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Why California will Never Fulfill its Shale Potential
Real Clear Energy ^ | December 18, 2013 | Tom Whipple

Posted on 12/18/2013 5:21:36 AM PST by thackney

There was an important study released by the Post Carbon Institute last week that gives us an insight into how long our great shale oil bonanza —or more likely, bubble— is going to last. As you might suspect, the thrust of the new report is bad news so we are unlikely to ever read much about it in the mainstream media, which continues to tell us about the bright energy-rich future ahead.

By now we should all know about the technological wonder of “fracking” that has raised America’s oil production by over 2 million barrels a day (b/d) in the last few years and has reversed the decline of our natural gas production. The speed with which this has happened has been amazing and shows that if oil prices get high enough (oil has risen from $20 to $100+ a barrel in the last decade), then we can have all the oil we will ever want.

Rapid increases in production, however, mean that the faster we use up something the sooner will come the day when production starts to decline—and that day may not be very far away. In the case of North Dakota, new drilling seems to be concentrating in four counties, known as sweet spots, which may be the only places where it is profitable to drill at today’s prices. With new drilling concentrated in a small geographical area it may soon be the case that there are no new places to drill — but since this is probably at least a couple of years off, there is no sense in worrying about it.

While areas in Texas and North Dakota are where spectacular increases in oil production have taken place, less well-known is that our energy future really is supposed to rest in California, where the government says some two-thirds of America’s shale oil will be found. Should North Dakota and south Texas ever start running dry, all we will need to do is move the drilling rigs to California and there will be enough new oil to last for many years. Energy independence, millions of jobs and a bonanza of tax revenue will come when California’s oil production revives.

To make sure there was no mistake about the good times ahead, the U.S. Department of Energy hired a contractor to examine America’s shale oil reserves to confirm there really was a bonanza of oil and gas out there that could be accessed by horizontal drilling and fracking. To no one’s surprise, the contractor came back and said “Yes America” there are 24 billion barrels of oil there for the taking.

As the U.S. burns about 7 billion barrels of oil a year we therefore have at least a three-year supply of shale oil — if we can get it out of the ground. Interestingly, the government’s contractor reported that some 15.4 billion barrels of this shale oil were buried under California while only 3.6 billion was in North Dakota and 3.4 billion in south Texas. The rest was sort of scattered around. The report also talked about 750 trillion cubic feet of natural gas buried in the shale, but that is a story for another day.

As we are already extracting roughly a million barrels of shale oil a day from both North Dakota and Texas, the future of the industry was thought to be in California. Of course, anybody with the most rudimentary knowledge of geology should know that the earth under California and under the American Midwest are very different places. Remember the San Francisco earthquake, the San Andreas Fault, and that giant tectonic plate that disappears under California.

To the U.S. Energy Information Administration’s credit, it did caveat the introduction to the report noting that: “Because most shale gas and oil wells are only a few years old, their long-term productivity is untested. Consequently, the long-term production profiles of shale wells and their estimated ultimate recovery of oil and natural gas are uncertain.” But, of course, nobody reads caveats. For most, California has 15 billion barrels of oil just waiting to be extracted after North Dakota and Texas start running short so the great shale bonanza can go right on into the future.

We now have a second look at the Monterey shale and things don’t look so rosy. First, the geology of California is similar to a bowl of spaghetti, with the earth squeezed into folds and steep inclines, not the 20,000 sq. miles of flat-laying shale deposits found in North Dakota. The Monterey shales are thick and complex, and do not lend themselves to drilling the long horizontal wells that can be fracked so productively in other places. Much of the shale oil in California appears to have drained over the years into conventional oil reservoirs and has already been extracted by many of the 238,000 oil wells that have been drilled in the state during the last century.

Our new study by an experienced Canadian geologist, who has already examined the productivity of other shale oil formations in the US, concludes that the government and its contractor’s study is absurdly optimistic about the prospects for shale oil production in California. Despite the use of all the latest drilling and production techniques, oil production in California has fallen from 1.1 million b/d 30 years ago to 500,000 b/d today. It is highly unlikely that this will be turned around given the geology of the region.

The Department of Energy’s report starts with the assumption that California’s shale is much like that in Texas and North Dakota. It posits that the oil industry will only have to drill 28,000 new wells—each yielding ridiculously large amounts of oil (550,000 barrels)—to extract California’s shale oil. This is simply not supported by the recent history of drilling in the state and is unlikely to happen. We will be lucky if California’s oil production does not continue to decline, for its geology is simply not the same.


