Seeking Alpha

U.S. cuts estimate of recoverable Monterey Shale oil by 96%

  • U.S. energy authorities have slashed by 96% the estimated amount of recoverable oil in California's Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum, the LA Times reports.
  • Just 600M barrels of oil can be extracted with existing technology, far below the 13.7B barrels once thought recoverable; the new estimate is expected to be released publicly next month.
  • The Monterey Shale formation contains about two-thirds of U.S. shale oil reserves, and had been seen as an enormous bonanza for California's economy and U.S. energy security.
  • Potential tickers of interest include OXY, CNQ, PXP.
Comments (21)
  • Bret Jensen
    , contributor
    Comments (10019) | Send Message
     
    Yeah, the only shale region in country where estimated reserves have gone down. No fudging the numbers to give political cover for the far left to fight any movement to frack in area or make their $100mm midterm funding alt energy crazy billionaire happy going on here. Nah, a govt agency would not do that, would they?
    21 May, 10:17 AM Reply Like
  • SivBum
    , contributor
    Comments (1604) | Send Message
     
    Report stated that the non-planar terrain of the Monterey shale deposits makes conventional fracking non competitive and inefficient, i.e. too expensive and require new extraction technology which is being developed but no doubt more expensive. The oil is there if push comes to shove ... On the other hand, we do have solar and wind renewables. A decade ago, solar cost was 10x higher than today and going lower with new technology. We also know that the sun is there if push comes to shove.
    21 May, 10:31 AM Reply Like
  • userwcSX
    , contributor
    Comments (33) | Send Message
     
    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. They have running oil wells all over CA already. Hell, they have working ones in downtown LA.
    21 May, 11:13 AM Reply Like
  • tdellertx
    , contributor
    Comments (5) | Send Message
     
    Brett, any effect on WRES ? I was checking to see if any of their holdings were in the Monterey.
    23 May, 01:58 PM Reply Like
  • 1434361
    , contributor
    Comments (60) | Send Message
     
    How does CNQ get affected ?
    21 May, 10:27 AM Reply Like
  • Big Bad Bulls
    , contributor
    Comments (90) | Send Message
     
    Yeah, Bret, I agree with you. As long as the current administration is in control, fossil fuels will never be in favor. If you just at the nat gas policies (or lack there of), one can easily ascertain that. And I am for non-renewables as well but for now, fossil fuels is still what runs the earth's economies and we try to pretend that it doesn't here in the US.
    21 May, 10:39 AM Reply Like
  • SivBum
    , contributor
    Comments (1604) | Send Message
     
    BBB,

     

    You should search got "Nat Gas Bill 2011" and learn something. It is not the current administration throwing up road blocks but the dysfunctional Congress.
    21 May, 01:10 PM Reply Like
  • badbernanke
    , contributor
    Comments (231) | Send Message
     
    With domestic oil production growing at virtually unprecedented rates, it surprises me that anyone would say that the current administration has been blocking growth. Whether they favor fossil fuels is another matter, but they haven't slowed development of the oil and gas.
    21 May, 04:13 PM Reply Like
  • DevilDog85
    , contributor
    Comments (266) | Send Message
     
    SivBum,

     

    Get a life.
    21 May, 08:20 PM Reply Like
  • Big Bad Bulls
    , contributor
    Comments (90) | Send Message
     
    SivBum,

     

    It is simple. Drilling has not happened on government held lands; all of this amazing increase has happened on private property. Who makes the decisions on whether or not we drill on government lands???? We spend billions on bankrupt solar companies while missing the opportunity to switch over to nat gas for much of our transportation needs. Do you ever wonder why Ford makes nat gas cars all over the world but doesn't here? All it would take would be for the admin to give nat gas a push but it doesn't happen. We are not allowed to drill on most all of the premier places offshore. We irritate our friends in Canada on the Keystone pipeline even though we are building pipelines as fast as we can all over the country as long as they don't cross country lines. I could go on and on but maybe you are starting to understand...
    23 May, 07:01 PM Reply Like
  • The_Hammer
    , contributor
    Comments (3845) | Send Message
     
    this is the monterey in CA not montney in Canada. cnq has no position in monterey. oxy probably involved here maybe even chv.
    21 May, 10:42 AM Reply Like
  • DevilDog85
    , contributor
    Comments (266) | Send Message
     
