California's Oil Industry Collapses Despite Shale Boom

California's Oil Industry Collapses Despite Shale Boom

Not that long ago, California was the second most vital U.S. oil producing state. Since peaking in 1985, however, output has plunged almost 60 percent to 460,000 barrels per day (bpd).  This collapse is made even more discouraging by the fact that total U.S. crude oil production has been soaring to record heights, up 140 percent to 12.1 million bpd over the past decade. Indeed, the shale revolution that has transformed the U.S. oil and gas industry has completely passed California by. Since 2008, while U.S. crude oil reserves have more than doubled to 45 billion barrels, California’s reserves have declined 25 percent to 2.2 billion barrels in the shale-era.

The most troubling part for California is that the state still uses a lot of oil. California each day devours around 40 million gallons of gasoline, uses 8 million gallons of diesel fuel, and accounts for 20 percent of all U.S. jet fuel consumption. Although the state is surely a global leader on renewables, wind and solar are strictly sources of electricity and do not really displace the need for petroleum, a designed transportation fuel. For every passenger vehicle in California today that runs on electricity there are about 70 that run on oil. Even reaching the ambitious goal of 5 million plug-ins by 2030 would mean less than 15 percent of the state’s cars running on electricity.

The inevitable result of plummeting production amid high consumption is that California is forced to import 70 percent of the oil that it needs. With the collapse of Alaska’s production, foreign sources now supply almost 60 percent of California’s crude oil, compared to just 15 percent 20 years ago. Additionally, a Low Carbon Fuel Standard (LCFS) has not just hampered the prospects of using locally sourced oil but also the heavier crude that comes from ally Canada. In contrast, California’s LCFS has supported the lighter, “cleaner” oil that comes from OPEC. Saudi Arabia, for instance, now supplies 37 percent of California’s oil imports, with Ecuador at 14 percent.

Such a turn to distant international suppliers is actually a quiet environmental problem going ignored. These shipments arrive on crude supertankers, giant ships that not just burn loads of oil themselves but are also at greater risk for spills. Unfortunately, California’s leaders have generally stood against building the pipelines necessary to receive high-quality, lower cost shale oil from other U.S. states.

For its own part, California does have the Monterey shale formation in the central and southern part of the state. The play could hold at least 20 billion barrels of recoverable oil and untold amounts of natural gas. Current Governor Gavin Newsom, however, is not supportive of development like his predecessor Jerry Brown was.

Although there are geological issues in the Monterey that make it a difficult play to exploit, many of those differences could be overcome with capital and by deploying the constantly evolving technology that the U.S. shale industry enjoys. The real problem is that California’s regulatory and tax policies discourage new oil production in the state. Namely, hydraulic fracturing for shale in California is burdened with the same restrictive rules that its offshore industry has. In fact, some municipalities and counties have passed outright bans on fracking, and many oil companies have left the state because drilling permits are too difficult to obtain.

California would be well advised to realize how North Dakota has leveraged shale from its Bakken play into an economic boon (see Figure). One study from the Price School of Public Policy at the University of Southern California, for instance, found that the Monterey could add millions of jobs and tens of billions dollars in tax revenues alone.

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Source: EIA

But overall, missing out on the shale revolution for California might be worse on the natural gas side. Gas is still the main source of power in the state, even accounting for over half of generation in recent years. California’s need to import 95 percent of its gas supply is a growing problem because other U.S. states, particularly Western neighbors, are increasingly moving toward more gas to meet rising demand while also lowering greenhouse gas emissions.

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6 hours ago, ceo_energemsier said:

The most troubling part for California is that the state still uses a lot of oil.

California each day devours around 40 million gallons of gasoline, uses 8 million gallons of diesel fuel, and accounts for 20 percent of all U.S. jet fuel consumption.

Although the state is surely a global leader on renewables, wind and solar are strictly sources of electricity and do not really displace the need for petroleum, a designed transportation fuel.

