Monterey Shale

Last year, a post here on DeSmog asked: “Could California's Shale Oil Boom Be Just a Mirage?”

For now, the answer appears to be a resounding yes.

According to the LA Times, the US Energy Information Administration (EIA) is set to announce next month that it is officially downgrading its estimate of the oil reserves in California's Monterey Shale from 13.7 billion barrels to 600 million barrels — a 96% decrease.

Modern technology, it seems, is just not up to the task. The EIA will issue its new estimate after reviewing output from oil operations using the latest technologies like fracking and acidization, which eats away rock.

“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 exploration and production analyst with the EIA, according to the LA Times.

At one point, the Monterey Shale was expected to fuel a new “black gold rush” in the Golden State. Initial estimates in 2011 put the amount of recoverable oil from the Monterey Shale at 15.4 billion barrels. The EIA revised this number down to 13.7 billion in 2012, which was still some two-thirds of shale reserves in the entire US.

As the LA Times notes, “The estimate touched off a speculation boom among oil companies. The new findings seem certain to dampen that enthusiasm.”

Environmentalists reacted to news of the downgrade with some relief but little surprise. 

“The oil had always been a statistical fantasy,” says geoscientist J. David Hughes of the Post Carbon Institute, who published a report last December that was critical of the EIA estimates. Hughes' findings were based on an analysis of actual oil production data from the Monterey Shale, which drastically underperformed the industry's projections.

While several of the major oil companies have been wary all along, not everyone is giving up so easily. It's not that the oil isn't there, it's just that the Monterey Shale's unique geography presents challenges for which existing methods have no answer, and there may yet be a technological innovation that will allow the exploitation of the Monterey Shale's reserves.

“As the technologies change, the production rates could also change dramatically,” Tupper Hull, a spokesman for the Western States Petroleum Assn., told the LA Times. 

There’s a lot of money at stake for oil companies that want to frack California’s Monterey Shale, so it’s no wonder Big Oil is spending big to forestall any new environmental regulations from biting into profits.

Here’s a particularly striking case in point: Just a week before the California State Senate voted on a bill that would impose new regulations on fracking activities, the Western States Petroleum Association (which represents the likes of Exxon, Chevron, BP, Occidental, Valero, Phillips 66, etc.) treated a dozen lawmakers to a lavish $13,000, 5-course meal at The Kitchen, one of Sacramento’s fanciest restaurants.

Two weeks later, the bill was signed into law by Gov. Jerry Brown, but by then lobbyists had managed to weaken the bill to the point that many environmentalists had withdrawn their support.

“Before they passed [the bill], lawmakers accepted new amendments from the oil and gas industry – amendments that undermine the original intent… changing it into a bill we simply can’t support,” said the California League of Conservation Voters.

That $13,000 dinner is a drop in the bucket, of course.

So far in 2013, the oil and gas industry has already spent over $11.5 million on lobbying efforts in California, and it’s not just fracking regulations that are in Big Oil’s crosshairs.

“Frackademia” - shorthand for bogus science, economics and other research results paid for by the oil and gas industry and often conducted by “frackademics” with direct ties to the oil and gas industry - has struck again in California.

It comes in the form of a major University of Southern California (USC) report on the potential economic impacts of a hydraulic fracturing (“fracking”) boom in California's Monterey Shale basin that's hot off the presses, “Powering California: The Monterey Shale and California's Economic Future.”

California Democratic Gov. Jerry Brown recently gave his cautious support to fracking, the toxic process via which oil and gas embedded deep within shale rock basins made famous by the documentary film “Gasland,” currently a topic of contention in California. The new report gleefully says we could be witnessing 1849 all over again, the second-coming of a “Gold Rush,” a term the co-authors utilize 9 times in the Preface. 

The report, co-authored by a Los Angeles-based public relations firm, The Communications Institute (TCI), concludes that “development of the 1,750-square-mile formation in central California could generate half a million new jobs by 2015 and 2.8 million by 2020,” as reported by The Los Angeles Times, which blared the headline, “Tapping California shale oil could add millions of jobs, study says.”  

Given California's population of 37,683,933 people, this would mean 7.4 percent of the state's citizens can gain employment and economic uplift from the industry. It would also shrink the 20.3-percent unemployment rate in the Golden State down drastically, to 12.9 percent. 

“The Monterey shale would help stimulate the California economy to a significant extent,” USC professor and co-author Adam Rose told The Times. “It's not just a benefit to the oil industry. These impacts ripple throughout the economy.”  

While a nice sentiment, the age-old questions quickly arise: who are the authors and who funded this study? 

The answers to these questions, a DeSmogBlog investigation has revealed, paints an entirely different picture of the report's findings and how it came to such rosy conclusions.