We hear a lot about shale oil. We heard a lot about the Monerray discovery. It was huge. It was billions of barrels.
It just got downgraded by 96%. Poof!
Here is the story from Chris Martenson.
Just today, we learned that the EIA has placed a hefty downward revision on its estimate of the amount of recoverable oil in the #1 shale reserve in the US, the Monterey in California. . . .
Yes, you read that right: 96% lower. As in only 4% of the original estimate is now thought to be technically-recoverable at today’s prices:
EIA Cuts Monterey Shale Estimates on Extraction Challenges
May 21, 2014
The Energy Information Administration slashed its estimate of recoverable reserves from California’s Monterey Shale by 96 percent, saying oil from the largest U.S. formation will be harder to extract than previously anticipated.
“Not all reserves are created equal,” EIA Administrator Adam Sieminski told reporters at the Financial Times and Energy Intelligence Oil & Gas Summit in New York today. “It just turned out it’s harder to frack that reserve and get it out of the ground.”
The Monterey Shale is now estimated to hold 600 million barrels of recoverable oil, down from a 2012 projection of 13.7 billion barrels, John Staub, a liquid fuels analyst for the EIA, said in a phone interview. A 2013 study by the University of Southern California’s Global Energy Network, funded in part by industry group Western States Petroleum Association, found that developing the state’s oil resources may add as many as 2.8 million jobs and as much as $24.6 billion in tax revenues.
From 13.7 billion barrels down to 600 million. Using a little math, that means the hoped for 2.8 million jobs become 112k and the $24.6 billion in tax revenues shrink to $984 million.
The reasons why are no surprise to my readers, as over the years we’ve covered the reasons why the Monterey was likely to be a bust compared to other formations. Those reasons are mainly centered on the fact that underground geology is complex, that each shale formation has its own sets of surprises, and that the geologically-molested (from millennia of tectonic folding and grinding) Monterey formation was very unlikely to yield its treasures as willingly as, say, the Bakken or Eagle Ford.
But even I was surprised by the extent of the downgrade.
This takes the Monterey from one of the world’s largest potential fields to a play that, if all 600 million barrels thought to be there were brought to the surface all at once, would supply the US’ oil needs for a mere 33 days.
Yep. 33 days.
(For the rest of the story, click the link.)