DOE to piecemeal Elk Hills sale

The U.S. Energy Department plans to sell the government's 78% interest in Elk Hills oil and gas field near Bakersfield, Calif., in segments, rather than as a single asset. The federal portion of Elk Hills is a naval petroleum reserve. Chevron Corp. owns the rest of the field, the 11th largest oil field and 10th largest gas field in the Lower 48. DOE will seek bids for an operating working interest, where one buyer would become field operator, and for multiple smaller nonoperating working

Oct. 14, 1996

2 min read

The U.S. Energy Department plans to sell the government's 78% interest in Elk Hills oil and gas field near Bakersfield, Calif., in segments, rather than as a single asset.

The federal portion of Elk Hills is a naval petroleum reserve. Chevron Corp. owns the rest of the field, the 11th largest oil field and 10th largest gas field in the Lower 48. DOE will seek bids for an operating working interest, where one buyer would become field operator, and for multiple smaller nonoperating working interests.

Sec. Hazel O'Leary said, "By offering multiple interests in Elk Hills, the department can broaden the universe of potential buyers and increase competition. This will help ensure that U.S. taxpayers receive the highest market value."

DOE said a company buying the operatorship interest would get a significant portion of the government's 78% share and assume field operatorship. Smaller companies, alone or in combination, could bid for nonoperating working interests.

DOE also might consider selling some of the field's surface facilities separately to attract companies that specialize in natural gas processing or power generation.

Congress set a February 1998 deadline for selling the federal share of Elk Hills, if adequate bids are received. DOE will hold meetings with prospective bidders Oct. 15 in Houston and Oct. 16 in Bakersfield.