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U.S. officials cut estimate of recoverable Monterey Shale oil by 96%
Los Angeles Times ^ | May 20, 2014 | Louis Sahagun

Posted on 05/21/2014 6:41:36 PM PDT by Kennard

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

The new estimate, expected to be released publicly next month, is a blow to the nation's oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

The Monterey Shale formation contains about two-thirds of the nation's shale oil reserves. It had been seen as an enormous bonanza, reducing the nation's need for foreign oil imports through the use of the latest in extraction techniques, including acid treatments, horizontal drilling and fracking.

The energy agency said the earlier estimate of recoverable oil, issued in 2011 by an independent firm under contract with the government, broadly assumed that deposits in the Monterey Shale formation were as easily recoverable as those found in shale formations elsewhere.

The estimate touched off a speculation boom among oil companies. The new findings seem certain to dampen that enthusiasm.

(Excerpt) Read more at latimes.com ...


TOPICS: Business/Economy
KEYWORDS: energy; lablog; monterey; montereyshale; oil; shale
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"NoDak and Texas don't have 80 million years of earthquakes to eliminate *horizontal* from the layers. In fact, every earthquake and volcano over the 80 million years was cracking those layers and letting the oil migrate away."
1 posted on 05/21/2014 6:41:36 PM PDT by Kennard
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To: Kennard

I don’t believe this at all.

Most of the rich deposits were said to be near Big Sur, some of the most pittoresque driving vistas in the USA.

I think there was absolutely ENORMOUS pressure to downplay the promise of Monterey Shale.


2 posted on 05/21/2014 6:47:17 PM PDT by gaijin
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To: Kennard
"Just 600 million barrels of oil can be extracted with existing technology,..."

A little more than 30 days' worth of oil for U.S. consumption. Well, export it anyway, and save the whole economy. ;-)


3 posted on 05/21/2014 6:48:07 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: Kennard

With N0bama’s war on coal and banning/severely limiting the drilling for oil and natural gas on federally owned lands, I have great doubts about the validity of this “new” estimate. It nicely shows “no oil here, go away.”

And California greenies will like it since it prevents “pollution” of their beaches and land.


4 posted on 05/21/2014 6:48:19 PM PDT by GreyFriar (Spearhead - 3rd Armored Division 75-78 & 83-87)
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To: gaijin

I just don’t trust the source.


5 posted on 05/21/2014 6:51:14 PM PDT by DannyTN
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To: Kennard

What do people who know something about extracting oil say?


6 posted on 05/21/2014 6:51:27 PM PDT by stevem
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To: gaijin

Who is applying the pressure? Tom Steyer and the enviros? It is the oil companies who are losing interest. Sacramento wants the revenue and has set up a process toward drilling approvals.


7 posted on 05/21/2014 6:52:00 PM PDT by Kennard
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To: Kennard

“the new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and...”

will make it easier to make the area a national park.


8 posted on 05/21/2014 6:53:01 PM PDT by icwhatudo (Low taxes and less spending in Sodom and Gomorrah is not my idea of a conservative victory)
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To: Kennard

Riiight. What buttons were pushed to make this report come out? They are likely lying to stop oil production there.
Anti fossil fuel rats at work behind the scenes,


9 posted on 05/21/2014 6:53:12 PM PDT by HereInTheHeartland (Obama lied; our healthcare died.)
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To: Kennard

Yes, the technology is not in place yet to extract this oil... but hopefully on day California liberals will get the brain transplants they so desperately need and then the drilling may start.


10 posted on 05/21/2014 6:54:15 PM PDT by Rodamala
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To: Kennard

Next they will recalculate Bakken at 96% as well.


11 posted on 05/21/2014 6:55:07 PM PDT by E. Pluribus Unum ("The more numerous the laws, the more corrupt the government." --Tacitus)
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To: Kennard

and just how reliable are “Federal energy authorities?”


