California, even as it seeks to be the greenest U.S. state, stands a good chance of emerging as the nation’s top oil producer in the next decade, helping America toward what once seemed an unlikely goal of energy independence.
The catalyst is the U.S. Bureau of Land Management’s sale last week of 15 leases covering about 18,000 acres of the Monterey Shale, a geologic formation whose sweet spots stretch from east of San Francisco more than 200 miles south to Monterey County. The auction was dominated by Los Angeles-based Occidental Petroleum Corp. (OXY) and smaller companies betting on a coming boom. Yesterday California regulators issued a draft of new rules to sharpen their oversight of the surge in fracking.
While shale developments have been most associated with natural gas, the ribbed-shaped Monterey could hold 15.4 billion barrels of oil, according to the federal Energy Information Administration. That amounts to 64 percent of all estimated U.S. shale oil reserves and double the combined reserves of North Dakota’s Bakken Shale and Texas’ Eagle Ford Shale, where energy companies are spending billions to ramp up output.
The leap in technology known as hydraulic fracturing, or fracking, has already found trillions of cubic feet of gas and billions of barrels of oil around the nation. The Monterey’s prospects coupled with a favorable oil price means “that renaissance is coming to California,” says Phil McPherson, a former energy analyst who is now chief financial officer of Citadel Exploration Inc. (COIL), a California-focused oil company.
Occidental, the largest onshore crude producer in the continental U.S., declined to comment about its interests in the Monterey shale.
Read more at Bloomberg Businessweek. By Bradley Olson.
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