For every passenger vehicle in California today that runs on electricity there are about 70 that run on oil.

Even reaching the ambitious goal of 5 million plug-ins by 2030 would mean less than 15 percent of the state’s cars running on electricity.

California NIMBY.  California uses huge amounts of hydrocarbons, but mostly wants to import hydrocarbons rather than do exploration & production of its own hydrocarbons.

Demand for oil & gas are simply not going away any time soon.

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3 hours ago, Tom Kirkman said:

California NIMBY.  California uses huge amounts of hydrocarbons, but mostly wants to import hydrocarbons rather than do exploration & production of its own hydrocarbons.

Demand for oil & gas are simply not going away any time soon.

https://oilprice.com/Latest-Energy-News/World-News/Are-California-Gasoline-Prices-Being-Manipulated.html

 

They wonder why their prices are higher?? what a group of brilliant people!!!!

lowest oil production, highest taxes ..................................... cant build pipelines into the state, importing crude oil from other states is expensive .....carbon tax .................................................. cant build new refineries, cant upgrade refineries without taking 10 years

https://reason.com/2019/04/24/california-politicians-hiked-gas-tax-now-demand-investigation-into-states-4-per-gallon-gas-prices/

California Politicians Hiked Gas Tax, Now Demand Investigation Into State's $4 Per Gallon Gas Prices

What could possibly be increasing California's gas prices?

 

 


 

https://www.ocregister.com/2019/04/16/californias-gas-taxes-total-nearly-1-per-gallon-and-include-a-28-cent-mystery-surcharge/

Here’s a breakdown of what we pay in gasoline taxes, according to the California Energy Commission. All numbers except the final category have been rounded to the nearest penny and were effective as of March. The combined Cap & Trade and low Carbon Fuels Standard costs were effective April 12.

  • Federal excise tax — 18 cents
  • State excise tax — 42 cents
  • State and local sales tax — 8 cents
  • State underground storage tank fee — 2 cents*
  • Additional costs for compliance under Cap & Trade, as well as the Low Carbon Fuels Standard — 28 cents
  • Total — 98 cents

https://www.sacbee.com/latest-news/article219331435.html

 

https://www.sfchronicle.com/business/article/California-drivers-pay-growing-cost-for-climate-13142607.php

 

 

https://www.taxpolicycenter.org/taxvox/ups-and-downs-californias-gas-tax

 

https://sites.uci.edu/energyobserver/2018/10/09/projected-carbon-tax-costs-for-households-in-california-and-orange-county/

 

 

https://www.politico.com/states/california/story/2018/12/14/a-year-after-california-extended-cap-and-trade-newsom-still-prefers-carbon-tax-740266

 

 

https://ktla.com/2019/04/08/california-gas-prices-climb-50-cents-in-1-month-ahead-of-gas-tax-increase-slated-for-summer/

 

https://www.latimes.com/politics/la-pol-ca-gas-price-manipulation-investigated-20190517-story.html

 

https://losangeles.cbslocal.com/2019/05/17/crude-awakening-as-gas-prices-continue-to-go-up-drivers-are-anything-but-down-with-it/

 

https://ktla.com/2019/04/01/californias-gas-tax-hiked-for-road-repairs-but-data-shows-poor-bridges-have-multiplied-in-state/

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Ah California, where a millennial genius told me, "Why kill animals, you can just buy meat at the store"

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43 minutes ago, Ward Smith said:

Ah California, where a millennial genius told me, "Why kill animals, you can just buy meat at the store"

classic.

That's like thinking you're not a murderer because you hired a hitman. We're doomed. Doomed, I tell you! 

 

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The Monterey Formation, which is the major source rock for California's oil, is a much different kind of rock than the shales that are being exploited elsewhere in the continental US. The Green River oil shale in Utah, Wyoming and Colorado literally contains trillions of barrels of oil, but it is not being successfully exploited (at these prices) either.  The narrative that California oil and gas development is only inhibited by California politics is not really valid. It probably has much more to do with the rock than the politics. 

