Posted on 09/13/2006 2:32:20 PM PDT by Enchante
Government To Sell Elk Hills to Occidental Petroleum for $3.65 Billion
Largest Privatization in History of U.S. Government
The Department of Energy has executed agreements preparing for the sale of the United States' interest in the Naval Petroleum Reserve No. 1 (Elk Hills) to Occidental Petroleum Corp. The sales price will be $3.65 billion in cash, making it the largest privatization in the history of the United States Government.
"We're getting maximum value for this asset, and we're turning one of the nation's premier oil and gas fields over to the private sector -- to a respected and experienced U.S. oil and gas producer," said DOE Assistant Secretary Patricia Fry Godley, who has been overseeing the sales process. "The Navy no longer needs Elk Hills, and this sale helps get the government out of the oil and gas business."
The Elk Hills field is located near Bakersfield, Calif. The property encompasses more than 47,000 acres and includes significant oil and gas reserves, more than 1,000 producing wells, a 47-megawatt electricity-generating facility and two large gas plants. Current daily production from the field is approximately 60,000 barrels of oil and almost 400 million cubic feet of natural gas.
The sale to Occidental will complete a two-year privatization process mandated by Congress in the 1996 National Defense Authorization Act. Closing of the transaction is subject to a Justice Department antitrust review, completion of the environmental impact assessment process under the National Environmental Policy Act and a 31-day Congressional review period. Closing is expected to occur prior to the statutorily-mandated deadline of Feb.10, 1998.
The Energy Department offered to sell Elk Hills in two types of segments: one "operatorship" segment consisting of 74 percent of the United States interest in Elk Hills and 13 non-operating segments each consisting of 2 percent of the U.S. interest. Potential purchasers could bid on one, some, or all of the segments. Under the Energy Department's offering guidelines, if a single purchaser wanted to buy all of the Government's interest, its bid would have to exceed the total of highest bids for all of the individual segments.
"The sales strategy was designed to maximize competition and to allow all qualified bidders to compete on an equitable basis," Godley said. "I am pleased to report that the process worked."
The Energy Department's offer solicitation process involved contacts with more than 200 companies from the United States and abroad, 46 of which attended the Department of Energy's technical data presentations in Bakersfield, Calif., and Houston, Texas. The Energy Department received a total of 22 bona fide offers from 15 parties acting alone or in concert.
"Our bidder group was diverse and included major oil companies, independent oil companies, independent oil refiner interests and financial parties," Godley noted.
In the transaction announced today, Occidental will acquire 100 percent of the United States interest and will become the new operator at Elk Hills. "The proposed sales price satisfies the statutory requirements that we maximize proceeds to the Government," Godley said. "It also exceeds the minimum acceptable price established under the provisions of the sales statute."
Elk Hills is one of the 11 largest oil and natural gas fields in the lower 48 States. Originally set aside in the early 1900s to ensure a future source of crude oil for the U.S. Navy, the field no longer serves a national security purpose. (The country's emergency oil supplies are now held in the Strategic Petroleum Reserve.)
Elk Hills has been in commercial production since Congress authorized its development in 1976. It reached peak production of 181,000 barrels of oil per day in 1981. President Clinton included the sale of the Elk Hills Naval Petroleum Reserve in his 1996 budget proposal as part of an effort to remove the Federal government from non-Federal functions.
The Energy Department's advisors in the sale were investment bankers Petrie Parkman & Co. and Credit Suisse First Boston and the law firm O'Melveny & Myers, LLP.
- DOE -
At only $50 per barrel (well under the current price) that oil production of 60,000 barrels per day grosses around $1.1 billion per year. Then there's the daily output of 400 million cubic feet of natural gas. Anyone here know the oil and gas industry well enough to judge what a reasonable market price would be to acquire such resources? Somehow I'm guessing it should have been a lot more than what Occidental paid, but I don't claim to know anything about that industry!! (However, I do stay in a Holiday Inn Express now and then)
If I recall, it was all put under his mother's name.
How much Occidental stock did the Gore family own at the time?
Wasn't this the oil field of the Teapot Dome Scandal?
So, BJ Clinton and Al Gore sell off oil already underground in order to buy other oil somebody pumped out to above ground and pay somebody else to pump it back underground?
Even if the MSM was trying to cover for BJC, there's just too much headline material here to not have printed it as a crime scandal at the time. You'd get to slam Big Oil, and make a fool out of Al Gore; both are great fun.
There is just something about this event that reminds me of the Sherlock Holmes line about the dog that didn't bark in the night. Not even the Republican dogs.
Hasn't she died? If so, I wonder if it was then split up among Gore's three kids.
Ray Irani, CEO of Oxy, was a frequent visitor to the White House. He had overnights in the Lincoln Bedroom and his donations to Clinton and Democrat causes probably exceeded $1 million. This was a Gore payback to Oxy for giving Al's old man a sinecure for life.
Been in the works since 1996 at least.
http://www.fossil.energy.gov/programs/reserves/npr/npr_elkhills_sale.html
It was part of it.
Teapot Dome, in U.S. history, oil reserve scandal that began during the administration of President Harding. In 1921, by executive order of the President, control of naval oil reserves at Teapot Dome, Wyo., and at Elk Hills, Calif., was transferred from the Navy Dept. to the Dept. of the Interior. The oil reserves had been set aside for the navy by President Wilson. In 1922, Albert B. Fall, U.S. Secretary of the Interior, leased, without competitive bidding, the Teapot Dome fields to Harry F. Sinclair, an oil operator, and the field at Elk Hills, Calif., to Edward L. Doheny. These transactions became (192223) the subject of a Senate investigation conducted by Sen. Thomas J. Walsh. It was found that in 1921, Doheny had lent Fall $100,000, interest-free, and that upon Fall's retirement as Secretary of the Interior (Mar., 1923) Sinclair also loaned him a large amount of money. The investigation led to criminal prosecutions. Fall was indicted for conspiracy and for accepting bribes. Convicted of the latter charge, he was sentenced to a year in prison and fined $100,000. In another trial for bribery Doheny and Sinclair were acquitted, although Sinclair was subsequently sentenced to prison for contempt of the Senate and for employing detectives to shadow members of the jury in his case. The oil fields were restored to the U.S. government through a Supreme Court decision in 1927.
And wasn't Gore's old man on the board of directors at Occidental at one time?
I thought that I would bump this article since the oil field that Occidental describes as the seventh largest in the country is burning and four people people have been injured in an explosion at Al Gore's inconvenient investment.
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