, but they still squeeze out a few barrels a day here, a few more there.

Chevron has injected steam into the reservoirs, coaxing the sedimentary rock into giving up millions of barrels of heavy oil that was too thick and sticky to retrieve using the technology of decades past.

But the Kern River field, like most U.S. oil fields, is in decline. After surging to new highs during the 1980s, Kern River production has dropped to just over 80,000 barrels a day, more than 40 percent below its peak. Enhanced recovery techniques will continue to prolong its profitable life, but its days are numbered.

Kern River is the story of America's oil supply. Four decades ago, the United States was the world's biggest oil producer. But U.S. crude oil output peaked in 1970, at 9.6 million barrels a day, which was enough to cover the bulk of the country's needs back then. Now, U.S. crude production stands at 5.1 million barrels a day. Together with liquids derived from natural gas and other inputs, domestic production covers only 42 percent of the country's needs. The balance comes from imports. Ever since President Richard Nixon called for "Project Independence" in a 1973 address to the nation, U.S. energy independence has been little more than a throwaway line in political speeches.

The United States is at the leading edge of what may lie ahead for worldwide oil production. Global petroleum output is still rising, but the rate of growth is slowing. Supply is not increasing fast enough to keep up with soaring global demand, putting ever more upward pressure on oil prices.

New technology is opening virgin areas for exploration -- especially off the shores of Brazil, the west coast of Africa and the Gulf Coast of the United States -- and extending the lives of older fields. But elsewhere, war and other political obstacles are impeding the development of prospects that would otherwise be the most accessible and cheapest to exploit.

Even if these fields become fully available, many oil experts warn that the world's production will hit a peak soon if it hasn't already. With the exception of Iraq's, most of the "easy oil" in large reservoirs close to the surface is gone. Mexico's biggest field, Cantarell, is in steep decline. Indonesia has become a net oil importer, withdrawing from the Organization of the Petroleum Exporting Countries as output from its largest fields has slipped and new discoveries have lagged. Production in the North Sea is plummeting, and Russian output is hitting a plateau.

Future discoveries may not turn the tide. New deepwater fields peak fast and then decline because of their unique geology. Deepwater prospects and fields of heavy oil, like those already being exploited in western Canada and Venezuela, are expensive and energy-intensive to develop.

In the meantime, it's getting more expensive to keep oil flowing from existing fields. Older infrastructure, including aging pipelines on the North Slope of Alaska and outdated equipment in Iran, cry out for costly maintenance.

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Steve Mufson
Tuesday, July 29, 2008
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I am the Washington Post's energy correspondent and I have been focusing on the sprawling intersection of energy and politics. That's led me to write about everything from Kansas coal plants to Kurdish oil contracts, from carbon trading in Europe to horse trading on Capitol Hill, from Gazprom's tactics on gas to OPEC's tactics on oil.