12 posted on 05/21/2014 6:56:12 PM PDT by elpadre (AfganistaMr Obama said the goal was to "disrupt, dismantle and defeat al-hereQaeda" and its allies.)
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To: Kennard

“Just 600 million barrels of oil can be extracted with existing technology”

Ok, how about TOMMORROW’S TECHNOLOGY.

10 years ago, all the millions of barrels of oil and gas that were “unrecoverable” by yesterday’s tech are now recoverable in the Marcellas and Eagle Ford shale formations.


13 posted on 05/21/2014 6:56:47 PM PDT by staytrue
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To: Kennard

Very convenient “technical adjustment” to the data. Gee, it’s only a 96% change in what the administration told us yesterday. What’s so unusual about that?


14 posted on 05/21/2014 6:58:16 PM PDT by faithhopecharity ((Brilliant, Profound Tag Line Goes Here, just as soon as I can think of one..))
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To: stevem

Harold Hamm of Continental Resources, which dominates Williston Basin fracking, says that “they haven’t cracked the code in the Monterey”.


15 posted on 05/21/2014 6:58:49 PM PDT by Kennard
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To: stevem

The oil industry, however, was hardly ready to hoist a white flag.

Tupper Hull, vice president of the Western States Petroleum Association, an oil industry trade group, said, “We’ve always been quite clear that there are challenges to producing oil out of the Monterey” Shale that set it apart from shale formations already tapped in North Dakota, Texas and elsewhere. “I have every confidence that the oil companies possess the experience and the ability to innovate. If anyone can figure it out, they can figure it out.”

Severin Borenstein, who directs the University of California Energy Institute, said “this is definitely a huge setback to the expansion of oil production in California, but I would not at all say the game is over. ... It is way too early to say that this is the death of fracking in California. Technology only moves forward, and I am sure there is going to be millions of dollars spent trying to make it better specifically for California because there is so much potential.”

A University of Southern California analysis — funded partly by Hull’s association, based partly on Energy Information Administration data and released in March 2013 — had estimated the Monterey Shale could help California create up to 2.8 million new jobs and generate up to $24.6 billion per year in new tax revenue by 2020.

In May 2013, Brown said “the fossil fuel deposits in California are incredible, the potential is extraordinary.” Environmental groups urged Brown to support a fracking moratorium, but the governor resisted. In September, he signed a law creating new fracking regulations, including a permitting process, notification of neighbors, public disclosure of chemicals used and groundwater- and air-quality monitoring.

http://www.mercurynews.com/california/ci_25810989/fracking-new-monterey-shale-oil-estimate-rocks-californias


16 posted on 05/21/2014 6:59:37 PM PDT by kcvl
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To: GreyFriar

Typical California energy mentality. Energy is created “somewhere else” and magically delivered to Californians in limitless quantities at no cost.


17 posted on 05/21/2014 7:00:10 PM PDT by henkster (Do I really need a sarcasm tag?)
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To: Kennard

I have to laugh at all the comments here calling this report BS...

We’ve fallen quite a way from trusting any US official. LOL.


18 posted on 05/21/2014 7:00:57 PM PDT by EBH (And the head wound was healed, and Gog became man.)
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To: Kennard

http://dailycaller.com/2014/05/21/environmentalists-blunder-on-monterey-shale-oil-claims/?utm_referrer=https://www.google.com/


19 posted on 05/21/2014 7:02:08 PM PDT by kcvl
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To: GreyFriar

Typical California energy mentality. Energy is created “somewhere else” and magically delivered to Californians in limitless quantities at no cost.


20 posted on 05/21/2014 7:06:36 PM PDT by henkster (Do I really need a sarcasm tag?)
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To: E. Pluribus Unum

They will “discover” that 80% of the moon is made of cheese, but is unedible due to transfatty acids.


21 posted on 05/21/2014 7:07:03 PM PDT by TurboZamboni (Those who make peaceful revolution impossible will make violent revolution inevitable.-JFK)
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To: EBH
We’ve fallen quite a way from trusting any US official.

