California's century-old oil economy fades for indepedents

By Andrea Almond ~ The Associated Press

BAKERSFIELD, Calif.

On a slip of flat yellow earth dotted with sagebrush and foxtail lies the rusting legacy of three generations of drilling: a graveyard of toppled oil derricks -- and Bruce Holmes' solitary moneymaker.

Like a squeaky steel horse, the lone pump bucks and thumps, sapping crude from nearly a mile down.

Holmes spent 13 years' savings for the $200,000 well his brother installed a year ago. At 40 barrels a day, its haul exceeds the combined output of his 19 other aging pumps. All are older than the 64-year-old oilman, and barely yield a profit.

Holmes -- who drives a dusty pickup and sports a brass belt buckle etched with his company's name, Western Production Inc. -- is one of the last of the mom-and-pop oil producers in California's southern San Joaquin Valley.

"This is the end of an era," he drawls from under a Stetson-shaped hard hat.

It's a common refrain in Kern County. Just as in parts of Texas, Oklahoma and Louisiana -- even in Los Angeles County cities such as Signal Hill and Long Beach -- its oil fields are slowly running dry.

At stake is not just the livelihood of independent drillers like Holmes but also the economy -- and identity -- of a region that for a century has helped keep California one of the top oil-producing states.

"People don't realize what oil has meant to the communities of the San Joaquin Valley," said Sally Kinney, 52, a waitress whose grandparents moved from Oklahoma during the Great Depression.

"Used to be everyone you'd meet had ties in some way to oil," Kinney said. "Now, fewer people know the fields. ... There's too many other options than to tie their future to a resource that won't be around forever."

Kern is still California's top oil-producing county, claiming 37,000 of the 43,000 wells statewide. At nearly 200 million barrels in 2002, the region generates three-fourths of California's oil, more than any state but Alaska and Texas and about one-tenth of overall U.S. production.

Some oil companies continue to invest, and state officials predict there are at least 20 years of crude left in 75 active fields.

But it's a finite resource, and plugging parched wells is now a thriving business. In 2002, regulators issued 2,000 permits to drill new wells and 2,500 to abandon old ones, said Randy Adams of the California Division of Oil, Gas and Geothermal Resources. Where pumps once stood, housing developments and strip malls have blossomed.

The Kern County fields have been declining by 3 to 5 percent annually since 1985, Adams said. That's not an exceptionally high rate for an old field, according to industry experts. But because producers already are using advanced technology to tap existing pools, the drop is all the more acute.

Last November, Shell Oil Co. announced it would shutter its 72-year-old refinery in Bakersfield, citing the decline in local production. Processing 70,000 barrels of local oil a day, the 400-worker refinery is one of only 13 in state that produce California's required clean-air gasoline.

The proposed shutdown sparked protests from politicians and consumers who argued the closure would hike the already-inflated tab California motorists pay for gas. Under pressure from politicians and consumers -- and facing state and federal investigations -- Shell announced in August it would delay the shutdown to allow more time to find a buyer.

The valley locals christened "California's Golden Empire" lies two hours north of Los Angeles, beyond the strip malls and superstores of Bakersfield -- population 267,000 and growing. Streets are named Standard, Gulf, Getty and Shell; nearby towns are called Oildale and Oil City. The Bakersfield High mascot: The Driller. "Once a driller, always a driller," boasts the school's Web site.

Forty years after gold lured prospectors to the valley in the mid-1800s, a hand-dug pit that gurgled black gold on the western bank of the Kern River ushered in a new era. Forests of wooden derricks and instant communities sprang up along a swath that, according to the Kern County Museum, would produce more wealth from oil than all the West's gold mines.

Output from the Kern River field soon accounted for 7 out of every 10 barrels of oil coming from California, which by 1903 had become the nation's top oil-producing state, industry experts say.

When the first gushers blew, thousands of oil companies were incorporated in just a few days. The number of independents in Kern County has dwindled to around 225 companies, according to Les Clark of the Independent Oil Producers' Agency -- about 100 fewer than just 20 years ago.

"We've been tapping into the earth full-bore since the gushers of the early 1900s," said Ron Bracken, an independent oil producer in the nearby town of Taft. "Nothing lasts forever."

New oil field discoveries are uncommon; one was located several years ago, but the last big finds were in the 1980s.

Now, of the top 15 fastest-growing occupations in Kern County, only one is directly related to oil, according to Bakersfield Chamber of Commerce statistics.

Fewer young people are interested in a job that's dirty and smelly, topping 100 degrees in the summer and sometimes dipping below freezing in winter. Some say they'll settle for easier work, even if it pays less than the relatively robust $16 per hour a new rig hand gets.

Local officials say the new economy has arrived, that service jobs will let Bakersfield smooth out the cyclical oil-and-agriculture economy. The hot jobs: information technology, corrections officers or human services workers.

California as a whole is well positioned to ride out the decline, said Ed Porter of the American Petroleum Institute. That's in part because nonconventional recovery techniques, such as steam injection, are being used to force out the molasses-like San Joaquin crude. Other states, depending on the type and depth of their oil, haven't been equally successful in using existing technology to continue extracting in mature fields.

For big producers in Kern County, expensive technology is extending the life of the oil patch.

ChevronTexaco says it plans to invest $350 million in 2004 -- $100 million more than last year -- to build more than 800 new wells in the San Joaquin Valley.

Independent producers who don't have such deep pockets say they can't afford to keep relying on a fading resource.

Oil has been in the Holmes family's blood since 1923, when Bruce Holmes' grandfather moved here hoping to tap a gusher. Holmes expects he'll be the last to work the family business, to love the bitter smell of crude, to fall asleep to the clamor of an active oilfield.

"It's everything I ever had," he says. "It's all gonna die with me."