Skip to comments.The California Shale Bubble Just Burst
Posted on 05/22/2014 5:46:52 AM PDT by thackney
The great hype surrounding the advent of a shale gas bonanza in California may turn out to be just that: hype. The U.S. Energy Information Administration (EIA) - the statistical arm of the Department of Energy - has downgraded its estimate of the total amount of recoverable oil in the Monterey Shale by a whopping 96 percent. Its previous estimate pegged the recoverable resource in California's shale formation at 13.7 billion barrels but it now only thinks that there are 600 million barrels available.
The estimate is expected to be made public in June.
The sharply downgraded numbers come amid a heated debate in California over whether or not the state should permit oil and gas companies to use hydraulic fracturing ("fracking") - the process in which a combination of water, chemicals and sand are injected underground at high pressure in order to break apart shale rock and access trapped natural gas.
Fracking involves enormous quantities of water; an average of 127,127 gallons of water were required to frack a single California well in 2013, according to the Western States Petroleum Association. That's equivalent to 87 percent of the water a family of four uses in an entire year.
California is home to an enormous agricultural industry, and with the Monterey Shale located beneath the fertile Central Valley, fracking is going to compete with agriculture, ranching and other commercial and residential users for water use. With 100 percent of California now in a state of "severe" drought, critics of fracking have gained traction in the debate over the extent to which the government should allow oil and gas companies to move in.
On March 20, Santa Cruz became the first county in California to ban fracking, the biggest win by environmental activists thus far in their campaign to rid the state of the practice. The move may have been symbolic though, since there isn't much of a presence by the industry in that locality; it was more aimed at putting pressure on Governor Jerry Brown to stop fracking in the water-starved state. That follows a unanimous February vote by the city of Los Angeles to ban the practice, the largest city to do so in the country.
Indeed, activists are pushing for a statewide ban on fracking, and a bill to do just that is working its way through the state senate. It passed a committee vote in April, but faces an uncertain future. Brown supports fracking and has trumpeted its potential for state revenues. The state has projected that fracking could bring up to 2.8 million new jobs and boost state coffers by $24.6 billion each year. He signed a bill last year that tightened regulations on the industry but also set up a permitting regime that could allow the industry to move forward.
Although the topic has been highly controversial, the ramifications may not be as significant as previously believed, now that the federal government believes only a small fraction of the Monterey Shale's reserves are accessible. The main reason for the downgrade was that the original 2011 estimate mistakenly assumed that California's shale oil and gas could be recovered with as much ease as it is elsewhere in the country.
But the geology of the Monterey Shale is much more complex than in the Marcellus, Bakken, or Eagle Ford Shales - the three formations principally responsible for the surge in oil and gas production in the United States. The layers of shale in the Monterey are folded in such a way that drilling is difficult, and test wells thus far have come up disappointing.
The Los Angeles Times quoted a downbeat assessment from an official with the EIA. "From the information we've been able to gather, we've not seen evidence that oil extraction in this area is very productive using techniques like fracking," said John Staub, a petroleum analyst with the EIA. "Our oil production estimates, combined with a dearth of knowledge about geological differences among the oil fields, led to erroneous predictions and estimates," he added.
The oil and gas industry was quick to point out that the calculation could change once again if drillers could improve technology to access the Monterey. After all, no one saw the shale revolution coming only a few short years ago. But as Staub, the EIA analyst noted, for now oil and gas production in "the Monterey formation is stagnant." And it could remain that way.
Does it matter, Thackney?
Would they have gone after the oil in California anyway?
Drilling in California is not necessary. Leave them to their enviro lunacy and eventual bankruptcy.
So the Sierra Club got their people inside to write this report.
A great tactic to use against shale oil production.
Clever; we need to fight the same way.
Estimates for oil drop by 96% between scientific studies. This is the study of rock, geology, and current drilling technology and economics, all solid, measurable, and with not much variation over the short run.
In contrast, the global warming is “settled science”, “the debate is over”, on a topic where even the key drivers of temperature are being debated, where previous forecasts have proven totally worthless, and where the role of the sun seems to be barely looked at. And people wonder why the “deniers” laugh at the warmists’ efforts to suppress the debate!
We won’t. We never do. Anyone who tries is called out for being a meanie by both sides...
The same group of people increased the Bakken and Eagle Ford oil field reserves.
We don’t need to create false reports. We don’t need to discount reports because they don’t meet our dreams.
Somebody inflated the numbers so that somebody could make a quick buck off of investors or grants, methinks.
I suspect political chicanery
There has definitely been a lot of hype based upon what might be accessible in the ground versus what was actually being brought up from the same play for a few years.
Given the lack of success hydraulic fracturing had been in producing the Monterey, companies have been trying other methods to get production high enough to meet the cost for the field.
Acidizing oil wells bigger than fracking?
August 12, 2013
nyone following the spread of fracking in California should check out an interesting and frustrating report this week from former San Francisco Chronicle journalist Rob Collier.
Its about acidizing, an oil production technique that involves pouring large amounts of hydrofluoric or hydrochloric acid down wells. Collier argues that it could be more effective than hydraulic fracturing as a way to unlock the Monterey Shale, an immense rock formation beneath central California that could hold more than 15 billion barrels of oil.
Can anyone believe any numbers the land-grabbing government produces?
The same group has been increasing the oil reserves in the Bakken and Eagle Ford, as well as others.
” - - - The U.S. Energy Information Administration (EIA) - the statistical arm of the Department of Energy - - - “
Do you have a typo? The correct term is the PROPAGANDA Arm, not the statistical arm, based solely on post mortems of their previous public estimates.
[Keep in mind that this IS an official estimate by the Keystone Cops, US Federal Government, proud provider of the VA Hospital and Obamacare failed money pits.]
BTW, will the Chinese, Nancy Pelosi, Harry Reid, AG Holder, POS Obama and Jerry Brown be forbidden to bid on the soon to be decreased mineral rights value of the Monterrey Shale acreage?
Either bad science (estimates are worthless) or politics (screw the estimates) at work here. Wish I knew which.
The initial reserves estimate was criticized by many as unsupported by data from the drilling that was going on.
Unlike other shale deposits around the country, the Monterey Shale is more uneven and the oil is buried deeper. Some companies have used hydraulic fracturing, which pumps massive amounts of water, sand and chemicals to break up rock formations, with mixed success.
From the information weve been able to gather, weve not seen evidence that oil extraction in this area is very productive using techniques like fracking, John Staub, an analyst who led the energy agencys research, told the Times.
The original estimate in 2011 was done by Intek, a Virginia-based engineering company.
The companys work was very broad, giving the federal government its first shot at an estimate of recoverable oil in the Monterey Shale. They got more data over time and refined the estimate, Intek senior associate Christopher Dean told the newspaper.
I understand the cline isn’t doing well either.
I always put all my faith in government.
Is a sarc tag really necessary?