You know, the Giant machines set along busy metropolitan arteries, which look like throwbacks to Southern California's past? With the oil barrel settling comfortably beyond the $100 mark, reactivating those long-discarded wells suddenly becomes an interesting proposition.As Howard Fine explains in his There will be oil article for the Los Angeles Business Journal, "The well in the middle of Santa Fe Springs [among other local wells] sat idle for more than 30 years. But 18 months ago, as oil prices were spiraling upward, the well's operator decided to bring it back to life. Breitburn Energy Partners LP spent $300,000 to reactivate the well, which came on line about a year ago. It’s turned out to be a worthy investment. If oil prices stayed at the current $100 a barrel level, and if the well pumped its current 15 barrels a day, the well would produce nearly $550,000 worth of oil in a year [...] The cost of restarting this well has been more than offset by the increasing price of oil."
And that is true up and down the coast, hence the renewed activity. No matter how comparatively difficult to extract, or sub-par the remaining California oil may be, at $100 a pop, it's worth the sweat.
[update 05/05/08: Million-Dollar Homes, Billion-Dollar Oil in LAT]
illustration pixelsnob via Flickr
