In a small bowl, mix oil, water, and seasoning from packet. Pour mixture over potatoes in a large bowl. Toss to coat all the potatoes with the mixture.
Into a lightly greased 6-quart slow cooker, add in 1/3 of potatoes. sprinkle 1/3 of the bacon and 1/3 of the cheddar cheese. Repeat 2 more times. Cover and cook on high 3-4 hours or until potatoes are cooked through.
Sprinkle with remaining cheddar cheese and cover again. Allowing cheese to melt. Serve with sour cream and freshly chopped chives.