I personally think CA is better off importing its oil and gas from neighboring states or via its ports, and not having to mitigate the added air quality issues (for millions of inhabitants) that drilling in the Central Valley would present.

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7 hours ago, Tom Kirkman said:

California NIMBY.  California uses huge amounts of hydrocarbons, but mostly wants to import hydrocarbons rather than do exploration & production of its own hydrocarbons.

Demand for oil & gas are simply not going away any time soon.

such a shirking of responsibility. . You can't have it both ways. It's evil and shouldn't be used, or it's not. If it's not, I guess they're have to scrap those Big Oil lawsuits. If it is, I guess they'll have to stop fossil fuel purchases now or be sued by its own citizenry like they did to Big Oil. 

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2 minutes ago, esgeo said:

The Monterey Formation, which is the major source rock for California's oil, is a much different kind of rock than the shales that are being exploited elsewhere in the continental US. The Green River oil shale in Utah, Wyoming and Colorado literally contains trillions of barrels of oil, but it is not being successfully exploited (at these prices) either.  The narrative that California oil and gas development is only inhibited by California politics is not really valid. It probably has much more to do with the rock than the politics. 

I personally think CA is better off importing its oil and gas from neighboring states or via its ports, and not having to mitigate the added air quality issues (for millions of inhabitants) that drilling in the Central Valley would present.

Perhaps. But they sure LOVE to cite the fact that they produce so much less oil and gas than other states.

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32 minutes ago, Rodent said:

Perhaps. But they sure LOVE to cite the fact that they produce so much less oil and gas than other states.

I believe Washington State and Hawaii have them beat (in non production of fossil fuels). The race to the bottom begins! 

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49 minutes ago, Rodent said:

Perhaps. But they sure LOVE to cite the fact that they produce so much less oil and gas than other states.

I can't do much about the general ignorance of Califonia's populace when it comes to natural resources, but was hoping maybe I can have an impact here at least! 

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2 hours ago, Rodent said:

Perhaps. But they sure LOVE to cite the fact that they produce so much less oil and gas than other states.

The Monterey formation has most of its oil migrated and has very little left for development and production but Crappifornia could still be able to recover the hundreds of millions of migrated oil from other zones.

What is left in the shale formation is not even probably worth the hassle to go through the permitting and the annoyance of the anti oil nutbag.

_________________________________________

"

 

The Monterey Formation in the deepest parts of California’s San Joaquin Basin contains an estimated mean volumes of 21 million barrels of oil, 27 billion cubic feet of gas, and 1 million barrels of natural gas liquids, according to the first USGS assessment of continuous (unconventional), technically recoverable resources in the Monterey Formation.

 

The area of the potential continuous accumulation assessed in this study is limited to where the Monterey Formation is deeply buried, thermally mature, and thought to be generating oil.

The assessment team concluded that most of the petroleum that has originated from shale of the Monterey Formation in the assessment area has migrated from the source rock, so there is probably relatively little recoverable oil or gas remaining there, and most exploratory wells in the deep basin are unlikely to be successful.  

Geological data from more than 80 older wells that penetrated the deep Monterey Formation indicate that retention of oil or gas in the Monterey Formation shale source rock is poor, probably because of natural fracturing, faulting, and folding.

The oil and gas readily migrates from the deep Monterey Formation to fill the many shallower conventional reservoirs in the basin, including some in fractured Monterey Formation shale, and accounts for the prolific production there."

 

 

https://www.usgs.gov/news/usgs-estimates-21-million-barrels-oil-and-27-billion-cubic-feet-gas-monterey-formation-san

 

 

 

image.png.86f218a1af5ec351311c22a53540bcc0.png

 

 

image.png.b9b9d47ba76bfceead0f72e4246cc0ca.png

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14 hours ago, Ward Smith said:

In 2011 the IEA said the Monterey shale was a barn burner. Three years later they changed their minds. What data did they use to come to their new conclusion? 

https://www.naturalgasintel.com/montereyinfo

Physics?