Mistrusting EIA studies: what have we come to! I can't say I blame anyone. In this case, however, with Jerry Brown and the industry on side, I can't see Obama trying to kill a source of California state revenue. Tom Steyer is not that powerful.

22 posted on 05/21/2014 7:08:05 PM PDT by Kennard
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To: kcvl
from your DC link:

Author Russell Gold writes in the Wall Street Journal that “the geology of the Monterey is complex” as it “is riddled with faults, its oil is deeply buried, and its rocks aren’t amenable to being fracked, as they are elsewhere.”

“Companies focused on the Monterey, such as Venoco Inc., have been warning investors that the California shale was different from other shales. And oil output has been lackluster,” Gold writes.

The practical test is reserves based on current prices and technology. Everything else is a pipe dream. The professionals tell us that the Monterey is not amenable to fracking; maybe something else in the future, but not fracking and not current technology.

23 posted on 05/21/2014 7:15:37 PM PDT by Kennard
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To: elpadre
And just how reliable are “Federal energy authorities?”

I would say VERY reliable, if what they are spouting screws your average American and grows control for the Government!!
24 posted on 05/21/2014 7:18:53 PM PDT by ExTxMarine (PRAYER: It's the only HOPE for real CHANGE in America!)
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To: Kennard

If it’s coming from “U.S. officials”, it’s more than likely bull****. The kids up in the District of Corruption running the government aren’t very bright.


25 posted on 05/21/2014 7:18:54 PM PDT by FlingWingFlyer (Obama's smidgens are coming home to roost.)
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To: DannyTN

Put them under oath!


26 posted on 05/21/2014 7:20:58 PM PDT by fedupjohn (America...Designed by Geniuses...Now inhabited by Idiots..Palin 2016...)
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To: Kennard; ckilmer; thackney

ping


27 posted on 05/21/2014 7:22:48 PM PDT by Kennard
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To: gaijin
I don’t believe this at all.

Neither do I. Everything this Administration and its minions in the government sets my BULLSHIT meter off.

28 posted on 05/21/2014 7:22:55 PM PDT by usconservative (When The Ballot Box No Longer Counts, The Ammunition Box Does. (What's In Your Ammo Box?))
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To: GreyFriar
"severely limiting the drilling for oil and gas on federally owned lands.

A large part of the Monterey Shale is located on lands to which the BLM owns the mineral rights.

The enviros are mad not just because Obama open this to drilling, but also because of the way he did it.

He opened a smaller portion in 2011 and then in Dec 2012, after he won re-election in Nov, he opened a much larger area.

This is why many enviros think Obama is waiting until after the 2014 election to stab them in the back again and greenlight the Keystone pipeline

29 posted on 05/21/2014 7:24:32 PM PDT by Ben Ficklin
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To: Kennard
I figure it's like shutting the coal mines down. Once the properties are sold to the right cronies at fire sale prices they'll figure out how to recover the oil and decide we really do need to mine the coal.

Think Hitler making sure the right companies own everything by regulating who can own what and you'll have the proper perspective on all of this. King Barry and the Democrat Fascists are just using regulations and pseudoscience rather than racial purity laws, that's all.

JMHO

30 posted on 05/21/2014 7:24:41 PM PDT by Rashputin (Jesus Christ doesn't evacuate His troops, He leads them to victory.)
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To: gaijin

Meanwhile, government funded climatologists raised estimates of the rise in sea level and global temperature by 96%.


31 posted on 05/21/2014 7:30:57 PM PDT by shotgun
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To: HereInTheHeartland

“Riiight. What buttons were pushed to make this report come out? They are likely lying to stop oil production there.
Anti fossil fuel rats at work behind the scenes”

The problem is, I don’t trust anyone at this point:

1. The EPA might have done this to bust speculation.
2. Someone might have been paid off so that that “someone else” could buy all of the rights for next to nothing.
3. Or, it could be absolutely true.

?????????????????


