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Fracking and Alternative Energy

State Net Capitol Journal: Slashed Oil Estimate Threatens Fracking In California

In 2011, an energy firm hired by the state of California estimated that a 1,750-square-mile rock formation extending from Sacramento to Los Angeles could yield 13.7 billion barrels of oil, based on existing extraction technologies. That projection spurred hopes of an energy boom in the state like those that have boosted the economies of North Dakota and Texas. In fact the University of Southern California forecast last year that the Monterey Shale formation could create up to 2.8 million new jobs and generate as much as $24.6 billion per year in new tax revenue in California by 2020. 
But last month scientists from the U.S. Energy Information Administration issued a report indicating that current extraction methods, including hydraulic fracturing, or "fracking," would yield only 600 million barrels of oil from the Monterey Shale, 96 percent less than the earlier projection. 
"From the information we've been able to gather, we've not seen evidence that oil extraction in this area is very productive using techniques like fracking," said John Staub, who led the energy agency's study. 
Staub added that compared with oil production at North Dakota's Bakken Shale formation and the Eagle Ford Shale in Texas, "the Monterey formation is stagnant." 
USC economics professor Adam Rose, who coauthored last year's study on the economic impact of the Monterey Shale, called the new estimate "a phenomenal cutback." 
"It's amazing in terms of that much refinement in the numbers," he said. 
The news had some environmental activists stepping up their calls for California Gov. Jerry Brown (D) and lawmakers to put an end to "fracking" in the state. 
"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, founder of the nonprofit group NextGen Climate. "Our leaders in Sacramento can no longer afford to pin our hopes on the false promises of a fossil fuel windfall — especially when our state is poised to lead the nation and the world toward a cleaner, more sustainable energy economy." 
Zack Malitz, campaign manager for the San Francisco-based liberal activist group CREDO, likewise, said the new estimate means "there is now no longer any political gain to be had for the governor in supporting fracking and putting our state at risk from water contamination, earthquakes and climate change." 
"He must enact a moratorium," he said. 
But a push for such a ban failed in the state's Legislature last year. And a bill (SB 1132) introduced this year by Sen. Holly Mitchell (D) has failed to make it out of the Senate. 
The oil industry, meanwhile, doesn't appear ready to raise the white flag. 
"We've always been quite clear that there are challenges to producing oil out of the Monterey" Shale that differ from those associated with the formations in North Dakota, Texas and elsewhere, said Tupper Hull, vice president of the Western States Petroleum Association. "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." 
And Severin Borenstein, director of the University of California Energy Institute, said that although "this is definitely a huge setback to the expansion of oil production in California...I would not at all say the game is over." 
"It is way too early to say that this is the death of fracking in California. Technology only moves forward, and I am sure there is going to be millions of dollars spent trying to make it better specifically for California because there is so much potential." (SAN JOSE MERCURY NEWS, LOS ANGELES TIMES, STATE NET) 

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