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49 minutes ago, esgeo said:

Physics?

I was thinking oiji board or birch stick winnowing. Were there any wells drilled in the meantime? I can't find them

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(edited)

4 hours ago, Ward Smith said:

I was thinking oiji board or birch stick winnowing. Were there any wells drilled in the meantime? I can't find them

These were all drilled since 2011 in the Monterey. Less than 200 wells...

MRY_since2011.PNG

Edited by esgeo
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1 hour ago, esgeo said:

These were all drilled since 2011 in the Monterey. Less than 200 wells...

MRY_since2011.PNG

I don't think those are new wells. 

Quote

less predictable. An analysis of oil production data from the Monterey Formation reveals the following: 

 

While tight oil plays generally produce directly from widely dispersed source rocks or immediately adjacent reservoirs—as is the case in the Bakken and the Eagle Ford—this is not the case in the Monterey Formation, where most production has come from localized conventional reservoirs filled with oil that has migrated from source rock. 

-

 

1,363 wells have been drilled in shale reservoirs of the Monterey Formation. Oil production from these wells peaked in 2002, and as of February 2013 only 557 wells were still in production.

 

 Most of these wells appear to be recovering migrated oil, not “tight oil” from or near source rock as is the case in the Bakken and Eagle Ford play

 

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Just want to say "Thank You" to California State Rep Al Muratsuchi  and his AB 345 bill for helping this Texan make another million. Maybe we can do it again next year.

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16 hours ago, Ward Smith said:

I don't think those are new wells. 

 

I realized after I posted that that I had just queried by completion and not even looked at when they were spud. So I went back and checked. here is a screenshot of the top of the list, sorted by spud date (oldest at top). All of these wells have been drilled since 2010 and were completed in 2011 or later.

 

image.thumb.png.0b0f05caf12fdc3543acbce1a8913685.png

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17 hours ago, esgeo said:

These were all drilled since 2011 in the Monterey. Less than 200 wells...

MRY_since2011.PNG

Not sure about Monterey exactly, but this article suggests that California oil (near San Joaquin valley) is particularly viscous ("Dirtiest in the country") and hard to refine (on top of being thought of as a local pariah in general)

This suggests the oil is so heavy it needs to be heated through the pipeline to get it to a refinery. 

 

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(edited)

1 hour ago, esgeo said:

I realized after I posted that that I had just queried by completion and not even looked at when they were spud. So I went back and checked. here is a screenshot of the top of the list, sorted by spud date (oldest at top). All of these wells have been drilled since 2010 and were completed in 2011 or later.

 

image.thumb.png.0b0f05caf12fdc3543acbce1a8913685.png

To be perfectly honest I'm not that up on the Monterey shale. The closest I got to it was a potential farm in on the kreyenhagen formation, which might be similar. But as rodent says above, quality matters and there was lower hanging fruit elsewhere. Personally I think Kalifornistan might be one of the worst places in the world to try to do business, although Koloradostan seems to be moving the same way… ;)

Edited by Ward Smith
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On 5/20/2019 at 8:48 AM, ceo_energemsier said:

https://oilprice.com/Latest-Energy-News/World-News/Are-California-Gasoline-Prices-Being-Manipulated.html

 

They wonder why their prices are higher?? what a group of brilliant people!!!!

lowest oil production, highest taxes ..................................... cant build pipelines into the state, importing crude oil from other states is expensive .....carbon tax .................................................. cant build new refineries, cant upgrade refineries without taking 10 years

https://reason.com/2019/04/24/california-politicians-hiked-gas-tax-now-demand-investigation-into-states-4-per-gallon-gas-prices/

California Politicians Hiked Gas Tax, Now Demand Investigation Into State's $4 Per Gallon Gas Prices

What could possibly be increasing California's gas prices?

