Why The Shale Boom Left California Behind

California is one of the only oil-producing states that has failed to benefit from the U.S. shale oil boom. Here’s why.

Instead, the shale boom has added nearly 4 million BPD of oil production in Texas. Millions of barrels were added in other states as well, and California began to slide down the ranks of leading oil producers. Just a few years ago California was still in second place, but now it has slipped to sixth, behind Texas, North Dakota, New Mexico, Oklahoma, and Alaska.

Geology Poses a Problem

Why did the shale boom leave California behind? California has a significant oil resource in the Monterey Shale. In 2011, the U.S. Energy Information Administration (EIA) estimated that the Monterey Shale could hold up to 23.9 billion barrels of oil. At that time this was more than the Texas Eagle Ford and North Dakota Bakken Shales combined.

However, the EIA later slashed its estimate of recoverable oil in the Monterey Shale by 96% to just 600 million barrels. There are several reasons for this.

The primary reason is that the Monterey Shale is more geologically complex than other shale formations. It is jumbled and folded, which means it can’t be as easily exploited by horizontal drilling.

As part of my research, I checked the trajectory and number of wells being drilled in Texas and California. According to the Baker Hughes Interactive Rig Count Map, in early March there were 502 drilling rigs in Texas, with 92% of those drilling horizontal wells. In California there were only 15 drilling rigs, with 20% drilling horizontal wells. So the geology of the Monterey is the single biggest issue.

Environmental Opposition

But there are other barriers.

The resistance to fracking in California is much greater than in Texas, with more restrictive rules and some localized bans. This is especially true in areas where California’s oil resource is under prime agricultural land. Farmers are among those concerned both about the competition for scarce water, and that fracking could potentially contaminate the water supply.

As an aside, I would point out that the aquifers are near the surface, where each year farmers apply thousands of tons of herbicides, pesticides, and fertilizers directly on the ground. (Source.) There are also highways, cities, and plenty of industrial activity directly above the aquifers. These aquifers are a few hundred feet below the surface, but residents seem more concerned about fracking thousands of feet below the aquifers.

(A farming emailed me to declare that “thousands of tons” is a lie, but the source above from UC Davis says “We estimate that 550 thousand tons of N fertilizer, 240 thousand tons of manure N, and 4 thousand tons of urban and food processing waste effluent N are annually applied to or recycled in Central Valley agricultural lands for food production.”)

Conclusion: California Shale Boom Unlikely

In any case, even if California residents completely embraced the idea of fracking, it is unlikely that the state would experience the kind of boom seen in places like Texas and North Dakota. Geology has conspired against California.

Ironically, had the shale boom never occurred, California would likely be the No. 1 oil-producing state in the country at this point, given that it was No. 2 and declining at a slower rate than Texas. But Californians can console themselves with being the leading producer of solar power in the U.S.

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