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Black gold: SLO County oil production was a ‘boom-or-bust industry’ even in 1980s

The Central Coast may not have a wealth of gold and silver, but it does boast significant reservoirs of oil.

Neighboring Kern County is the sweepstakes winner, while San Luis Obispo County comes in at ninth place in California in terms of oil production.

The future of the county’s oil industry is being debated as Measure G seeks to restrict fracking and new well drilling.

Back in the early days, prospectors would sniff at gopher holes near oil seeps for the tell-tale scent of petroleum.

Drilling rigs stand in a Unocal oil field in the Guadalupe Dunes in 1989. The field was shut down in 1994 because a chemical used to help extract the thick, asphalt-like oil product was contaminating nearby areas. David Middlecamp

Asphalt for roads was a key product. Gasoline, on the other hand, was a pesky, explosive byproduct with no market, best dumped in the creek.

The local oil industry opened in the late 1800s near Maricopa on Highway 166 with hand-dug wells and oil sands quarries.

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Pioneer oilman H.A. Blodget later recalled the early days in the book “Spudding In” by William Rintoul: “The miners worked stark naked, covered with the liquid asphaltum. At the end of the tour, they were scraped with a case knife, or the wooden scrapers used on race horses, and washed in distillate.”

Cleanup took so much time that workers ate lunch without being fully cleaned, sitting on newspapers which then stuck to them like flypaper.

Extraction and refining evolved over time and gasoline became the most marketable component.

Oil production in San Luis Obispo County has fluctuated in terms of the price of oil and the technology used to get it out of the ground.

Union Oil was a leader in formulating chemicals that helped get tar-like oil out in their Guadalupe field.

The effort resulted in contamination, a massive remediation effort that’s still underway and the shutting of the oil field in 1994.

A series of stories published Jan. 26, 1986 in The Telegram-Tribune documented a countywide slump in oil production to 1.1 million barrels a year.

More than three decades later, in 2017, San Luis Obispo County produced 604,308 barrels of oil from 493 wells, according to Don Drysdale with the California Department of Conservation.

This story by Mike Stover ran Jan. 26, 1989, in the Telegram-Tribune.

This Unocal oil field in the Guadalupe Dunes, pictured in 1989. , was shut down in 1994 because a chemical used to help extract the asphalt-like oil product was contaminating nearby areas. David Middlecamp

Oil slump

Decline in county drilling means losses of jobs, taxes

Oil production in San Luis Obispo County hit a 40-year low in 1988, as cheap overseas supplies reduced the incentive to pump local crude.

The slump means fewer jobs in the oil fields and a loss of about $200,000 a year in taxes to local governments and schools.

State estimates show 1.1 million barrels were drawn from wells in the county during 1988, the fourth year in a row production declined.

In California as a whole, 1988 is expected to be the third straight year production has dropped since hitting an all-time high in 1985.

“There isn’t a well being drilled in San Luis Obispo County right now,” said Hal Bopp, who heads the state Division of Oil and Gas office in Santa Maria.

Unocal’s Dale Elchlepp, left, shows a solid example of his company’s product during a tour of a Unocal (formerly Union Oil) oil field in the Guadalupe Dunes in 1989. At right is Jim Shew. The field was shut down in 1994 because a chemical used to help extract the asphalt-like oil product was contaminating nearby areas. David Middlecamp

“It’s kind of scary when these guys are hinging on every OPEC meeting.”

Unocal, for example, was drawing 4,000 barrels a day in January 1986 from its Guadalupe field, just north of the San Luis Obispo/Santa Barbara county line. It was getting $18 a barrel.

Today the company is getting only $8 a barrel, and as a result, is only pumping 1,400 barrels a day.

“As you can see, the price is a determining factor here and that’s the reason production has fallen off as it has,” said Art Bentley, a Unocal spokesman.

“It’s pretty much a boom-or-bust industry; it always has been,” he said. “What we’d like to see is stability.”

County Assessor Dick Frank estimates the fall in oil prices over the last four years has meant a loss of $200,000 a year in taxes, half of which would have gone to county schools.

With all the concern in the county over offshore oil development, the decline of onshore oil has gone largely unnoticed in recent years.

From its heyday in the early 1950s when newly-discovered fields in the county were pouring out more than 3.5 million barrels a year, production ranged from 1.12 million and 2.1 million barrels a year during the 1960s and 1970s.

There are 42 gallons to the barrel.

The Arab oil boycott brought a production surge in the early 1980s, but the numbers have been on a decline ever since.

Bopp said activity in his office has slowed to a trickle. We don’t really see any development work coming up now at all,” he said. “I don’t think there’s any oil operation over here in the coastal counties that is profitable.”

Wells have been drilled literally all over the county since the late 1800s. Most have been drier than dust.

This chart, published Jan 26, 1989, in The Telegram-Tribune, shows barrels of oil produced in San Luis Obispo County from 1950 to 1988. Telegram-Tribune file

Today, six fields are producing. Most straddle the Santa Maria River at the southern edge of the county.

The field farthest north is the Arroyo Grande, which runs along Price Canyon Road near Pismo Beach. It was purchased in September 1985 by Shell Western E&P, which has moved aggressively since the late 1970s to become the leading oil producer in California.

Today, it’s putting out 850 barrels a day, down from its 1988 high of 950, said Shell spokesman Bill Devereux.

Not all the fields are being worked by major oil companies, however. Santa Fe Energy Co., an independent firm based in Bakersfield, operates the Russell Ranch field near Cuyama; West America, also centered in Bakersfield, pumps the Midway-Sunset field which crosses the county near Taft.

198901-19UnionOildunes (2)
A pump is covered with oil at a Unocal oil field in the Guadalupe Dunes in 1989. The field was shut down in 1994 because a chemical used to help extract the thick, asphalt-like oil was contaminating nearby areas. David Middlecamp

But most of the fields share the fact that their oil is unusually thick and difficult to pump. Some comes out looking like roofing tar. Some turns solid at room temperature.

Getting it out of the ground often requires the help of steam injection. Hot water and steam are forced into the ground, heating the oil and pushing it toward pumps that bring it to the surface.

The process adds to the price of doing business and has been curtailed at some fields because of the costs.

Another factor limiting production is the depletion of the fields during the 40 or more years they’ve been pumped. All are past their prime, Bopp said.

The Arroyo Grande field, for instance, was first tapped in 1906. It had given up 7.1 million barrels of crude by the end of 1987 and had an estimated 3.6 million barrels remaining in the ground.

Russell Ranch had yielded 67.3 million barrels by the end of 1987, most of which came from the Santa Barbara County side. It had only 1.2 million barrels left, according to state figures.

Unocal’s Guadalupe field still has about 20 million barrels in the ground. At current rates of production, it will go dry in about 2010.

For the time being, though, Unocal spokesman Bentley said it will be business as usual. There are no plans to shut down any more wells or to lay off any of the 23 employees working the field.

Pulling out is not even a possibility. “We’ll be there for a long time to come,” he said.

The extent of production, however, will depend on the price.

David Middlecamp is a photographer for The Tribune. 805-781-7942,, @DavidMiddlecamp
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