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Page added on April 7, 2014
Vast oil trove trapped in Monterey Shale formation
San Joaquin Valley’s Monterey Shale formation may hold 15 billion barrels of oil, but no one has found an affordable way to extract it.
It’s all been hustled into service to solve a tantalizing riddle: how to tap into the largest oil shale reservoir in the United States.
Across the southern San Joaquin Valley, oil exploration sites have popped up in agricultural fields and on government land, driven by the hope that technological advances in oil extraction — primarily hydraulic fracturing and acidization — can help provide access to deep and lucrative oil reserves.
The race began after the federal Energy Information Administration estimated in 2011 that more than 15 billion barrels of recoverable oil is trapped in what’s known as the Monterey Shale formation, which covers 1,750 square miles, roughly from Bakersfield to Fresno.
But getting at that oil isn’t easy. The Monterey Shale is unlike other oil shale formations across the United States. In those booming oil fields, reserves are pooled in orderly strata of rock. Once the rock is cracked open by fracking or other means, operators can sink a single well with multiple horizontal shafts and pull in oil from a wide area.
California’s geology is far more complicated. The earth under the Monterey Shale has undergone constant seismic reshaping that has folded, stacked and fractured the substrate, trapping the oil in accordion pleats of hard rock at depths of up to 12,000 feet. To reach the crude using conventional methods requires oil companies to drill far-deeper wells, and more of them — a prohibitively expensive undertaking.
To crack the code, companies are busily drilling test wells here, using various fracking and acidization techniques in search of cheaper solutions. So far, no one seems to have found a method to profitably extract the oil.
“Very smart engineers are spending their waking hours trying to come up with the magic formula,” said Rock Zierman, chief executive of the California Independent Petroleum Assn., a trade group that has many Monterey Shale prospectors among its members.
“What we do know is there is a heck of lot of oil down there,” Zierman said. “What we don’t know is how we can get it out of the ground in an economically viable way to justify the heavy investment.”
The shallow, 1,000-foot wells in the established Bakersfield oil patch might cost a hundred thousand dollars to sink. In the Monterey formation, that expense might run to $5 million, and with every chance of yielding a dry hole.
Despite the difficulty getting at the oil, the potential bonanza is too big for many oil companies to ignore.
In Kern County — where the bulk of the Monterey formation lies — available land for drilling has nearly all been snapped up. Speculators are believed to be responsible for driving up the cost of obtaining leases.
In 2007, the average successful bid for an acre of land for oil leasing went for $2, according to the federal Bureau of Land Management. The price has since soared above $500, with some recent parcels going for twice that. Oil companies drove up prices sharply in 2010, as various federal assessments began to hint at the magnitude of the Monterey reserves.
The leading edge of the exploration boom is pushing Bakersfield’s oil patch — which has reliably produced oil for more than 100 years — into long-established agricultural tracts. Oil companies are now paying farmers for their water rights, land and, in some cases, buying their homes outright to get at the reserves that might lie underneath.
Exploratory wells are sprouting near homes, schools and in the town of Shafter, where the city charges drillers to hook up to corner fire hydrants for the water they require. Companies are searching for the best well sites with 3D seismic “thumper trucks” that send shock waves underground to create a picture of subterranean deposits.
Should energy companies find a way to crack the Monterey’s deeply folded rock, the ensuing boom could be transformative for California. A USC economic study forecast an enormous impact: A Monterey-fueled oil shale industry could create 2.3 million new jobs by 2020 and boost the state’s GDP by as much as 14%.
The report, which was funded by the energy industry and published in 2013, projected that the Monterey formation had the potential to increase oil production in California sevenfold.
The implications are profound, touching on public health, water use, water quality and the loss of agricultural land. The subsequent transformation also would alter the lives of families living in the resolutely rural communities dotting the valley.
For Tom Frantz, a retired teacher and third-generation farmer, the exploratory drilling is already too much.
“This is prime farmland and they have drilled between 200 and 300 wells in the last 10 years in the Monterey Shale,” Frantz said. “Every one took out an acre or two of farmland. Every one has used hundreds of thousands of gallons of water. Each one has contributed to our air pollution. Each one has had spills on the ground of different chemicals and crude oil. Each one is emitting methane as we speak.
All the predictions — both enthusiastic and dire — are predicated on cracking into the stubborn Monterey formation.
David Hughes, a geoscientist at the Santa Rosa-based Post Carbon Institute, studied both the USC report and the federal data and then published his own assessment, which casts a skeptical eye on the rosy assumptions. His conclusion: “It’s not going to happen.”
Reviewing industry-generated data, Hughes said test wells in the Monterey so far have been expensive and unproductive.
“California oil production peaked in the early ’80s,” Hughes said. “It’s now down to half that. If the Monterey Shale can just maintain California’s production level — I would think that’s about all it could do.”
The uncertainty has kept some of the industry’s heavy hitters on the sidelines. And although the big companies are loath to reveal their strategies, Chevron‘s chief executive has said, “The jury’s out on Monterey Shale.”
Gabe Garcia, manager of the Bakersfield office of the BLM, which permits drilling on federal land, said no one has yet found enough accessible crude to make extraction profitable. “We’ve got areas where they’ve drilled several wells and they are still trying to prove economics to us,” Garcia said.
Any technology that succeeds will probably include either hydraulic fracturing — fracking — or acidizing. Fracking is a controversial but long-used technique that sends a high-pressure mixture of water, chemicals and sand into a well bore to explode the “tight” rock formation and free the oil. Acidizing entails shooting a potent mix of highly corrosive chemicals into the formation to dissolve the rock.
