Hathaway LLC

Back when Kern County crude was selling for a mere $52 a barrel, Bruce Holmes risked his quarter-of-a-million-dollar retirement fund to drill a single well outside of Maricopa.

It was in retrospect an absurd investment: If the well didn’t strike oil, the 67-year-old said he might have had to spend the rest of his life working other people’s oil fields.

But the well he paid to have drilled in October 2005 did strike — enough to produce nearly 30 barrels a day, each of which now sells for about $119.

"I’ve suddenly become the eccentric Mr. Holmes," he said with a laugh.



More and more people are following his lead.

Spurred by record oil prices, operators big and small are reactivating idled wells, drilling new ones and overhauling others to make them more efficient. The largest among them have rolled out new technologies to extract every possible drop, going to lengths that literally were not worth the effort a few years ago.

The surge in activity has been so sudden as to catch much of the industry by surprise. It has led to months-long waiting lists for drilling rigs and a tug-of-war over experienced oil workers.

"It’s go time," Bakersfield oil man Chad Hathaway said. "If you’re not out there doing something and busy in this environment, you’re not doing something right."



GOING UP

Prices and oil field activity are way up locally.

The monthly average price of Midway-Sunset oil — a heavy class of crude produced in Kern County — increased more than five-fold from $22.26 in May 2003 to about $119 last week.

Meanwhile, applications to perform work on Kern oil wells more than tripled to 360 between May 2003 and February of this year, according to the state Division of Oil, Gas and Geothermal Resources, or DOGGR. These applications are for reworking existing wells as well as for new drilling, most of which takes place in proven oil fields as opposed to exploratory projects.

What’s more, everybody’s getting in on the action, with applications coming in from mom and pop operations all the way to large international companies.

"It’s across the board," said Randy Adams, district supervisor for DOGGR in Bakersfield.

SLOWING THE DECLINE

For all the new activity, local oil production continues to decline. That’s because Kern oil fields have been in production for more than 100 years, and producers hope only to keep the crude flowing.

Between May 2003 and February of this year, Kern oil production decreased by 14 percent to 7.8 million barrels a month, DOGGR reported.

Accordingly, much of the emphasis at Aera Energy LLC, a large oil production company based in Bakersfield, is prolonging the life of local fields by investing in increased efficiency and new technology.

"Higher oil prices allow us to squeeze more and more oil out of these fields," Senior Vice President Barry Biggs said.

A MATTER OF SIZE

Exactly how oil producers have responded to the high prices depends largely on their size.

While big oil companies like Aera are able to invest large sums into making the most of their holdings, they generally operate according to long-term strategies that cannot easily be adjusted to short-term price fluctuations.

"Everything has to be well thought out," said Susie Geiger, a spokeswoman for Occidental of Elk Hills, a Kern County subsidiary of Los Angeles-based Occidental Petroleum Corp. "We don’t do knee-jerk reactions."

Big oil companies can and do respond to higher prices — it just takes them longer.

"We’ve been doing that for years. We’ve been ramping up," Chevron spokesman Roger Christy said. Although he could not provide Kern-specific numbers, he said Chevron’s oil-exploration budget has more than doubled since 2004 to reach nearly $23 billion, in large part because of recently high oil prices.

Smaller operators are by nature more nimble. They have fewer hurdles to clear when making a decision to invest in a local oil field, which can allow them to capitalize quickly on strong prices.

Hathaway, for example, said he can make a call and get a well-servicing rig to one of his nearly 47 wells the following day.

WAITING TO DRILL

Getting hold of a drilling rig is not quite as easy. With relatively few drilling contractors operating in Kern these days, Hathaway — who also owns a directional drilling company that he said does "phenomenal" business lately in Colorado natural gas fields — said he has to wait months to get access to a drilling rig in Kern.



That level of demand means steady business for Excalibur Well Services, a Bakersfield-based drilling company. General manager Gordon Isbell said the company has grown by a quarter in the past year, adding 40 employees to serve oil producers across the state.

Fast growth presents its own challenges, Isbell said. The company is always comparing its benefits packages against those of its competitors in hopes of luring the best, most experienced workers, he said.

Isbell doesn’t see things letting up anytime soon.

"I see going forward that we’re going to see this as a sustained rate," he said. "Everybody associated with the industry is going to be extremely busy over the next five to 10 years."