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Wednesday, May 21 2014 05:48 PM

Kern oilmen unfazed by reassessment of Monterey Shale

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BY JOHN COX, Californian staff writer jcox@bakersfield.com

It won’t cause an exodus from Kern County oil fields, but a lowering of federal expectations for petroleum production along California’s vaunted Monterey Shale may change the state’s fracking debate, which could add to its local repercussions.

Kern oilmen familiar with the difficulties of tapping the giant “source rock” underlying much of the southern Central Valley were unfazed by a report Wednesday that the U.S. Energy Information Administration believes the Monterey contains 96 percent less recoverable oil than it previously estimated.

Several people in the local oil industry said reservoir estimates are inherently tricky, and that either way, there’s still a considerable amount of oil in the Monterey. Even so, some acknowledged the EIA’s revision reflects the industry’s failure to tap the formation effectively.

“It’s a huge source. It’s just that nobody has solved all the problems that you have to face with it,” Bakersfield oil geologist Phil Ryall said.

He and others expressed doubt that the revision will reverse an influx of nationwide oil companies to Kern County over the last few years. That’s partly because the challenges of exploiting the Monterey are widely acknowledged, and because mature, well-understood oil fields in the area continue to produce prolifically.

Bakersfield-based oil producer Aera Energy LLC said it remains committed to exploring and testing in the Monterey.

“Whether there are 15 billion barrels or 600 million barrels or something in between, it’s still a lot of oil,” the company’s public affairs director, Susan Hersberger, wrote in an email. “We see potential and are in it for the long term.”

Chevron, meanwhile, said California “continues to be a great place to invest in” regardless of the EIA’s estimate.

The biggest single investor in the Monterey, Los Angeles-based Occidental Petroleum Corp., declined to comment, saying it had not seen any new EIA report.

Earlier federal estimates of the Monterey’s potential prompted warnings from politicians including Rep. Kevin McCarthy, R-Bakersfield, that new state regulation of hydraulic fracturing — the controversial but effective oil field technique known as “fracking” — could hamstring California's Monterey oil-fueled economic boom.

But environmental groups, seeing an opportunity to push for a statewide fracking ban, said the EIA’s revision shows how little is understood about the utility of such “extreme” extraction methods on formations like the Monterey.

Anti-fracking group CREDO Action issued a statement that the revision “hammers the final nail in the coffin for oil companies’ ludicrous claims that fracking is the key to California’s prosperity.”

Bakersfield oil executive Steve Layton suggested the opposite may be true. The president of E&B Natural Resources Management Corp. said now is the time to increase, not take away, the tools available to oil producers.

While federal experts refine their view of the Monterey, he said, “we need to work with whoever the stakeholders are, whether it be the regulators, landowners, etc. ... to remove the roadblocks so that we can develop, in a responsible way, the resources that we know exist.”

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