California Resources Corporation (CRC) is committed to using advanced technology to maximize locally sourced oil and natural gas production in a safe,
environmentally responsible, and efficient manner. This technology helps to make CRC an industry leader in sustainable production.
The company invests in state-of-the-art equipment and tools to find, develop, produce, and deliver energy resources throughout the state. Technology plays an
integral role in every phase of this process, from exploration to field development to operations management.
Advanced technologies contribute to top performance in areas including safety and environmental stewardship, geologic interpretation, oil and gas reservoir
description and modeling, well drilling, facility construction, field automation, artificial lift, well and equipment maintenance, and fluid processing.
In a collaborative work environment, CRC engineers and geoscientists combine expertise and ingenuity with cutting-edge technology to achieve the results
that help define our success and advance a sustainable energy future in California.
Well Stimulation
Well stimulation is a process defined under California law to enable certain production wells to extract more oil and natural gas from the targeted underground formation. Well stimulation is only useful in certain geologic conditions, such as when the oil and gas formation consists of hard or tight rock with little natural permeability. The two primary types of well stimulation are hydraulic fracturing, which uses water, sand and select additives under pressure to create fractures, and acid matrix stimulation, which uses a low concentration solution of acid in water under lower pressure to dissolve minerals that have been deposited within the oil and gas formation.
Well stimulation is used less commonly in California than in other states, and typically with less water and less energy. CRC and its Aera subsidiary have not used hydraulic fracturing since 2019. In many parts of New Mexico, North Dakota, Pennsylvania or Texas, by comparison, 100 percent of the wells undergo hydraulic fracturing.
Where well stimulation is used in California, it typically occurs once in the targeted oil and gas bearing zone during the production well’s 40-year life. The actual stimulation process generally takes only a few hours, with a few days before and after the job for equipment set-up, testing, regulatory inspections, fluid recovery and demobilization before the well is put on production. Used safely and effectively by CRC’s operations and contractors for many years, hydraulic fracturing has been a routine practice in the oil and gas industry for seven decades.
Production Methods
Production of oil and natural gas requires energy to lift the fluids from the oil and gas reservoir deep underground to the surface. The
reservoir's natural pressure provides much of this energy but is eventually supplemented by artificial lift equipment. As oil and gas is
produced, the reservoir’s natural pressure is reduced. This pressure can be restored by injecting recycled water or gas to mobilize and displace
additional oil and gas into production wells. Even after applying these improved oil recovery (IOR) techniques, a large quantity of oil and gas
typically remains in the reservoir. Enhanced oil recovery (EOR) techniques such as injection of steam or carbon dioxide can allow more of the
oil in the reservoir to flow into production wells. By producing oil and natural gas with IOR and EOR techniques, we extend the lives of mature
fields and maximize the efficient use of existing infrastructure and land surface.
We determine the development method to use based on geologic characteristics of the oil and gas reservoir and its reserves potential and
expected returns. We seek to optimize our assets by progressively implementing primary recovery methods, which may include well stimulation and
artificial lift techniques, IOR methods such as waterflooding and EOR methods like steamflooding, using both vertical and horizontal drilling.
All of these techniques are proven technologies we have used extensively in California for many decades.
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Primary recovery is a reservoir drive mechanism that utilizes the natural flow of the oil and gas formation and is the first technique
we use to develop a conventional reservoir. Our successful exploration program continues to provide us with primary recovery
opportunities in new reservoirs or through extensions of existing fields. Our primary recovery programs create future opportunities to
convert these reservoirs to waterfloods or steamfloods after their primary production phase.
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Some of our fields have been partially produced and no longer have sufficient energy to drive oil to our producing wellbores.
Waterflooding is a well understood process that has been used in California for over 50 years to re-introduce energy to the reservoir
through water injection and to sweep oil to producing wellbores. This process has been known to increase recovery factors under primary
recovery methods. Our waterflood operations have attractive margins and returns. These operations typically have low and predictable
production declines and allow us to extend the productive life of major fields and significantly increase our incremental recovery after
primary recovery. As a result, investments in waterfloods can yield attractive returns even in a low oil price environment.
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Some of our fields contain heavy, thick oil. Steamfloods work by injecting steam into an oil and gas reservoir to heat the oil, which
allows it to flow more easily to the producing wellbores. Steamflooding is a well understood process that has been used in California
since the early 1960s. This process has been known to increase recovery factors under primary recovery methods. The steamflood process
generally requires low capital investment with attractive margins and returns even in a low oil price environment. The economics of
steamflooding are largely a function of the ratio between oil and natural gas prices. Since natural gas is typically used to generate
steam, steamflooding offers favorable returns as long as the oil-to-gas price ratio is in excess of five. After drilling, these
operations typically ramp up production over one to two years as the steam continues to influence the oil production, and then exhibit a
plateau for several months, with a subsequent low, predictable production decline rate of 5 to 10 percent per year. This gradual decline
allows us to extend the productive life of a viscous oil reservoir and significantly increase our incremental recovery after primary
production.
