ENERGY/CALIFORNIA OIL PRODUCTION

  Drilling for oil in California is
  likely to continue at last year's sharply reduced levels
  despite recent gains in crude oil prices, industry analysts
  said.
      Because much of the crude oil in California fields is
  thick, heavy and expensive to extract, oil prices would have to
  increase to near 1985's levels before any significant recovery
  is seen in drilling, they said.
      "Companies will probably only drill their best prospects,"
  said John Curti, an analyst with Birr Wilson Securities Inc.
      Few new wells now are being drilled.
      Only 33 rigs, about one-quarter of the total available,
  were drilling for oil onshore in California last week, compared
  to about 70 last year, said Bill Bolster of Munger Oil
  Information Services, which tracks California drilling
  activity.
      "It's in the dregs right now," said Bolster of the state's
  drilling activity.
      Current prices are not enough to justify increased
  drilling, said Ed Malmgreen of the California Independent
  Producers Association.
      While an Organization of Petroleum Exporting Countries pact
  to curb production boosted oil prices early this year, prices
  eventually fell.
      Prices for California's marker grade, Line 63 blend, have
  slumped about 20 pct in the last month to 14 dlrs from a high
  of about 17 dlrs.
      More than half of California's oil comes from stripper
  wells, those producing less than 10 barrels a day, and that
  much of that oil costs between 18 and 25 dlrs a barrel to
  extract, Malmgreen said.
      "It's not unusual for a stripper well to cost 18 dlrs,"
  Malmgreen said.
      Many stripper wells along the southern California coast
  produce eight times as much water as crude oil, and inland
  wells frequently require the use of steam injection to spur
  extraction of the thick, heavy oil, he said.
      The outlook for future production in California is clouded
  by a lack of exploratory drilling now, analysts said.
      In the heart of California's oil patch, Kern County, which
  produces about two-thirds of the state's oil, exploratory
  drilling has slowed to a crawl.
      Only 55 exploratory wells were drilled in Kern County in
  1986, compared to 137 in 1985, according to David Mitchell of
  the state energy commission. So far this year only five
  exploratory wells have been drilled.
      "I don't think they'll even get to what they did last
  year," Mitchell said.
      No pickup in exploratory drilling is likely for the rest of
  the decade, Mitchell said.
      Along with the fall in drilling has come a decrease in the
  number of producing wells and overall production.
      Between February and October of 1986, the number of
  producing oil wells in California fell 14 pct to 43,521 from
  more than 50,000, said Bill Guerard of the California Energy
  Commission.
      In line with that decrease, California's crude oil output
  fell about 10 pct last year due to low oil prices and is
  expected to remain at that lower level, analysts said.
      Between February and October 1986, California's crude oil
  production slipped from an all-time high of 1.185 mln barrels
  per day to 1.066 mln bpd, Guerard said.
      Total estimated crude oil production in California for 1986
  was 408 mln bbls, compared with 424 mln bbls in 1985 and 405
  mln bbl in 1983, according to the California Department of
  Conservation.
      "Production in 1987 will probably hold around 1986 levels,"
  Guerard said.
  

