San Diego’s Royale Energy (Nasdaq: ROYL) announced Wednesday that it has begun drilling for natural gas on its Victor Ranch 3-20 well in the Sacramento Basin and expects to bring two more wells into production this week and another one by the end of the quarter.
Royale’s Cardiff well, which was drilled in the fourth quarter of 2013, now has a flow rate of 1.7 million cubic feet per day.
The new wave of drilling comes as California natural gas prices are at a four-year high, partly because the drought has forced San Francisco’s Pacific Gas & Electric (NYSE: PCG) to cut back on its hydropower generation and shift to gas. With its Diablo Canyon nuclear power plant slated to shut down for maintenance this spring, PG&E’s reliance on natural gas has jumped by 33 percent.
In the meantime, Royale has begun seismic acquisition operations on 120 square miles on Alaska’s North Slope, where it is working with Australia’s Rampart Energy to explore for both oil and natural gas. Rampart this week committed $50 million for exploration costs on the project.