The Energy Information Administration has cut by 96 percent the estimate of the amount of oil that can be recovered from the Monterey Shale formation in central California, once expected to contain two thirds of the United State’s oil deposits.
EIA forecasts that 600 million barrels of oil can be recovered from the 1,750 square-mile Monterey formation with existing technology, the Los Angeles Times reported. The estimate will be released publicly next month, the Times said.
{mosads}The previous estimate was based on a 2011 study by an EIA contractor’s assumption Monterey’s oil would be as easy to recover as oil in other formations. That touched off a speculation boom and forecasts that the oil could bring 2.8 million new jobs to California and increase tax revenue by $24.6 billion a year.
The problem lies in the shale’s geology, which has become extremely folded and broken, so the oil is deeper than in other formations and harder to extract than oil in more active exploration areas like North Dakota and Texas, the Times said.
Oil industry representatives nonetheless told the Times they are optimistic that they will develop new technology to make Monterey’s oil profitable.
Environmentalists were glad to see the new estimates, saying it will stop the rush to bring hydraulic fracturing, or fracking, to California.