Occidental Petroleum 2002 Annual Report Download - page 13

THUMS
Occidental purchased THUMS, the field contractor of the Long Beach Unit, an
oil and gas production unit offshore Long Beach, California, in 2000. It is part
of the Wilmington field, which is the fourth largest oil field in the
continental U.S. At year-end 2002, net production from the THUMS oil property
was averaging 26,000 barrels per day.
Occidental completed construction of a 45-megawatt gas-fired power plant
and began generating electricity in December 2002. Previously, the oil field's
operations depended on the local utility for power to operate electric pumps
critical to production. The electricity supply from the utility was
interruptible, meaning that when power was in short supply, service could be
temporarily discontinued. Electricity is the largest component of operating
costs for this field and by securing a reliable source of electricity, it will
be possible to reduce overall field production costs.
GULF OF MEXICO
In July 2000, Occidental completed agreements with respect to two
transactions involving its interests on the Continental Shelf in the Gulf of
Mexico (GOM) and the proceeds were used to reduce debt.
Occidental has a one-third interest in the deep water Horn Mountain oil
field, which is its primary asset in the GOM. BP p.l.c. (BP) is the operator.
The discovery well, which was drilled to a depth of nearly 14,000 feet, is
located about 60 miles off the Louisiana-Mississippi coast in 5,400 feet of
water.
Development work was completed on time and under budget and the field began
production in November 2002, with a year-end exit rate of approximately 9,000
net BOE per day. Net proved reserves are approximately 36 million BOE.
HUGOTON
Occidental owns a large concentration of gas reserves, production interests
and royalty interests in the Hugoton area of Kansas and Oklahoma. The Hugoton
field is the largest natural gas field discovered to date in North America.
Occidental's Hugoton operations produced 148,000 Mcf of natural gas and 3,000
barrels of oil per day in 2002.
MIDDLE EAST
DOLPHIN PROJECT
In 2002, Occidental purchased a 24.5-percent interest in Dolphin Energy
Limited (DEL), the operator of the Dolphin Project. The Dolphin Project, which
is expected to cost its owners $3.5 billion in total, consists of two parts: (1)
a development and production sharing agreement with Qatar to develop and produce
natural gas and condensate in Qatar's North Field; and (2) the rights for DEL to
build, own and operate a 260-mile-long, 48-inch export pipeline to transport 2
billion cubic feet per day of dry natural gas from Qatar to markets in the UAE
for a period of 25 years. The pipeline will have capacity to transport up to 3.2
billion cubic feet per day, which will allow for additional business development
projects. DEL is currently negotiating contracts to market the gas with users in
the UAE. Construction on the upstream production and processing facilities and
the pipeline is expected to begin in 2003 and production is scheduled to begin
in early 2006. The Dolphin partners anticipate securing project financing.
Occidental has not recorded any revenue or production costs for this project and
no oil and gas reserves have been included in its 2002 proved oil and gas
reserves.
OMAN
Occidental's Oman business centers on its 300-million barrel discovery in
Block 9, in which it has a 65-percent working interest. Occidental has produced
more than 150 million gross barrels from the Block, most of it from the Safah
field.
Net production to Occidental averaged 13,000 barrels of oil per day in the
fourth quarter.
Occidental uses multi-lateral horizontal wells to increase production and
recovery rates and to minimize the number of wells needed. Today, 60 percent of
Occidental's production in Oman relies on horizontal wells. A new waterflood
program is currently under way at Safah that will enhance production and improve