California could be the site of the next big oil shale boom in the United States


California’s Monterey Shale is believed to contain more 15 billion barrels of recoverable oil.

We've previously talked about the potential benefits associated with the surge in domestic energy production that has taken place in the United States in recent years.

Much of the media excitement has focused on oil and gas wells that tap into the nation's major shale formations, such as the Bakken in North Dakota and the Eagle Ford in Texas. The output of these areas has given U.S. oil and gas companies a good reason to be optimistic about their prospects in the near future.

Now, a slew of industry analysts and media commentators are suggesting that California could become the site of the next major shale play in the United States. According to the U.S. Energy Information Administration (EIA), the Monterey and Santos formations could hold a total of as much as 15.4 billion barrels of oil.

In comparison, the agency projects that the Bakken and Eagle Ford formations hold a combined total of about seven billion. With only 23.9 billion barrels of technically recoverable shale oil in the lower 48 states, California's Monterey Shale is a major reserve.

According to the American Association of Petroleum Geologists (AAPG), oil and gas wells sited throughout California have actually been tapping the Monterey Shale for years at conventional oilfields.

"Almost all the oil in California has been sourced by the Monterey," explained AAPG member Marc Kamerling. "Only a small percentage has come from other source rocks."

Oil and gas producers looking to drill in the Monterey Shale face unique challenges

The exploration of shale formations has been driven by advances in two related techniques – horizontal drilling and hydraulic fracturing. As we've previously discussed, companies involved in fracking operations continue to face environmental and economic obstacles. California is no exception to this pattern.

A particular challenge for producers looking at the Monterey Shale is the play's proximity to the San Andreas Fault. Over time, tectonic activity in the region has left the entire rock formation twisted and broken in many places.

Energy producers need to conduct drill stem testing, drilling and extraction operations with the utmost efficiency to secure their bottom line. The fracking process entails additional challenges, such as gas well dewatering and wastewater disposal.

Environmental concerns linked to fracking continue to draw attention

We've previously discussed a number of developments in the ongoing debate about fracking's effect on the environment. For instance, we've looked at an ongoing review of fracking's effect on drinking water that is being conducted by the U.S. Environmental Protection Agency (EPA).

A study released in October examined the potential environmental impact of fracking at an established oilfield in Los Angeles County. The final report asserted that fracking did not pose a threat to the area's residents, although critics called for further testing.

Using high-quality oil production equipment can help companies operate safely and efficiently. In particular, using an oil jet pump or other artificial lift equipment can be extremely useful in raising the efficiency of extraction operations.

Caution must be exercised in the jet pump installation process. Equipment failure can lead to hazardous oil spills, which can be costly in financial, legal and reputational terms. For example, we recently talked about the implications of an agreement reached between Transocean – operator of the Deepwater Horizon – and the U.S. Department of Justice, which settled charges that had been brought against the company in connection with the 2010 oil spill in the Gulf of Mexico.