Viewpoints: California should find a way to tap Monterey shale

Published: Sunday, Sep. 8, 2013 - 12:00 am

In California, we use a lot of energy. As a state, we use more than almost anyone else in America. That makes sense, given that California is home to more people than any other state, as well as several of the nation’s most sprawling urban landscapes.

What doesn’t make as much sense is how we’re not adequately utilizing the resources we already have to meet the state’s ever-growing energy demand.

State leaders seem to put the lion’s share of the focus on developing alternative fuels and building a renewable energy infrastructure. But while renewables certainly have a role to play in California’s long-term energy future, they do very little to solve the state’s immediate energy issues.

If we’re serious about controlling the rising cost of energy and limiting our dependence on imports in the near-term, we need to get serious about finding a way to tap the oil-rich Monterey shale.

The Monterey shale, a vast formation of shale rock that stretches across more than 1,750 square miles of California’s coastal plains and inland valleys, could contain as much as 15.4 billion barrels of oil. That’s more than half the undeveloped, technically recoverable shale oil believed to exist in the continental United States.

If fully tapped, the Monterey shale could be a game-changer for California’s energy portfolio, as well as the broader statewide economy. We know this because we’ve already seen it happen in several other states.

Extraction from the Bakken shale in North Dakota, for example, has led to an abundance of low-cost energy across the region, as well as a substantial measure of economic prosperity. Since 2001, weekly wages in the immediate vicinity of the Bakken shale have risen 140 percent and unemployment has fallen below 2 percent. Texas’ Eagle Ford shale has also become a thriving source of domestic, low-cost energy and a critical economic driver in the state.

However, as beneficial as the shale oil resources in North Dakota and Texas have been, their sizes both pale in comparison to the Monterey shale, which is believed to contain more than twice the oil in the Bakken shale and five times the oil in the Eagle Ford shale.

According to the Price School of Public Policy at the University of Southern California, fully tapping the Monterey shale would create nearly $30 billion in additional tax revenue and almost 3 million jobs by 2020. In addition, it would allow California to drastically reduce its oil imports, which have climbed by 60 percent between 2000 and 2009.

But tapping this kind of oil supply isn’t easy, especially in a state like California, where resources are so heavily regulated. There are significant technical and public policy hurdles to overcome before Californians can begin seeing the benefit of this resource.

Senate Bill 4, for instance, a bill currently making its way through the California Legislature, would establish a process to restrict hydraulic fracturing – a critical process for breaking shale rock and accessing the oil within it.

Some state leaders – like Sen. Fran Pavley, who authored SB 4 – have talked about a full-scale moratorium on fracking, a move that would effectively prevent us from tapping the Monterey shale. More moderate voices in Sacramento have redirected the state’s legislative efforts toward more limited fracking regulation for the time being.

It’s no secret that California stands at a critical juncture in securing its energy future. The Monterey shale offers the state an incredible opportunity to create a vast wealth of low-cost, locally sourced energy for its people, while significantly stimulating the statewide economy and creating millions of jobs.

Achieving this goal will require collaboration, cooperation and compromise amongst diverse stakeholders – from politicians and public policy influencers to energy industry leaders and environmentalists. Gov. Jerry Brown has already shown a willingness to step out of his political comfort zone by acknowledging the economic need for more in-state oil production and working with his colleagues to prevent impulsive and drastic fracking regulation.

We can only hope that other state leaders will follow suit in the coming months and years, working together to make the limitless potential of the Monterey shale a reality.


John T. Young Jr., who specializes in crisis management and financial advice to the energy sector, manages the Western region for Conway MacKenzie, a middle-market financial restructuring and advisory firm.

Read more articles by John T. Young Jr.



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