    CNQ at one time had about 200K acres. Not sure if they still do. Why do you say differently?
    21 May, 08:19 PM Reply Like
  • Dean K
    , contributor
    Comments (5) | Send Message
     
    Hate to say it but I find it hard to believe much of anything out of the government.
    21 May, 11:59 AM Reply Like
  • coyote21
    , contributor
    Comments (14) | Send Message
     
    OXY knew it already... that's why they want to pawn it off - whoops I mean spin it off into a separate entity...

     

    Looks like they got caught...

     

    OXY wanted to package it up with their Bakken acreage...

     

    another disappointment they want to pawn off - spin off...

     

    OXY's Bakken play is being a run by a 30 yr old nitwit...

     

    they are the only Bakken Oil Co who can't find oil in the Bakken...
    21 May, 12:33 PM Reply Like
  • davidbdc
    , contributor
    Comments (3149) | Send Message
     
    From what I've heard the geology is indeed different in much of this play. But I've not heard anyone saying that its a insurmountable problem.

     

    I suspect that if companies were given the green light to develop that they would give it a shot - develop slightly different techniques and processes and perhaps develop some new technology - and they'll soon be revising those estimates.

     

    No one should believe there will be NEW development in CA anytime soon. You'd have to be certifiable to want to get involved with California bureaucrats and regulators.
    21 May, 03:09 PM Reply Like
  • userwcSX
    , contributor
    Comments (33) | Send Message
     
    Bull. You can go to legalzoom, incorporate for $50, borrow money, and then try to get oil out of the Monterey profitably if you think it's easy.

     

    E&P companies who have boatloads of PhD geologists on staff and access to the latest technology are passing on it. It's not because of red tape. It's fundamental to how the fracking process works. You need to be able to create the pressure to push apart the rocks in a given strata, and even then it's profitable because you have widely spaced (40 acre) wells drilled horizontally. If the rock is folded so it's not in the same horizontal plane and fractured you get neither.

     

    And politically you're off, too. Central valley and the coast are very different places. Just because they are resistant to offshore drilling in CA doesn't mean onshore development is a problem. And the coastlines are tourism gold, it's not a crazy decision.
    22 May, 10:16 AM Reply Like
  • DevilDog85
    , contributor
    Comments (266) | Send Message
     
    Look at the Obama leftist out en mass doing what they do best..lie! The Monterey shale is loaded with oil. Oxy is a very well run company. For those considering an investment in Oxy, strike soon.

     

    it was once reported that CNQ had about 200K acres in the Monterey shale play.
    21 May, 08:17 PM Reply Like
  • trinh
    , contributor
    Comments (21) | Send Message
     
    Devildog, can you please leave your ridiculous, personal political beliefs out of this, if ANYBODY needs to get a life, it's you.
    22 May, 08:53 AM Reply Like
  • California Dividend Bull
    , contributor
    Comments (138) | Send Message
     
    Righ on trinh! If I want to read about the Obama bin Laden administration I go to CNN. Here we want to know how to make the best of our leftover money after every dollar we make has been taxed three times.
    23 May, 12:52 PM Reply Like
  • Heapcoup
    , contributor
    Comments (3) | Send Message
     
    This a biogenic (opal to quartz) shale, not detrital. Totally different perm and porosity with 3 diagenetic phases... Complex stuff. Some of it can be fracture stimulated, some can't. The new California company has some the best people in the industry on it as does Chevron...but you can't suck blood from a turnip.
    23 May, 07:36 PM Reply Like
  • liwill21
    , contributor
    Comment (1) | Send Message
     
    Is there anyone can give me the URL from EIA, I cannot search it.
    24 May, 12:55 PM Reply Like
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