Field Development
CRC’s capital allocation process takes into consideration various factors such as wellhead returns, expected cash flows relative to investments
and payout metrics to prioritize investments.
Following are descriptions of key activities within the various functions.
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CRC has developed unique and
proprietary stratigraphic and structural models of the subsurface geology and hydrocarbon potential in each of the basins where
we operate. As a result of our long successful operating history, extensive seismic library and proprietary subsurface geologic models,
we have tested and successfully implemented various exploration, drilling, completion and enhanced recovery technologies to increase
recoveries and value from our portfolio.
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Exploring for and producing oil and natural gas requires drilling wells – often more than a mile deep – to bring oil and natural gas
from the targeted underground formation to the surface. Once a well is drilled, steel pipe is placed in the well and cemented in place
to isolate, support and protect the casing. Water-bearing zones are cased off, cemented and isolated from hydrocarbon-bearing zones to
protect groundwater aquifers. The cemented pipe keeps the wellbore open for the life of the well and seals the formations that hold the
oil and gas. Wells are completed in targeted pay zones in the formation allowing the oil and gas to flow into the well. Removable steel
pipe, called tubing, is installed to carry the flow of oil and gas to the surface. The steel pipe, cement, tubing and valves at the
surface contain and control the oil and gas.
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CRC’s experienced drilling professionals use rigorous well design standards, state-of-the-art technologies and optimized rigs and
equipment to deliver superior safety and drilling efficiency. CRC has a collaborative process with our drilling contractors and
suppliers to select, commission and start up drilling rigs and to promote safety and reliable operations.
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Well stimulation is a process defined under California law to enable certain production wells to extract more oil and natural gas from
the targeted underground formation. Well stimulation is only useful in certain geologic conditions, such as when the oil and gas
formation consists of hard or tight rock with little natural permeability. The two primary types of well stimulation are hydraulic
fracturing, which uses water, sand and select additives under pressure to create fractures, and acid matrix stimulation, which uses a
low concentration solution of acid in water under lower pressure to dissolve minerals that have been deposited within the oil and gas
formation.
Well stimulation is used less commonly in California than in other states, and typically with less water and less energy. CRC has not used hydraulic fracturing since 2019. In many parts of New Mexico, North Dakota, Pennsylvania or Texas, by comparison, 100
percent of the wells undergo hydraulic fracturing.
Where well stimulation is used in California, it typically occurs once in the targeted oil and gas bearing zone during the production
well’s 40-year life. The actual stimulation process generally takes only a few hours, with a few days before and after the job for
equipment set-up, testing, regulatory inspections, fluid recovery and demobilization before the well is put on production. Used safely
and effectively by CRC’s operations and contractors for many years, hydraulic fracturing has been a routine practice in the oil and gas
industry for seven decades.
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Reservoir conditions change as commingled oil, natural gas and water are extracted. To manage oil and gas reservoirs effectively, CRC’s
multi-disciplinary teams collect and analyze data to optimize production and reserves. The data, much of it from automated systems,
includes pressure, temperature, production and injection rates, artificial lift efficiency, well logs and downhole conditions.
Continuous monitoring enables CRC’s professionals to make prompt adjustments that improve oil and natural gas production.
CRC also uses performance prediction tools such as reservoir simulation and compares the results with actual performance. Based on the
findings, opportunities are identified to fine-tune field development, enhanced oil recovery programs, artificial lift design and well
servicing plans.
Operations
The operations team is at the frontline of CRC’s ESG initiatives that maximize the efficiency of production while minimizing the footprint of
our operations. Following are some key examples that contribute to our performance.
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CRC applies the latest automation technology and surveillance software in conjunction with a centralized operating strategy to safely
and efficiently operate wells, production facilities and gas plants across our extensive acreage. This combination of technology and
operating philosophy promotes workplace health and safety, lowers operating costs, reduces downtime and variability, improves
reliability, facilitates our extensive environmental monitoring, and extends the economic life of oil and gas fields.