 

 


 

https://www.ocregister.com/2019/04/16/californias-gas-taxes-total-nearly-1-per-gallon-and-include-a-28-cent-mystery-surcharge/

Here’s a breakdown of what we pay in gasoline taxes, according to the California Energy Commission. All numbers except the final category have been rounded to the nearest penny and were effective as of March. The combined Cap & Trade and low Carbon Fuels Standard costs were effective April 12.

  • Federal excise tax — 18 cents
  • State excise tax — 42 cents
  • State and local sales tax — 8 cents
  • State underground storage tank fee — 2 cents*
  • Additional costs for compliance under Cap & Trade, as well as the Low Carbon Fuels Standard — 28 cents
  • Total — 98 cents

https://www.sacbee.com/latest-news/article219331435.html

 

https://www.sfchronicle.com/business/article/California-drivers-pay-growing-cost-for-climate-13142607.php

 

 

https://www.taxpolicycenter.org/taxvox/ups-and-downs-californias-gas-tax

 

https://sites.uci.edu/energyobserver/2018/10/09/projected-carbon-tax-costs-for-households-in-california-and-orange-county/

 

 

https://www.politico.com/states/california/story/2018/12/14/a-year-after-california-extended-cap-and-trade-newsom-still-prefers-carbon-tax-740266

 

 

https://ktla.com/2019/04/08/california-gas-prices-climb-50-cents-in-1-month-ahead-of-gas-tax-increase-slated-for-summer/

 

https://www.latimes.com/politics/la-pol-ca-gas-price-manipulation-investigated-20190517-story.html

 

https://losangeles.cbslocal.com/2019/05/17/crude-awakening-as-gas-prices-continue-to-go-up-drivers-are-anything-but-down-with-it/

 

https://ktla.com/2019/04/01/californias-gas-tax-hiked-for-road-repairs-but-data-shows-poor-bridges-have-multiplied-in-state/

And they keep talking about another Gas Tax. I'm outta here as soon as I can.

 

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California is great at killing industry. kind of reminds me of the same thing OPEC is trying to do, but to explain that is very long winded. So I'll hist continue on with my original intended reply. 

As I've said before, I own and operate a fueling station. I'm very hands on and onsite daily. That being said, everyone wants to throw the finger at tax and only tax. Now most of us here are very savvy, and generally understand the principles of business. (Thats why I like this place) 

With that being said, we all know what factors into a retail price. The general and overall cost of overhead. So, leading into this, folks want to know just WHERE the extra profit is going, and who's gouging. The answer is the state. No one privately is gouging. It's very expensive to operate here. Equipment and monitoring standards, other regulatory fees, licensing, permits, insurance, utility cost, cost of real estate, and their favorite. Higher wages for all! 

The state benefits from all of the above being higher in cost. Paid back through higher sales tax, higher income of regulatory fees, higher income taxes, higher property taxes. You name it, these folks arent as stupid as they appear to be. They just play the age old Democrat game of pass the buck. They mandate a problem into existence and then blame the poor souls that have to deal with it 😄

As costs rise, prices rise. Margins have to rise, inflation happens. 

 

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Yes, I am laughing at them.  Primarily there government.  moonbeam's predecessor is going to investigate O&G because of their high prices.  Get er done but don't do a phony investigation like the mueller team just finished.  The facts are in ceo's and others comments right here.  Having put up with the wonderful protesters you sent to break our survey stakes off, shut down BLM and other offices with your protests and just put up with the crap people like the sierra club started and rainbow clan continued, not feeling sorry for the ones out there whining.  My family and friends, well I have been telling them for years, either change it or get out but don't whine because it isn't getting better.  Kind of unsympathetic?  Yep.  Had to have people in my face telling me what a scum bag I was for ruining the world, all the while smelling the mj on them and paying to resurvey!  My apologies for the rant, thinking it is funny and in general being an @$$ to some people but as I get older my give a dam has kinda got up and went.  

 

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