January 26, 2015 / 9:31 PM / 4 years ago

California Resources Corp pulls plug on oil drilling project

SAN FRANCISCO, Jan 26 (Reuters) - California Resources Corp on Monday said it would no longer seek approval for a large oil drilling project in Carson, California, due to low crude prices.

The plan, first proposed in 2012, included the drilling of more than 200 new wells in the Dominguez Oil Field, located about 20 miles (32 km) south of Los Angeles. The field is estimated to hold 52 million barrels of oil.

The company, which until late last year was part of Occidental Petroleum, said the project was no longer practical given current commodity prices.

U.S. crude was pegged at $46.29 on Monday, down more than 50 percent since last June.

Local environmentalists, who had successfully pushed to get the Carson City Council to pass a 45-day moratorium on new oil drilling in March, declared victory on Monday.

“Because of our efforts and much prayer we are victorious,” said Latrice Carter, a researcher with the Carson Coalition.

Environmentalists initially objected to the project because it planned to use the controversial practice of hydraulic fracturing, or fracking, to help bring the oil to the surface.

Fracking consists of injecting water, sand and chemicals deep underground at high pressure to break apart rock and release oil and gas into a well.

The project’s backers later revised the scope of the project to eliminate fracking after test wells showed it would not effectively increase production. That did not deter opponents however, who said they did not trust the company to keep its word.

A spokeswoman for California Resources Corp said the company would retain its Southern California presence, where it employs about 700 people. The company has said the project would have created well-paying jobs and increased tax revenues.

Californians are now watching to see whether low crude oil prices will halt other proposed energy projects in the state, including a number of projects aimed at expanding rail terminals so they can offload more crude coming to the state by rail. (Reporting by Rory Carroll; Editing by Alan Crosby)

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