California ripe for oil investment as Monterey Shale opens up

6 Oct

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The U.S. has already seen a massive reversal of fortunes in oil and gas exploration, as the energy industry has started to tap unconventional resources from Bakken Shale in North Dakota to the sprawling Marcellus Shale, which runs underneath New York, Pennsylvania, Ohio and other states. Though, the biggest investment prize of all has barely been touched thus far.

The New York Times reports that interest is starting to mount in oil investment in the massive Monterey Shale in Central California.

Black gold in a green state

While it is not traditionally associated with the oil industry, California was the third-largest oil producing state in the U.S. until midway through last year and was the site of one of the country’s largest oil rushes in the early 20thcentury. As it stands, California remains the fourth-largest oil producer in the country, coasting on steadily declining output from aging conventional fields.

The Monterey Shale offers the opportunity to turn this decline on its head, however. The deposit, located in the San Joaquin Basin, stretches roughly from east of San Francisco around Modesto southeast to around the city of Bakersfield, northwest of Los Angeles.

This enormous deposit is projected to hold as much as two-thirds of the total U.S. shale oil reserves, according to the U.S. Energy Information Administration estimates, potentially as much as 15.4 billion barrels of oil equivalent.

Technological revolution

For the most part, energy companies have been skeptical about investing in oil exploration in the Monterey Shale, since the field’s tricky geology has produced a number of notable disappointments already. While normal oil wells generally go to depths of around 2,000 feet, the Times notes that shale wells often go more than a mile underground, an area made more complex in California by the presence of nearby faults and similar geological features.

However, the boom in North Dakota and some of the liquids rich shale plays in Texas has offered some hope that the technology has advanced to the point that California could begin to see some of the benefits of unconventional oil and gas exploration.

“Everyone has known that there is shale oil not just in the Monterey Shale but also in North Dakota and Wyoming and all over the country,” Severin Borenstein, co-director of the University of California at Berkeley Energy Institute, told the Times. “Back in the ’70s, there were discussions that there’s all this oil and all we’ve got to do is get it. Now 40 years later, the technologies have become available to actually get it in a cost-effective way.”

Environmental roadblock

One of the biggest problems aside from the still difficult geology of the region, however, is that California actually has a highly-developed and well-funded environmental lobby. The big states to benefit from shale exploration thus far, North Dakota and Texas, have much smaller-scale environmental advocacy, and Texas is probably the state with the best track record with the oil industry in recent years.

In California, groups are coming together to oppose the use of the drilling technique known as hydraulic fracturing, or fracking, which pumps millions of gallons of water, sand and chemicals into the ground to break up rock formation. Last December, the State Department of Conservation released a set of rules governing the process, but critics have already objected over the failure to require the disclosure of the chemicals used in fracking.

While the process has sparked numerous water concerns, perhaps the more interesting problem in an area already prone to earthquakes is the potential that the process can trigger seismic events. Most companies operating in the U.S. maintain that fracking itself is not linked to earthquakes; however, some evidence has at least linked the process of dumping fracking fluids in deeper disposal wells with seismic events in Ohio.

4 Responses to “California ripe for oil investment as Monterey Shale opens up”

  1. Waneta August 8, 2013 at 8:41 pm #

    have the right to drill at angles and can even frack natural gas directly beneath your home, without providing you any notification or offering you an opportunity to have your well-water tested and the results certified by a notary public?
    Obviously the Notary public is not serving as a scientific expert, just verifying the date of the document so as to make the document acceptable in court.

  2. Carlie August 14, 2013 at 8:09 pm #

    Cleaner than coal. Many micro stations. Can easily be throttled to meet demand. Easier to transmit electricity than gas. Easier to get right of ways. Exhaust gases could possibly be sequestered at another well. Why don’t they do this? Not economical? Why?

  3. Tiara September 2, 2013 at 5:57 pm #

    I am thinking about majoring in Petroleum Engineering or Civil Engineering. There are 3 types of Petroleum Engineers,Drilling, Reservoir, and Production. I don’t know which one I would become if I got a degree. Any feedback would great, thanks

  4. Orlando September 10, 2013 at 6:56 am #

    Describe surface and sub surface mining techniques as well as techniques for onshore and offshore oil and natural gas production. Analyze the consequences of each to landscapes, habitats, and mining interests.

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