Gail

Thank you for the post, there are interesting observations. What strikes me (and you noted as well) is that despite little or no debt and equipment that is mostly fully amortized (ok, maybe not the cogen), the Kern field appears to be at the margins of current oil production costs. The picture of the Kern field brings home a Matt Simmons comment to the effect that 'there is plenty of oil in little pockets, but what we need are more super-giants.'

That makes heavy oil a tough proposition in new field development. On top of that, not many refineries (particularly U.S. refineries) are built to handle heavy crude. So you have higher costs at the wellhead, and upward cost pressure at the refinery to cover retrofits or new construction. Seeing, as we now do, that consumers will reduce demand at $4/gallon+ for gasoline or diesel, heavy oil seems like a big investment gamble along the whole supply chain. All this before we touch on climate change.