INTEK obliged with a somewhat opaque report (apparently based on oil company investor presentations) suggesting that the Monterey might yield 15.4 billion barrels—64 percent of the total estimated tight oil reserves of the lower 48 states. The EIA published this number as its own, and the University of Southern California then went on to use the 15.4 billion barrel figure as the basis for an economic study, claiming that California could look forward to 2.8 million additional jobs by 2020 and $24.6 billion per year in additional tax revenues if the Monterey reserves were “developed” (i.e., liquidated as quickly as possible).

We at Post Carbon Institute took a skeptical view of both the EIA/INTEK and USC reports. In 2013, PCI Fellow David Hughes produced an in-depth study (and a report co-published by PCI and Physicians Scientists & Engineers for Healthy Energy) that examined the geology of the Monterey Shale and the status of current oil production projects there. Hughes found that the Monterey differs in several key respects from tight oil deposits in North Dakota and Texas, and that currently producing hydrofractured wells in the formation show much lower productivity than assumed in the EIA/INTEK report. Hughes concluded that “Californians would be well advised to avoid thinking of the Monterey Shale as a panacea for the State’s economic and energy concerns.”

On May 21 the Los Angeles Times reported that “Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national ‘black gold mine’ of petroleum.” The EIA had already downgraded its technically recoverable reserves estimate for the Monterey from 15.4 to 13.7 billion barrels; now it was reducing the number to a paltry 0.6 billion barrels.

What happened to all those billions of barrels of oil? Of course, the resource is still there. The Los Angeles Times article quotes Tupper Hull, spokesman for the Western States Petroleum Association, as responding, “We have a lot of confidence in the intelligence and skill of our engineers and geologists to find ways to adapt. . . . As the technologies change, the production rates could also change dramatically.”

However, technology comes with costs. The current tight oil boom in North Dakota and Texas would not have happened absent the context of historically high oil prices. But even with oil at $100 per barrel, the EIA now thinks only a very small portion of the Monterey formation’s oil resources can be produced profitably. Maybe with oil at $150 or $200 per barrel that percentage would change. But how high an oil price can the American economy bear before it falls into recession? Evidence suggests that $100 per barrel oil is already acting as a brake on economic expansion.

The new EIA estimate is a welcome note of realism in a California energy discussion that had veered into hyperbole and wishful thinking. Can we now begin a reasoned discussion about our energy future? It’s late in the game, but better late than never.

3 Comments on "Heinberg: What Happened to My 13 Billion Barrels?"

Plantagenet on Thu, 22nd May 2014 6:13 pm 



The Post-Carbon Institute has a lot of nerve complaining about the EIAs various estimates of how much oil can be obtained by fracking. The Post-Carbon Institute has consistently gotten it wrong by consistently UNDERESTIMATING again and again the actual oil production from Bakken and other shale oil plays.

MSN Fanboy on Thu, 22nd May 2014 6:27 pm 



Plantagenet, can you blame the post-carbon institute for being optimistic.

They want a post carbon world ( clue in name ) therefore when considering Shales/ other FFs reserves they will consistently downplay and UNDERESTIMATE.

Ditto for big oil

Its just Human Nature, so smile 🙂

MKohnen on Fri, 23rd May 2014 12:39 am 



Plant,

In the comments to “The US Shale Oil Miracle Disappears” by Chris Martenson, you mock his ascertain that Monterey accounted for 2/3 of shale oil reserves. But in this article Heinberg states that it was the EIA who stated that Monterey accounted for “64% of all recoverable tight oil reserves in the US.” In your comments for this article, you don’t seem to be scoffing at that. Instead, you shift the focus to PCI’s supposed inaccurate forecasts, as if that has anything to do with anything. You really do come off as a propagandist for the oil companies. BTW, where’s Nony? Supporting the cornucopian view by holding up predictions (when often there wasn’t an actual prediction made) that he deems inaccurate seems to be his trick, too. After you pointed out the inaccuracy of the PCI estimation, is the 13 billion barrels back in Monterey? Are we OK now? Good, we can get back to BAU! Or could it be that the cheerleaders of the shale boom could be just a little wrong – say by about 96%?