This Rocks: California Oil Shale No Bonanza

May 22, 2014

monterey

Oil companies have been salivating at the possibility of turning central California into a sewer of toxic air, poisoned water, dried up wells, squalid boomtowns, overcrowded man camps, bursting jails and sex slavery.  It’s their vision of the future for most of America.

Looks like maybe not. At least, not yet.

LATimes:

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.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

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.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

 

The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

Post Carbon Institute:

The downgrade has major implications for California’s energy and economic future, as well as the debate over hydraulic fracturing (“fracking”) and other forms of well stimulation-enabled oil development. The perception of an impending oil boom has dominated energy policy discussions in California since the release of a 2011 report by the EIA which had estimated up to 15.4 billion barrels of recoverable tight oil—64% of the nation’s total—in the state’s Monterey shale formation. The estimate was widely cited by drilling proponents, and economic forecasts based on it projected millions of new jobs and billions in new tax revenue.

“The oil had always been a statistical fantasy,” said geoscientist J. David Hughes, author of Drilling California: A Reality Check on the Monterey Shale, an influential report critical of the EIA’s original Monterey estimates. “Left out of all the hoopla was the fact that the EIA’s estimate was little more than a back-of-the-envelope

San Jose Mercury News:

The news, which cut the forecast by 96 percent, weakened hopes for an oil boom that would bring millions of jobs and billions of dollars in new tax revenue to the Golden State, home to about two-thirds of the country’s shale oil reserves. But foes of hydraulic fracturing — which uses pressurized liquid to break rock formations to mine gas or oil — were over the moon. They argued that the new estimate by U.S. Energy Information Administration scientists makes fracking in California politically unfeasible considering the potential environmental and seismic damage.

“The myth of vast supplies of domestic oil resources and billions in potential revenue from drilling in California by the oil industry has been busted,” said San Francisco billionaire Tom Steyer, the former hedge fund manager who founded the nonprofit NextGen Climate to fight global warming.

The earlier estimates of the oil available in the Monterey Shale — a 1,750-square-mile formation extending from Sacramento to Los Angeles — had sparked a wave of California speculation not seen since the Gold Rush. Oil companies scurried to position themselves, and many politicians rushed to tally up the economic benefits — causing a serious rift between environmentalists and Gov. Jerry Brown, who sees himself as a champion against climate change.

But now the federal agency that keeps track of the nation’s energy reserves estimates that current fracking methods could extract only 600 million barrels of oil from the formation — a far cry from the 13.7 billion barrels once thought to be recoverable. The new estimate was first reported by the Los Angeles Times.

The oil industry, however, was hardly ready to hoist a white flag.

Tupper Hull, vice president of the Western States Petroleum Association, an oil industry trade group, said, “We’ve always been quite clear that there are challenges to producing oil out of the Monterey” Shale that set it apart from shale formations already tapped in North Dakota, Texas and elsewhere. “I have every confidence that the oil companies possess the experience and the ability to innovate. If anyone can figure it out, they can figure it out.”

 

 

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31 Responses to “This Rocks: California Oil Shale No Bonanza”

  1. rayduray Says:

    Recent Energiewende News from Germany:

    New Scientist Headline: Germany’s energy revolution on verge of collapse

    http://www.newscientist.com/article/dn24914#.U34QSnazn40

    Quote:

    Germany’s energy revolution has gone sour, as have its efforts to cut carbon dioxide emissions.

    Chancellor Angela Merkel’s “Energiewende” policy aims to cut greenhouse gas emissions by 40 per cent between 1990 and 2020, mostly by closing coal-fired power plants and boosting renewable energy. Yet in 2013, coal burning soared to its highest level for more than 20 years.

    Then, last week, economy and energy minister Sigmar Gabriel said he will slash wind and solar subsidies by a third, to cut rising energy bills. Subsidies for renewables currently cost German consumers €23 billion a year.

    Merkel is also shutting down Germany’s nuclear power plants, its largest source of low-carbon energy. This means emissions, which had fallen by 27 per cent by 2011, are now on the rise.

    [Continues at website….]

    • ontspan Says:

      Note the different meanings:
      “efforts to cut carbon emissions”
      “coal burning soared to it’s highest level”

      All CO2 vs CO2 emissions from coal.

      “Merkel is also shutting down Germany’s nuclear power plants, its largest source of low-carbon energy.”
      Single source… wind+solar+biomass+hydro is much larger.