32 posted on 05/21/2014 7:40:56 PM PDT by The Antiyuppie ("When small men cast long shadows, then it is very late in the day.")
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To: Kennard

Little oil production expected out of Monterey Shale due to economics: US EIA

Washington (Platts)—21May2014/354 pm EDT/1954 GMT

The US Energy Information Administration on Wednesday said it has never expected much actual crude production from California’s Monterey Shale, due to the fraught economics of drilling into the complex formation.

The agency drastically cut its estimate of “technically recoverable resources” from the Monterey Shale by 96%, from 13.7 billion barrels in a 2012 study to 600 million barrels in a study to be released next month.

But though the cut made headlines Wednesday, EIA spokesman Jonathan Cogan downplayed its significance, saying the agency has long noted the unlikelihood that anywhere close to the entire resource would be produced.

“Clearly, there is not a proportional relationship between [total recoverable resources] and production estimates,” Cogan said in an email. “Economics matters, and the Monterey play faced significant economic challenges regardless of the TRR estimate.”

The Los Angeles Times first reported Wednesday morning that the EIA intends to slash its Monterey Shale resource estimate in an addendum to its 2014 Annual Energy Outlook. That estimate considers all the crude that can extracted using existing technology, regardless of how much it might cost.

But in terms of economically recoverable production, Cogan said the EIA’s 2014 AEO reference case projects the Monterey play to average 57,000 b/d between 2010 and 2040, which is actually an increase from its 2013 AEO estimate of 14,000 b/d.

“While TRR is a useful concept, changes in play-level TRR estimates do not necessarily have significant implications for projected oil and natural gas production, which are heavily influenced by economic considerations that do not enter into the estimation of TRR,” Cogan said.

The oil industry and its advocates in Congress have viewed the Monterey Shale as a potential mother lode of crude, and the EIA’s 2011 estimate that the formation contained 13.7 billion technically recovered barrels sparked immense interest in the play.

The formation, which runs across most of California, is unlike the Bakken and Eagle Ford, however, in that it is heavily deformed, twisted and splintered, due to earthquake faults running through the area. Drillers have so far struggled to produce the play profitably.

The industry maintains that advances in technology can help make the Monterey Shale more economically feasible to develop.

David Quast, the California director of Energy in Depth, a pro-fracking group sponsored by the Independent Petroleum Association of America, noted that the US Geological Survey in 1995 estimated that the Bakken Shale in North Dakota contained just 151 million barrels of recoverable oil, only to significantly boost that projection in 2008 to 3-4 billion barrels, and then again doubling it last year.

“To believe that some companies won?t invest in the development of the Monterey Shale in the long-term, though, is to believe that American (and particularly Californian) innovation has peaked,” he said in a statement on Energy in Depth’s website. “After all, technology only advances.”

But fracking and acid stimulation, a drilling technique that industry advocates say can unlock Monterey Shale deposits, are increasingly under scrutiny in California, with regulators drafting rules on oil drilling. Santa Cruz on Tuesday became the first California county to impose an outright ban on fracking.

The EIA said it cut its TRR estimate because drillers have yet to prove much success in the play. It also incorporated new information about the formation compiled by the US Geological Survey.

“TRR estimates will likely continue to evolve over time as technology advances and as additional geologic information and results from drilling activity provide a basis for further updates,” Cogan said.

—Herman Wang, herman.wang@platts.com —Edited by Derek Sands, derek.sands@platts.com


33 posted on 05/21/2014 7:43:41 PM PDT by Kennard
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To: fedupjohn

“Put them under oath!”

Oh, come on. Like, THAT will make them tell the truth, for sure. Maybe have them swear on a bible. Surely, that will help.


34 posted on 05/21/2014 7:43:56 PM PDT by The Antiyuppie ("When small men cast long shadows, then it is very late in the day.")
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To: Kennard

If there is not much oil there, they should sell the oil leases cheap then. Lol!


