Oxy drops after California drilling ban
CARSON, California (Bloomberg) -- Occidental Petroleum Corp. fell the most in seven months after a Los Angeles-area city imposed a moratorium on new drilling.
The unanimous vote by the Carson, California, city council on March 18 imposed a 45-day hold on oil and gas activity and also halted negotiations on development of about 200 wells until Los Angeles-based Occidental completes the spinoff. Carson is the third local government in the state since September to seek restrictions on drilling.
Occidental fell 3.9% to $91.44 as of 12:25 p.m. in New York after earlier sliding the most on an intraday basis since July. It was the worst performer on the Standard & Poor’s 500 Index.
“There are too many unknowns and too much of a chance of something bad happening if the city allows fracing or other similar techniques,” Albert Robles, the Carson council member who proposed the moratorium, said yesterday in a telephone interview. “I don’t think these techniques have ever gotten enough scrutiny.”
California Governor Jerry Brown has introduced new regulations to govern the practice of hydraulic fracturing. The Democrat has stopped short of a statewide ban.
Occidental in 2011 filed applications to build a production facility that would consist of as many as 202 wells pinpointing oil reservoirs at depths of as much as 13,500 ft, according to a March 18 report to the Carson city council.
The company assured city officials in a March 10 email that it would not use fracing in the project or any techniques commonly used to stimulate production in old wells. Occidental also said that establishing a broad moratorium would run afoul of state law. An Occidental spokeswoman didn’t return a call and email seeking comment.
The Los Angeles City Council last month unanimously approved a motion to impose a moratorium on fracing that will still require a final vote to go into effect. Santa Cruz County approved a temporary moratorium on fracing in September.