TOPICS: News/Current Events; US: California
KEYWORDS: energy; monterey; oil; shale


Out-of-phase detachment folds and low-angle faults in the Monterey Formation at “the Boathouse” section, Vandenberg Air Force Base


https://www.aapg.org/explorer/2013/02feb/monterey_6_800.jpg

onterey Shale Continues to Tempt and Tease
https://www.aapg.org/explorer/2013/02feb/monterey_shale0213.cfm

1 posted on 12/18/2013 5:21:36 AM PST by thackney
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To: thackney
It's too good to last!

We're all going to die!

Peak oil, peak oil!

Save us Obama!

Is the the energy sector equivalent of Real Clear Politics?

Sheesh.

2 posted on 12/18/2013 5:27:19 AM PST by Arm_Bears (Refuse; Resist; Rebel; Revolt!)
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To: Arm_Bears
Build more stupid windmills and chop up our national symbol...
3 posted on 12/18/2013 5:30:52 AM PST by Eric in the Ozarks ("Say Not the Struggle Naught Availeth.")
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To: thackney

That’s not even taking into account California’s political insanity.


4 posted on 12/18/2013 5:42:46 AM PST by arthurus (Read Hazlitt's Economics In One Lesson ONLINEhttp://steshaw.org/economics-in-one-lesson/)
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To: arthurus
Yes, this is just addressing the technical problems compared to plays like Bakken, Eagle Ford, Permian...
5 posted on 12/18/2013 5:44:59 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney
the contractor came back and said “Yes America” there are 24 billion barrels of oil there for the taking.

They might want to hire a new contractor

The Green River Formation weighs in at 3 TRILLION BARRELS.

With 1 Trillion recoverable with today's technology.

6 posted on 12/18/2013 5:59:07 AM PST by spokeshave (OMG.......Schadenfreude overload is not covered under Obamacare :-()
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To: spokeshave

The Green River Formation’s 3 trillion barrels is not oil already separated from the rock, like what has been produced by drilling from the Bakken, Eagle Ford and other shales.

The Green River is a much less thermally mature formation. It contains Kerogen that has to be retorted (cooked) from the rock in order to then create a synthetic crude oil.

They are not the same thing and it is far more expensive to produce.


7 posted on 12/18/2013 6:19:48 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“The Green River Formation’s 3 trillion barrels is not oil already separated from the rock, like what has been produced by drilling from the Bakken, Eagle Ford and other shales.

The Green River is a much less thermally mature formation. It contains Kerogen that has to be retorted (cooked) from the rock in order to then create a synthetic crude oil.

They are not the same thing and it is far more expensive to produce.”

Same thing goes for the Monterey

OOIP is not the same as reserves


8 posted on 12/18/2013 8:36:56 AM PST by bestintxas (Obamacare = Obamascrewed)
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To: thackney
Why California will Never Fulfill its Shale Potential

Never is a long time.
Call me optimistic, but I can't believe California will be run by moronic Marxist criminals forever.

9 posted on 12/18/2013 8:53:22 AM PST by Amagi (Lenin: "Socialized Medicine is the Keystone to the Arch of the Socialist State.")
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To: bestintxas
Same thing goes for the Monterey

No. The quantities of oil discussed are oil already cooked out of the rock. There has been drilling and limited production already done without retorting.

The is additional hydrocarbons that could be retorted out, but that is not the subject of discussion.

10 posted on 12/18/2013 9:16:12 AM PST by thackney (life is fragile, handle with prayer)
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To: Amagi

The article is discussing the technical challenges of the formation, not the political roadblocks.


11 posted on 12/18/2013 9:16:54 AM PST by thackney (life is fragile, handle with prayer)
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To: bestintxas

The 15.4 billion barrels is estimated technically recoverable oil based upon today’s drilling/fracking technology.

Total oil in place that includes stuff that would require retorting and stuff that will never be economically recovered is estimated at 500 billion barrels.

https://www.aapg.org/explorer/2013/02feb/monterey_shale0213.cfm


12 posted on 12/18/2013 9:21:10 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney
Not that many years ago shale oil was thought to be unobtainable, at least economically.
When it became obtainable there began to appear reasons why the oil shouldn't be retrieved, such as danger to the water table.
Yes, I endeavor not to underestimate the politics behind anything involving accessing the nation's energy resources.
13 posted on 12/18/2013 9:41:37 AM PST by Amagi (Lenin: "Socialized Medicine is the Keystone to the Arch of the Socialist State.")
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To: Amagi
Not that many years ago shale oil was thought to be unobtainable, at least economically.