      “This means emissions, which had fallen by 27 per cent by 2011, are now on the rise.”
      No, it isn’t. Shutting down nuclear isn’t the cause. Germany had an extraordinary cold winter in 2013, gas is expensive and CO2 certificates are cheap. These are the primary drivers of coal burning. The cold winter argument is proven because coal consumption in the first months of 2014 is down by 9.2 TWh (-21%) while wind+solar show their continuing growth: +7.2 TWh (+70%)

      “The Energiewende is moving emissions in the wrong direction,” says Roger Pielke Jr”
      The US Roger Pielke Jr? Really? What does he know about Germany and energy?

      • ontspan Says:

        He calculates that Germany will have to more than double renewables’ contribution to energy from 17 to 38 per cent to reach the 40 per cent target.

        “It seems highly unlikely that Germany can hit the reduction target by 2030, much less 2020,” says Pielke, who believes nuclear is “the best tool available for reducing CO2 emissions”.

        Even when Germany would stop building wind&solar but start building new nuclear plants tomorrow then they certainly would not be able to reach their goal. How Pielke can believe that nuclear is “the best tool” is beyond me, but then again: what does this professional contrarian know about energy?

        • rayduray Says:

          Re: How Pielke can believe that nuclear is “the best tool” is beyond me

          Disregarding the carbon footprint to build a nuclear power station, one can say that the production of electricity by means of nuclear fission has resulted in exactly zero CO2 emissions ever. Since nuclear power supplies several orders of magnitude more power than wind/solar/biomass/geothermal, Pielke’s statement is perfectly true and perfectly logical. It is the proven winner over the past half century at producing electrical power without dumping CO2 into the atmosphere.

          As to the nuclear waste issue and accidents, that’s not what is being addressed in this “best method” analysis.


          • And ignoring the carbon in mining, processing, enrichment, and long term waste storage.. And the fact that it takes ten years for one to be built, costs 3x as much per unit energy, …yes, many have been misled by a campaign of distortion and falsehood. It’s going nowhere. Meanwhile, renewables are unstoppable.
            http://will.illinois.edu/nfs/RenaissanceinReverse7.18.2013.pdf
            http://www.rmi.org/cms/Download.aspx?id=5039&file=E08-01_NuclearIllusion+(1).pdf&title=The+Nuclear+Illusion

          • rayduray Says:

            Christopher Arcus,

            You provide some excellent and thought provoking articles Thank you! 🙂

          • dumboldguy Says:

            Ray and Christopher,

            Ray, your comments on this thread show that you understand about nuclear power. Good for you.

            Christopher, for a guy who is so “heads up” on so many things, you suffer from some serious cognitive dissonance on the topic of nuclear power. You give us the typical “uber liberal knee-jerk” and “but-but-but….” routine every time nuclear energy comes up.

            The small carbon footprint in construction is insignificant in relation to almost NO carbon footprint during years of operation. It will NOT take ten years to build the newer (and safer) designs. And we do NOT know what the relative energy costs will be when the SHTF and we have to stop using fossil fuels virtually overnight. By then nuclear will be “cheap at any price”. Long term waste storage is not a problem, considering that there may be no long term if we don’t deal with carbon soon, and that we have been crudding up the planet since the start of the industrial revolution with many more dangerous things than a bit of highly concentrated nuclear waste.

            YOU are the one who has been misled by a campaign of distortion and falsehood, and it’s likely the Kochs and their ilk are behind it as they try to maintain the primacy of fossil fuels.. I was strongly anti-nuclear myself back in the 70’s, but have come to agree with Hansen, Lovelock, Monbiot, (and nearly ALL scientists, actually) who see nuclear power as a potential part of the solution.

            You need to start acting like a REAL liberal and use the analytic functions in your right ACC rather than operate from the emotions and simple “belief” base of the conservative.

            Renewables may be “unstoppable” in that they are our only real hope to cut CO2, but they are NOT happening fast enough. We need SOME nuclear NOW.

        • Sir Charles Says:

          All good points, ontspan. Leave aside accidents and the vast amount of waste (a problem which for more than 60 years has not been solved and doesn’t appear in any CO2 equivalent calculation). Nuclear has a carbon footprint of about 120 gCO2e/kWh, compare to that wind has around 10-15 gCO2e/kWh roughly a tenth of that.

      • rayduray Says:

        I completely agree with you that Pielke is tainted goods. Why the articles’s author Fred Pearce chose to cite him is a curiosity to me. I’ve read other books and articles by Fred Pearce and he’s really rather honest and informed. This lacuna of using someone as controversial as Pielke remains a curiosity to me.