For example, at CRC’s Elk Hills Field in Kern County, the 40,000-square-foot Consolidated Control Facility serves as the nerve center
for oil and natural gas production, as well as the plants and facilities operated by CRC or our Elk Hills Power, LLC joint venture. The
facility contains a central control room where technicians monitor and control production and injection wells, processing facilities,
gas compression, gas plants and enhanced oil recovery facilities around the clock.
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Most wells in California require additional energy to bring fluids to the surface as oil and gas reservoir pressure declines over time.
A key solution is artificial lift, which provides energy to lift fluids to the surface and increase production from a well. Artificial
lift is used on about 90 percent of CRC’s producing wells.
CRC invests in new technologies and techniques to optimize and extend production from artificial lift. The primary methods of artificial
lift in use at CRC are beam lift, electric submersible pump (ESP), gas lift and progressive cavity pump (PCP).
Beam lift, the most common artificial lift method worldwide, consists of a beam unit (also called pumping unit or pump jack) on the
surface, a downhole pump and rods that connect the two. Beam lift is the largest component of CRC's artificial lift, both in terms of
number of wells and percentage of production, and CRC has pioneered new beam lift technologies at our Elk Hills Field. We operate
central communication and analysis systems that monitor, control and optimize our beam units around the state.
ESPs consist of an electric motor and pump suspended near the bottom of a wellbore and connected to a power supply at the surface. ESPs
can lift liquid at very high rates and are the workhorses of our artificial lift fleet in terms of total fluid production.
Gas lift injects gas into the fluid column in a wellbore, reducing the column's density to the point where reservoir pressure is
sufficient to produce the fluid to the surface. This provides a powerful tool to optimize production in select fields.
PCPs are in use at many CRC operations. These pumps typically are used in medium to shallow depth wells, including steamflood wells, and
fill a gap in rate between beam pumps and ESPs.
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Well servicing comprises the many activities performed on wells, such as initial completion (opening the wellbore to its initial
producing zone), re-completion into additional producing zones, sand control (placing a gravel layer between the well and the oil and
gas formation to prevent sand or silt from blocking flow into the well), well maintenance to remove or prevent the build-up of solids,
scale or wax in or near the well, diagnostics, pump or equipment replacement or repairs. CRC most often accomplishes the work using well
servicing rigs, although rigless operations with coiled tubing also are common.
CRC has developed and deployed powerful tools and systems to achieve high performance in its well servicing operations. Well servicing
trends and results are tracked to identify areas for improvement. In addition, software is integrated with other systems to aid in the
scheduling of well servicing operations.
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Asset integrity management refers to CRC’s comprehensive maintenance, mechanical integrity, quality assurance and corrosion management
programs that are used to help ensure that key systems and equipment remain safe, reliable and fit for service over their life cycle.
Asset integrity is achieved by providing consistent programs for maintenance and mechanical integrity and comprises a combination of
inspection, testing and maintenance requirements which include predictive, preventative and corrective processes. These individual
programs cover maintenance of rotating equipment such as compressors, pumps, motors, generators and engines, and mechanical integrity of
stationary equipment such as piping, pressure vessels, pipelines, electrical components, relief valves and atmospheric tanks.
CRC uses computerized maintenance and inspection management systems to facilitate scheduling of routines, data management, trending and
analysis.
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CRC operates a state-of-the-art cryogenic gas processing plant at the Elk Hills Field in Kern County. The plant's capacity of 200
million cubic feet per day brings the total gas processing capacity at Elk Hills to more than 330 million cubic feet per day, bolstering
Elk Hills' status as a regional gas hub for California.
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Idle wells are valuable assets for which substantial resources have been invested in drilling, well construction and completion to
produce from an oil and gas formation. Idle wells allow us to resume production from the original target formation, access additional
hydrocarbon-bearing zones intersected by the well bore with recompletions, step out with directional drilling and reach additional oil
and gas deposits, or implement enhanced recovery using recycled water, steam or carbon dioxide in future phases of development, all with
smaller project footprints, lower energy use and emissions, and increased efficiency.
Responsible stewardship of idle wells is a strength of CRC. A hallmark of our operations is our life-of-field planning to advance our
fields through the decades-long value recovery chain from primary production to improved or enhanced oil recovery methods to produce
more of the existing oil in place and maximize the efficient use of existing wells and facilities. Idle wells have an essential role in
this process, since they enable us to access formations through existing well bores rather than drilling new wells – thereby reducing
our surface footprint, energy use and emissions.
CRC is also investing in new technologies that have the potential to reuse idle wells for generating renewable energy, such as geothermal power, to advance the energy transition in California. In addition, as part of CRC’s robust Idle Well Management Program, we invest to permanently plug idle wells at a pace that exceeds state mandates.