Optimizing the operation of marginal oil production leases in the Placerita Oil Field, Newhall, California, to fit the constraints of an associated cogeneration plant

In mid 1992 I was hired, along with a production superintendent, to increase the oil production on three leases located in the Placerita Oi l Field. These leases were owned by a subsidiary of a power generating plant and had been unprofitably operated by contractors since 1986. Very little information was avai lable to help optimize production, most of the equipment was in poor condition, and the operation vv'as out of compliance with several government regulations. The first six months were dedicated toward equipment repair, achieving regulatory compliance, and implementing procedures for gathering re liable operating and well production data. This new well production data led to the discovery that most of the wells were unprofitable to operate and could not be expected to meet the oil production goals of the owners. The oil production operation, however, did provide several very necessary functions for the power plant. The power plant relied on the oil field operation to supply water for steam injection and the cooling tower, to dispose of plant waste water, and to dispose of excess steam. Ironically, the physical limitations of water disposal imposed a maximum economic disposal rate. I decided that the best mission for the oil leases was to provide the required services to the power plant in the most effective manner. This required minimizing oil production rather than maximizing. The Northridge earthquake of January 17, 1994, helped accelerate plans to minimize oil production. Following the earthquake, the oil field completed the minimum repairs necessary to provide plant services. Operations were reduced from a 7-day a week, 24-hour a day, operation to a 5-day a week daylight operation. These changes drastically reduced losses in oil operations. Side effects of improvements in the oil field also helped improve the economics of the power plant. When the oil field mission was to maximize oil production then economic losses escalated, but when oil operations were synergistically meshed with the power plant then oil field losses dropped dramatically, and even the power plant benefited. The power plant entered the oil business, spending millions of dollars with great expectations for profit, without having any oil field expertise within their organization. It wasn't until an experienced oil field staff was developed that operations improved and uncontrollable losses were reversed.