Translated by Ollie Richardson for Fort Russ
10th February, 2016
U.S. authorities have reduced official estimates of commercial reserves of shale oil in the Monterey formations in California by 96%. As a result, total commercial oil reserves in the U.S. decreased by 39%.
According to the data published by the Los Angeles Times, the Energy Information Administration at the U.S. Department of Energy (EIA) revised its earlier estimate of industrial reserves of oil (recoverable oil) in California. As a result, the U.S. has dramatically decreased the total industrial stocks of oil.
Earlier, the EIA considered the geological formations in Central California to contain a total of 13.7 billion barrels of oil that can be extracted using the current level of technology of hydraulic fracturing.
This is several times larger than the volumes in the largest shale oil deposits that are actively being developed in the U.S: Bakken in North Dakota (3.65 bn barrels) and Eagle Ford in Texas (3 billion barrels).
A number of optimistic estimates, in particular, were published in the 2013 report by the University of Southern California, “The Monterey Shale & California's Economic Future”. Development of shale oil by 2020 was to create 2.8 million new jobs and bring California $24.6 billion in taxes.
The differences in the fields
The experts noted that, unlike the Bakken fields in North Dakota and Eagle Ford in Texas, shale of the Monterey formation is much more “fragmented” due to higher seismic activity, the oil lies in the deeper layers of the stratum.
LA Times lead analyst John Staub comments:
“Given the information gathered, we see no evidence that oil extraction in this region is very productive with the use of technologies such as hydraulic fracturing. As a result, our previous estimates on oil production and scarce knowledge on geological differences among the oil fields led to erroneous predictions and estimates.”
Extensive inventory revaluation
This is the second revaluation of industrial stocks of volumes of shale formations at Monterey in California. In 2011, EIA said that the formation contained 15.4 billion barrels of oil available for extraction using the hydraulic fracturing technology. In 2012 this evaluation was reduced to 13.7 billion barrels.
According to the new calculations, published in the LA Times, industrial oil reserves in California are only 600 million barrels of oil. This means a massive reduction in total industrial reserves of oil in the United States. According to the EIA assessment, published in April 2014 – “U.S. Crude Oil and Natural Gas Proved Reserves, 2012”, the total industrial reserves of oil in the USA following the results of 2012 amounted to 33.4 billion barrels.
In view of the announcement of EIA experts of reducing reserves in California, the total industrial reserves of oil in the U.S. fell by 39% from 33.4 billion to 20.3 billion barrels.
Such volatility underlines the risks associated with shale oil production. The technology of hydraulic fracturing used in the extraction of shale oil involves a number of different side effects, which are recently becoming more explicit (in particular, the activation of the "shale earthquakes", the problem of contamination of the aquifer soil, disposal of toxic waste and atmospheric pollution in mining). In addition, this news has also led to questions about the plausibility of long-term forecasts on the production of shale oil in the United States.
New estimates by the EIA on industrial oil reserves in shale formations in Monterey will be officially released in June 2014.