You may be confusing oil shale with shale oil.

Horribly confusing terms, I know. Retorting shale to release Kerogen from the rock is far different than drilling into layers in/near the shale to get oil that was already cooked out.

14 posted on 12/18/2013 9:48:37 AM PST by thackney (life is fragile, handle with prayer)
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To: Amagi

Oil Shale vs. Shale Oil

http://www.coga.org/pdf_Basics/Basics_OilShale.pdf


15 posted on 12/18/2013 9:49:23 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

You are missing the point entirely

The Monterey has extremely large OOIP in the form of Kerogen. That cannot be said for recoverable reserves however

Most geologists agree that it is mostly outside the hydrocarbon maturity window. It is simply not cooked enough

The maturity window is a big thing.

For all the hoorah for the Eagleford, 90% of it exists outside the ideal maturity window


16 posted on 12/19/2013 7:44:10 PM PST by bestintxas (Obamacare = Obamascrewed)
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To: bestintxas
You are missing the point entirely

The Monterey has extremely large OOIP in the form of Kerogen.

That petroleum is not the topic of discussion of this article. It is only referencing the oil that has already been "cooked" out. What you are describing applies to the Bakken as well. That may be future production but it isn't the real concern of today.

17 posted on 12/20/2013 4:57:07 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“That petroleum is not the topic of discussion of this article. It is only referencing the oil that has already been “cooked” out. What you are describing applies to the Bakken as well. That may be future production but it isn’t the real concern of today.”

You are reading too many articles obviously.

I am a practicing Petroleum Engineer of 40 years who has worked exploration extensively, a number of years including the Monterey.

The company I worked for drilled hundreds of Monterey wells.

There is no way the Monterey is “cooked” as extensively to produce the large volumes mentioned in the articles.

The thermal maturity of the Bakken is a magnitude better than the Monterey.


18 posted on 12/20/2013 7:50:01 AM PST by bestintxas (Obamacare = Obamascrewed)
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To: bestintxas
There is no way the Monterey is “cooked” as extensively to produce the large volumes mentioned in the articles.

While I don't begin to claim your level of knowledge, there are others that disagree.

Review of Emerging Resources:
U.S. Shale Gas and Shale Oil Plays
http://www.eia.gov/analysis/studies/usshalegas/pdf/usshaleplays.pdf
July 2011

Executive Summary
Table ii U.S. Technically Recoverable Shale Oil Resources Summary
Page x

The thermal maturity of the Bakken is a magnitude better than the Monterey.

That may be true, but the "Technically Recoverable Shale Oil Resources" compared to the total petroleum in place is a comparable ratio when compared to the Monterey. The Bakken also has hundreds of billions of barrels underground but a small fraction of that is available without retorting.

19 posted on 12/20/2013 9:16:58 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Just don’t believe all the articles you read. Many are slanted to produce certain results.

The Bakken shales which generate and exude the Bakken oils contain the richest known organic content of any shale in the world. That, plus the trapping of the oil between the shale layers which provide high overpressures and natural fraccing of the rock, makes it a unique system, unlike anything seen elsewhere.

The Monterey has immense kerogens, but little chance at maturity. Taking many billions and identifying a small % of it as mature calculates to billions of oil possible; however, it is dissipated across vast vertical and horizontal volumes and does not make reserves necessarily.

Sorta like knowing the oceans contains billions of barrels of oil dissipated across the many trillions of barrels of water. We know it is there, but is it recoverable? No. Just no way to economically extract it, so it stays in the oceans, floating around.

I do enjoy the many postings on energy matters you produce.
I find them succinct, current, and of interest to us in the community of energy. Keep it up.


20 posted on 12/20/2013 11:40:32 AM PST by bestintxas (Obamacare = Obamascrewed)
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To: bestintxas

Thank you. I also enjoy reading input from those experienced in the field. My work is above grounding, building upstream, midstream and downstream facilities. The underground info is just the obsession, not my profession.


21 posted on 12/20/2013 12:13:28 PM PST by thackney (life is fragile, handle with prayer)
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