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.
Source: http://oilprice.com/Energy/Energy-General/The...Just-Burst.html
By Nicholas Cunningham of target="_blank" Oilprice.com
