About the Former Naval Petroleum (NPR)
For much of the 20th century, the Naval Petroleum Reserves (NPR) served as a contingency source of fuel for the Nation's military. All that changed in 1998 when NPR No. 1, known as Elk Hills, was privatized, the first of a series of major organizational changes.
Set aside in a series of Executive Orders in the early 1900s, the government-owned petroleum and oil shale properties were originally envisioned to provide a reserve supply of crude oil to fuel U.S. naval vessels in times of short supply or emergencies. The Reserves remained mostly undeveloped until the 1970s, when the Nation began looking for ways to maximize its domestic oil supplies. In 1976, Congress passed the Naval Petroleum Reserves Production Act authorizing full commercial development of the Reserves. One of the largest of the Federal properties, the Elk Hills oil and natural gas field in California, was the highest-ranking oil producing field in the lower 48 states, in 1981. In September 1992, the field produced its one billionth barrel of oil, becoming only the thirteenth field in the Nation's history to reach that milestone. The crude oil, natural gas, and liquid products produced from the Reserves were sold by DOE at market rates. While managed by DOE, Elk Hills generated over $17 billion in profits for the U.S. Treasury.
Divestment Activities
For the two decades that the U.S. Department of Energy managed the Naval Petroleum and Oil Shale Reserves, the properties served valuable functions not only as a source of revenue for the U.S. Treasury but also as a model for improved oil field practices.
NPR-1 (Elk Hills) - In 1996, Congress determined that the properties no longer served the national defense purpose envisioned in the early 1900s, and authorized steps towards potential divestment or privatization of them. As a result, in 1996, the government's share of the Elk Hills field in California was offered for commercial sale. On February 5, 1998, DOE completed its sale to Occidental Petroleum Corporation for $3.65 billion in the largest privatization of Federal property in the history of the United States.
NOSR-1 and -3 - Subsequently, the Department of Energy transferred two of the Naval Oil Shale Reserves, both in Colorado, to the Department of the Interior's Bureau of Land Management.
NOSR-2 - In 2000-2001, the Department returned the undeveloped Naval Oil Shale Reserve #2 in Utah to the Northern Ute Indian Tribe in the largest transfer of federal property to Native Americans in the last century.
NPR-2 (Buena Vista Oil Field) - The enactment of the Energy Policy Act 2005 effected the transfer of administrative jurisdiction and land management of the Naval Petroleum Reserve #2 (NPR-2) and sites in Ford City, CA, to the Department of the Interior, with the exception of certain lands that were conveyed to the City of Taft, CA.
NPR-3 – Naval Petroleum Reserve #3 - On January 30, 2015, DOE finalized the sale of the historic Teapot Dome Oilfield located 35 miles north of Casper WY. The Teapot Dome Oilfield, consisting of 9,481 acres, was set aside as a naval oil reserve in 1915, and is best known for its connection to a scandal that rocked the Harding Administration approximately 90 years ago. Under the terms of the sale, operation and ownership of all NPR-3’s mineral rights and land was transferred to Stranded Oil Resources Corporation.
Environmental Remediation Activities at the Former NPR-1
The DOE continues to complete the safe environmental remediation of contaminated sites resulting from past oil field operations at the Former NPR-1. In accordance with a Corrective Action Consent Agreement with the California Department of Toxic Substances and Control (DTSC), the DOE is responsible for the cleanup and closure of 131 areas of concern (AOCs). The primary contaminant found in the soils at many of the AOCs includes arsenic from past use of oil well corrosion inhibitors. Other contaminants in the soil and soil gas include volatile organic compounds (VOCs) and polycyclic aromatic hydrocarbons (PAHs), found in the soils of surface impoundments and trenches used for past oil well development wastewater and mud disposal. All remediation Work Plans for the AOCs have been approved by the California DTSC after undergoing tribal review and public outreach and comment periods in accordance with federal and state law. As of April 2025, of the 131 AOCs at the Former NPR-1, 116 have been awarded a No Further Action (NFA) designation by DTSC, 11 are pending or undergoing corrective measures, and 4 are awaiting approval of Land Use Covenants (LUCs), the last step before receiving an NFA designation.