Both practices are under review by the state of California and the BLM and are, at the moment, unregulated.
Another aspect of fracking presents a unique challenge in California. The process of reinjecting drilling fluids into the ground is thought by some to stimulate minor seismic activity around drilling pads, dubbed “frackquakes.”
Fracking operations in Arkansas, Oklahoma and Pennsylvania have measured this phenomenon, but industry officials vigorously dispute the theory.
The San Andreas fault traces the western outline of the Monterey formation.
11 Comments on "Vast oil trove trapped in Monterey Shale formation"
rollin on Mon, 7th Apr 2014 2:20 am
So now they are not happy with just the earthquakes they get naturally. Now they have industrially induced earthquakes too.
Plantagenet on Mon, 7th Apr 2014 3:14 am
Don’t be afraid. Earthquakes produced by frakking are too small to do any serious damage.
Kenz300 on Mon, 7th Apr 2014 4:01 am
Fossil fuels are getting more expensive to extract so the price keeps going up……..
Wind and solar keep getting less expensive every year…….
If all you have is a hammer….. everything takes a hammer to build……. all fossil fuel companies know is more fossil fuels…..
Time for the fossil fuel companies to wake up and start to diversify into “energy” companies by investing in safer, cleaner and cheaper alternative energy sources.
Climate Change is real…… time for fossil fuel companies to quit all the misinformation and change the business model or get left behind……..
The economics of fossil fuels is losing out to cheaper alternative energy sources.
Beery on Mon, 7th Apr 2014 7:38 am
Vast.
15 billion barrels. What is that – 6 months global supply – if it’s all recoverable? And how long will it take to extract just half of the oil in there – 20 years? 30? 40? If they can ever get any out at all profitably.
So what we’re talking about is something that “might” provide a week’s worth of our oil needs every year, best case scenario – if we’re really lucky.
So we just need to find another 52 of these “vast” fields, then start producing oil from them, and we’ll be just fine for another few years. Then we need to find another 52 to push things out another few years, and so on.
Piece of cake. I’ll go out and buy me a 6000 SUX.
Arthur on Mon, 7th Apr 2014 8:04 am
How about using these extra 15 billions to construct 200,000 wind turbines. If you can extract them in the first place.
Oh wait, you have to build your 14th carrier first. I see.
rockman on Mon, 7th Apr 2014 11:22 am
Arthur – “How about using these extra 15 billions to construct 200,000 wind turbines” Simple answer: because the folks spending the $15 billion don’t built wind turbines for a living. Same reason you don’t go to a gynecologist for a broken leg…not their thing. LOL.
rockman on Mon, 7th Apr 2014 11:41 am
And again those picky details: “…how to tap into the largest oil shale reservoir in the United States.” The MS is a geologic formation…not a reservoir. But there have been some very local accumulations that would fit that term: Commercial oil production from the Monterey Formation is not new—more than a billion barrels of oil
and four trillion cubic feet of gas have been produced from it since 1977, largely from conventional reservoirs.
But there are more serious issues about the hype of the MS:
While tight oil plays generally produce directly from widely dispersed source rocks or immediately adjacent reservoirs—as is the case in the Bakken and the Eagle Ford—this is not the
case in the Monterey Formation, where most production has come from localized conventional reservoirs filled with oil that has migrated from source rock.
Almost 1,400 have been completed in the Monterey Formation. Oil production from these wells peaked in 2002, and as of February 2013 only 557 wells were still in production. Most of these wells appear to be recovering migrated oil, not “tight oil” from or near source rock as is the case in the Bakken and Eagle Ford plays.
The EIA/INTEK report assumed that 28,000 tight oil wells could be drilled and that each well would recover 550,000 barrels of oil. The data suggest, however, that these assumptions are extremely optimistic for the following reasons:
Initial productivity per well from existing Monterey wells is on average only a half to a quarter of the assumptions in the EIA/INTEK report. And remember: this is the recovery from those CONVENTIONAL RESERVOIRS…not the fractured shale intervals which typically have a lower recovery factor.
Existing Monterey shale fields are restricted to relatively small geographic areas. The widespread regions of mature Monterey shale source rock amenable to high tight oil production from dense drilling assumed by the EIA/INTEK report likely do not exist.
mo on Mon, 7th Apr 2014 1:27 pm
Yea remember the old BP commercial ( beyond petrolium). The mans right, their buisness is oil and gas and only oil and gas
rockman on Mon, 7th Apr 2014 2:34 pm
mo – And the scary implication of that commercial is that oil and gas are what BP is really good at. Thank goodness they don’t try to go anything else. LOL.
shortonoil on Mon, 7th Apr 2014 4:44 pm
“A Monterey-fueled oil shale industry could create 2.3 million new jobs”
There isn’t enough water in the San Joaquin Valley to water a peach tree, but they are going to spend $15 billion, and produce “millions” of jobs. The BS around shale is getting so deep they could use it to make their drilling mud. The geology of that area looks like a jig saw puzzle put together by a three old; with ADD. Hughes is right, “it isn’t going to happen”!!!!
http://www.thehillsgroup.org
John Orr on Mon, 7th Apr 2014 4:58 pm
All this oil coming to the surface one way or other….what happens if you keep drilling, have any of you heard if it’s true are you not going to find oil eventually?