35 posted on 05/21/2014 7:46:14 PM PDT by FreeInWV (Have you had enough change yet?)
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To: Kennard

Here are some new words for His Holiness to contemplate:

Credibility Gap


36 posted on 05/21/2014 7:53:16 PM PDT by Rembrandt (Part of the 51% who pay Federal taxes)
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To: Kennard
a comment from SeekingAlpha:

The geology between the texas/gulf shales, the bakken/williston, and eastern (utica/marcellus) are very different from the Monterrey.

The US west coast was formed by accreted island arc. The shale beds are highly fractured (like SivBum says, non-planar) by that process.

It's geology, not politics.

37 posted on 05/21/2014 7:53:37 PM PDT by Kennard
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To: Kennard

Well, 80 million years of earthquakes didn’t seem to ruin the oilfields in the LA area and the Central Valley, did they?

I call BS on this report, just like on the Obama Admins Global Warming report that is pure agenda driven fiction


38 posted on 05/21/2014 8:02:46 PM PDT by rdcbn
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To: Kennard

from the WSJ today, by Russell Gold (thesis is that EIA estimates vary wildly over time):

The internet is abuzz today over California’s Monterey Shale – and a news article that says the federal government will soon slash its estimate of how much crude oil drillers can extract from the region, which has been touted as the biggest potential oilfield in the country.

Here’s what is happening – and what matters.

The Los Angeles Times reports the Energy Information Administration will soon lower its estimate of how much oil can be recovered from the Monterey Shale. A couple years ago, the government estimated there were 13.7 billion barrels underneath California. The new figure? Six hundred million barrels, according to the article.

An EIA spokesman confirmed the change, attributing it to “new geology information…and a lack of production growth relative to other shale plays.”

Does that mean the oil has disappeared? Not at all. The 600 million barrel figure is the government’s estimate of how much oil drillers can get out of the earth with existing technology and at current prices. And based on the handful of wells that have been drilled, the Monterey is proving to be tough for energy companies to tap.

Unlike the Bakken Shale in North Dakota, or the Eagle Ford in Texas, the geology of the Monterey is complex. Take a look at this graphic to get an idea. The Monterey is riddled with faults, its oil is deeply buried, and its rocks aren’t amenable to being fracked, as they are elsewhere.

This shouldn’t come as a surprise to anyone paying attention. Companies focused on the Monterey, such as Venoco Inc., have been warning investors that the California shale was different from other shales. And oil output has been lackluster.

This isn’t the first time we’ve seen enormous gyrations in what are known in the industry as proved reserves. In 2002, the United States Geological Survey said its best guess about the amount of gas “resources” in the Marcellus Shale was 1.93 trillion cubic feet.

The wording it used is important. Resources means, basically, how much gas is in the rocks. It is a broad figure that doesn’t take into account whether the technology exists to extract the gas, or whether it would be prohibitively expensive.

Nine years later, in July 2011, the Energy Information Administration said there were 410 trillion cubic feet of “technically recoverable” natural gas in the Marcellus. Not only was the agency saying there was 200 times more gas than previous government estimates, but it was “technically recoverable”, meaning it could be extracted with readily available technology at prevailing prices.

The euphoria lasted a month. In August 2011, the United States Geological Survey slashed this optimistic assessment, saying there were 84 trillion cubic feet of “technically recoverable” natural gas.

More recently, the EIA reported reserves of 42.8 trillion cubic feet.

Calculating reserves is a very imprecise science. But this doesn’t mean the shale boom isn’t for real. About a million barrels of oil a day are flowing from the Bakken Shale and even more is coming from the Eagle Ford. That isn’t a best guess of reserves – that is actual oil production. The lesson here? Beware of forecasts that make too many assumptions about how much oil is available. You need to drill a lot of wells first before you can really figure it out.


39 posted on 05/21/2014 8:03:17 PM PDT by Kennard
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To: gaijin

Besides, Obama needs to confiscate more land for his new National Monument Obama-Holder Drug and Wetback Corridors, and Feudal Lord Reid always needs more land for his BLM.