        Were I to seek a spokesman for nuclear with more credibility, I’d cite James Hansen or Richard Rhodes, both of whom have a high level of credibility in my mind.

        Which is an oblique way for me to say that I think the Germans are daft for deciding to close existing nuclear plants before the end of their licensing agreements. They don’t have the alternatives in place and the result is the boom in lignite burning. Solving people’s irrational fears of theortical and speculative nuclear disasters by pumping excess carbon into the atmosphere seems to me to be high irrational.

        We surely have reached the age of limits.


      • Ang gas use was cut 15%. This is sloppy. Renewables cut carbon. By focusing solely on coal in the short term and ignoring gas, the new scientist article misleads.

    • andrewfez Says:

      Seems like there are articles on Energiewende that come in all flavors of optimisms and pessimism. One will say ‘renewables making electricity prices drop’ and the next will say ‘Energiewende causing industry to move to [insert a country] due to high prices’ (as if they’re going to sacrifice their tight supply chain and go through the expenditures of moving in hopes that wherever they go will consistently have cheaper prices in the long run).

      I thought they had planned to cut tariffs faster than originally scheduled secondary to a greater amount of success in the program than had been anticipated?


      • Articles say all kinds of things. Technical sources don’t lie. Renewables have sunk German wholesale electricity prices. That’s uncontested. The rest is persiflage.
        https://climatecrocks.com/2014/01/06/germany-rising-renewables-and-falling-electricity-prices/

        • andrewfez Says:

          Thanks Christopher –

          I’m sure most of us are rooting for the German model to succeed, as at the point where we hit 2C or 2.5C, and people start feeling the heat whilst they’re being backed into a corner, if there isn’t a working model in place, then there may be some probability that we to go into an national emergency scale, nuclear renaissance.


          • Nuclear renaissance isn’t happening anytime soon. The opposite.
            http://will.illinois.edu/nfs/RenaissanceinReverse7.18.2013.pdf
            Cooper has a list of aging reactors soon to go offline. Falling like dominos. Meanwhile wind and solar 3x cheaper are growing exponentially. For reactors, I like the htgr, but there are so many other problems that need to be solved in the nuclear fuel cycle. So many people think nuclear is necessary, but it’s not.
            Renewables are more viable. We are past the tipping point for renewables. Citigroup notices.
            http://cleantechnica.com/2014/04/26/wind-solar-can-generate-electricity-half-cost-nuclear/

            http://cleantechnica.com/2014/04/26/wind-solar-can-generate-electricity-half-cost-nuclear/
            As Peter also showed, solar plus storage is about to rock the utility market. EVs are coming, too. The world will be a much different place in ten years. It already is radically different from ten years ago, but few notice. And while all this happens, there will be doubt. The change is unstoppable.

          • dumboldguy Says:

            Andrew gets it when he says “….there may be some probability that we to go into an national emergency scale, nuclear renaissance”.

            Christopher once again displays his motivated reasoning with these links. The Cooper piece is well done and informative, but again makes the case mainly on cost, with the main secondary issuesbeing the “safety issues” of the aging reactors built to the now-ancient PWR designs rather than the newest proposals.

            Again the point is COAL-COAL-COAL-COAL, INCREASING fossil fuel use worldwide, and CO2-CO2-CO2-CO2—–although the change IS unstoppable, we are not moving away from fossil fuels fast enough to get it done in time. Christopher continues to waste our time by beating this dead horse of “dangerous, expensive, waste and fuel cycle issues, etc.”. No one is arguing against that (except perhaps the equally out-of-touch E-Pot). All irrelevant if we don’t get CO2 under control soon, and if Andrew is right, cost will NOT be an issue.

      • rayduray Says:

        andrew,

        Are you sure on your facts. What I’ve read of the Energiewende system is that the high rates apply only to retail (grandma’s) account and that the German industry was specifically excluded from the tariff scheme, thus forcing grandma to subsidize the mittlestadt and big industry.

        • andrewfez Says:

          Hi Ray,

          No, I’m not sure: I can’t find the article i was referencing, as it was thrown in my face years ago by a professional Koch troll on Youtube, but i recall the source was one of our Washington conservative think tanks, and the article was mostly fear stirring propaganda. Here’s something a tad softer, so you can get a feel for the type of article i’m talking about:

          http://www.telegraph.co.uk/finance/newsbysector/energy/10321173/Germany-industry-in-revolt-as-green-dream-causes-cost-spiral.html

          “Spiralling energy costs will soon drive us into the wall. It has become dangerous,” said the German Chemical Industry Association.