40 posted on 05/21/2014 8:06:03 PM PDT by Graewoulf (Democrats' Obamacare Socialist Health Insur. Tax violates U.S. Constitution AND Anti-Trust Law.)
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To: Kennard
Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.


I had always regarded the early estimates for the Monterey Shale as very optimistic, nearly to the point of being delusionally so. It made me wonder where this estimate came from. Turns out it was the work product of, as set forth in the LA Times article, a consulting outfit in Virginia, under a contract awarded by the Energy Information Agency.

Now, with all due respect to the fine folks of the Commonwealth of Virginia, it surely is not the first place you go to find top-flight geoscientists and petroleum engineers. Paper-pushing bureaucrats, yes. Reservoir engineers? No. The original Monterey Shale reserve estimates produced by that outfit prove that beyond a shadow of a doubt.

I wonder how much that group charged the U.S. taxpayer for those bogus reserve estimates, anyway.
41 posted on 05/21/2014 8:06:32 PM PDT by Milton Miteybad (I am Jim Thompson. {Really.})
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To: Kennard

Where did that oil go? Perhaps the Chinese are slant-drilling from ships over the horizon.

Did I really say that?


42 posted on 05/21/2014 8:20:53 PM PDT by Veto! (OpInions freely dispensed as advice)
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To: Milton Miteybad
I had always regarded the early estimates for the Monterey Shale as very optimistic, nearly to the point of being delusionally so. It made me wonder where this estimate came from. Turns out it was the work product of, as set forth in the LA Times article, a consulting outfit in Virginia, under a contract awarded by the Energy Information Agency.

So do you think that these consultants were asked to come in high and, if so, why? Was it to provide political cover for Obama and Brown to expand drilling activity in, and revenue for, Brown's California?

43 posted on 05/21/2014 8:22:30 PM PDT by Kennard
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To: Kennard

Where did you get that gibberish quote from?


44 posted on 05/21/2014 8:39:38 PM PDT by crusty old prospector
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To: crusty old prospector
Where did you get that gibberish quote from?

a commenter to the article as posted on SeekingAlpha, an investment website.

45 posted on 05/21/2014 8:43:59 PM PDT by Kennard
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To: crusty old prospector

What is your considered opinion on the Monterey Shale, Crusty?


46 posted on 05/21/2014 8:49:52 PM PDT by Kennard
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To: Kennard
So do you think that these consultants were asked to come in high and, if so, why? Was it to provide political cover for Obama and Brown to expand drilling activity in, and revenue for, Brown's California?

I don't know that they were asked to "hit the number" or anything like that. Personally, I think the EIA had some money left in the budget at the end of the fiscal year, so they paid some consultant in Virginia (of all places) to come up with a reserve estimate for the Monterey Shale. Looks more like political patronage or crony capitalism than anything else. I'm not convinced there was any ulterior economic motive, because if you're trying to touch off a drilling boom, probably the worst place to try and do it would be 21st century California. In 1920, of course, it was a different story.
47 posted on 05/21/2014 8:54:13 PM PDT by Milton Miteybad (I am Jim Thompson. {Really.})
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To: Milton Miteybad

This government is full of dishonest people...at just about every level. Can you say “liars”?


48 posted on 05/21/2014 9:02:43 PM PDT by ogen hal (First amendment or reeducation camp)
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To: Kennard
"U.S. officials cut estimate of recoverable Monterey Shale oil by 96%"

Smells like another "the science is settled" moment.
49 posted on 05/21/2014 9:30:46 PM PDT by clearcarbon
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To: clearcarbon
Thus far, my layman's assessment is that:

- estimates were far too high in the past;

- the Feds are bringing them back in line;

- EIA estimates are subject to wild swings and low levels of accuracy;

- this topic is influenced by geology, not politics.

50 posted on 05/21/2014 9:41:15 PM PDT by Kennard
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