          Fears that power bills could cripple German industry combine with growing angst over US shale output, which has slashed American gas costs to a quarter of German levels. German chemical companies are switching plant to the US.” (yes, there is some sort of grammatical error happening in the last sentence.)

          Sorry I don’t have a source for the early tariff phase outs.


        • That’s correct, ray.


  2. You can pretty much guarantee that someone made a lot of money off of this – has the putrid odor similar to stock pump and dump scheme.

  3. climatebob Says:

    The world is not short of energy we are just using the wrong sort. Oil is a diminishing resource and has a volatile price. The faster you move to a renewable electric energy society the more secure you will be. http://www.climateoutcome.kiwi.nz/clean-energy-alternatives.html


  4. In 2013, the United States consumed a total of 6.89 billion barrels of petroleum products, an average of 18.89 million barrels per day
    http://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6
    And the now dashed plans for California?
    “Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable”
    California oil would hardly make a dent in consumption. One years worth.

    ” In April 2013, the US Geological Survey released a new figure for expected ultimate recovery of 7.4 billion barrels of oil.[8]”
    Say what? That also hardly puts a dent in consumption.

    Where are the oil barons heads at? Well oil is just too cheap in the US and they want to lift the ban on exports. The refineries want to keep the ban on exports and export the refined products. Hows that for you.

    And nobody wants to leave it in the ground (in the FF industry). Who’d a thunk it?
    http://www.nytimes.com/2014/04/22/business/energy-environment/challenges-lie-ahead-for-north-american-oil-production.html?_r=0

    • jimbills Says:

      Thanks for the last link. It’s a mess of an article, mostly presented from the pro-industry side (and the optimistic pro-industry side at that), but it has some good info, too.


      • Jimbills- you are welcome. We have been chatting EIA nonsense projections on renewables for a while. Maybe this is why.
        “That’s where John Krohn comes into play. A former spokesman for the gas industry front group Energy in Depth (EID), Krohn now works on the Core Team for EIA’s “Today in Energy!“

        Krohn has been at EIA since at least January 2014, when his name first appeared on the EIA website. On his Twitter account, he describes himself as an EIA communications manager.

        As DeSmog revealed in February 2011, Energy In Depth was launched with a heavy injection of funding from oil and gas industry goliaths such as BP, Halliburton, Chevron, Shell and XTO Energy (now owned by ExxonMobil).

        With its public relations efforts conducted by FTI Consulting, EID now serves as a key pro-industry front group promoting unfettered hydraulic fracturing (“fracking”) to the U.S. public.”
        http://www.desmogblog.com

        • jimbills Says:

          Yeah – I’d figure there’s a lot of that.

          But what I see often is the over-tendency of the environmental movement to scapegoat the fossil carbon industry. It’s absolutely true that they pervert government and the public to support policies and attitudes that favor their business model, but in the end the main problem is consumption, which is us. No demand, no business.

          The fossil carbon industry is just looking for sources to meet that demand when all is said and done. They’re finding it harder and harder to do so. If you look between the lines of any news item on energy, even very optimistic pro-industry pieces, one can see it easily. There’s no reason to frack or drill the Arctic if there really is an over-abundance of supply.

          Renewables supply is a different ball game, and I know I’m far more skeptical of renewables projections than you are. You have your reasons, and I have mine, it’s all good – that’s really too much to go into here. The EIA is undoubtedly wrong about how things will actually play out, but I just don’t see the Great Green Utopia on the horizon, and my concern is that hoping for the miracle cure will only lead us further down the primrose path.

          We’ll probably discuss this in better detail on relevant posts. And thanks again – one of the best things about Peter’s blog (in addition, of course, to Peter’s amazing quantity and quality of input) are the really great thoughts and links from other contributors.

  5. rayduray Says:

    Not just California….

    The Guardian’s Nafeez Ahmed concludes “Write-down of two-thirds of US shale oil explodes fracking myth”

    In brief:

    ‘Next month, the US Energy Information Administration (EIA) will publish a new estimate of US shale deposits set to deal a death-blow to industry hype about a new golden era of US energy independence by fracking unconventional oil and gas….

    ‘…Analysts like Jeremy Leggett have said, citing exaggerated oil industry estimates, that if reserve and production reality are indeed significantly lower than industry forecasts, we could be at risk of an oil shock as early as within the next five years.’

    [Continues at website….]


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