All posts by Roger Straw

Editor, owner, publisher of The Benicia Independent

Monterey Shale estimate bungled: background & causes

Repost from the Post Carbon Institute

The Peak Oil Crisis: The Monterey Shale Debacle

May 28, 2014  |  Tom Whipple

Last week the LA Times ran a story saying that the U.S. Energy Information Administration (EIA) is about to reduce “its” estimate of the amount of shale oil that can be recovered from the Monterey Shale under California by 96 percent. This reduction cuts the estimate of producible shale oil in the U.S. by 60 percent.

This development, of course, came as no surprise to those of us who have been watching the Monterey Shale situation closely. To begin with, anyone with the most rudimentary knowledge of geology knows that California is where great tectonic plates have been banging together for millions of years turning the earth below the surface into an incredible jumble. To produce shale oil one needs nice flat strata of oil bearing rock that run on for miles.

Then of course we have the issue of Chevron, which has been drilling in California since 1879. If one believes there really are 15 billion barrels of shale oil under the state, then why isn’t Chevron pumping it out by the tanker load?

Thus the interesting parts of this story are: who said there were 15.4 billion barrels of shale oil under California in the first place?; and how did the Department of Energy come to accept such an obviously flawed estimate, and trumpet the story far and wide so that many investors and policy makers in California and Washington fell for it?; and then why did it come to such a screeching halt leaving the country’s prospects for “energy independence” a dubious proposition?

Moreover, the government’s retraction of its estimate of shale oil prospects in California raises issues about just how good are its forecasts that North Dakota and Texas will continue producing large amounts of shale oil into the next decade.

The great Monterey Shale oil myth got its start back in July 2011 when the EIA stapled a cover on a contractor-produced “study” that it paid for entitled Review of Emerging Resources: U.S. Shale Gas and Oil Plays. In the fine print of the cover pages, however, the EIA did note that the “views in this report should not be construed as representing those of the Department of Energy.”

The underlying study, which was prepared by a small consulting company, INTEK, Inc., in Arlington, Virginia, purports to have been based on a wide range of sources and methods. However when it came to California the report’s author, Hitesh Mohan, said the California portion was primarily based on technical reports and presentations from oil companies. Presentations from oil companies are prepared to raise money from investors and can be expected to lay out the most optimistic view possible.

The methodology that produced the mythical estimate seems to have been something like this: take the 1,700 square miles of the Monterey Shale, drill 28,000 wells in it at the rate of 16 wells per square mile, wait until each well produces 550,000 barrels of oil, and you have your 15.4 billion barrels. Later research showed that only a handful of California oil wells ever produced 550,000 barrels of oil or anything close.

The California story only gets worse. The California oil industry funded a joint study by the University of California and the industry which concluded that exploiting the supposed 15 billion barrels of shale oil would result in from 512,000 to 2.8 million new jobs in the state; would increase per capita GDP by $11,000 and boost government revenue by up to $24.6 billion per year. All the politicians had to do was get out of the way, stop all this environmental nonsense over fracking and more regulations, and the state would be rich.

The writing on the wall came last year when thorough and independent studies by the Post Carbon Institute pointed out first that very little oil was coming out of California due to fracking of shale deposits as compared to those in North Dakota and Texas. In December of last year, a second and more detailed well-by-well study of what was actually happening in California blew the ridiculous INTEK/EIA conclusion out of the water. Although the Post Carbon Institute studies got little nationwide attention, several California newspapers and TV stations, which are much closer to the state’s well-being, did in-depth stories concluding that the 15 billion number and the ensuing riches were unlikely eventualities.

It is obvious that the new studies brought pressure on the Department on Energy to take a second look at what they were saying about shale oil in California. When it became obvious that were endorsing nothing but industry hype, they did an about face and lowered the estimate to 600 million barrels, which in itself may be high.

The EIA’s reaction to questions about one of the biggest blunders in its history is interesting. EIA Director Adam Sieminski told the Wall Street Journal that the oil bearing rocks are still under California, but the technology to extract the oil has not yet been developed. Industry spokesmen are more upbeat, saying that hundreds of smart engineers are working on the problem of producing California’s shale oil and that someday, if not sooner, they will be successful.

The California shale story raises once again questions about just where America’s shale oil and gas production is going and along with it the future of industrial society. Naturally, none of us want to hear that hard times, lower economic growth, and fewer jobs lie ahead. The Department of Energy clearly is trying to draw a fine line between the gross over-optimism exhibited in the Monterey shale incident and an energy apocalypse. But, do we really have to wait until the evidence of over-optimism is so overwhelming that it has to be admitted? There are several other “Monterey Shales” out there well-understood in the peak oil community where the Department of Energy continues to make overly optimistic estimates which will one day rebound to the detriment of us all.

Originally posted at Falls Church News Press.
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    California SB1132 (Fracking Moratorium) fails in Senate

    UPDATE:
    From: Judi Sullivan
    Sent: Thursday, May 29, 2014 5:13 PM
    Subject: California SB1132 Fails to Pass in the CA Senate

    According to Senator Mitchell’s office at around 4:00 p.m. today, SB 1132 failed with a vote of 16 Ayes( yes votes) to 16 Noes (no votes), with 8 senators abstaining.  21 votes were needed for it to pass.  The oil companies won this round.


    California Senate Bill 1132 (Fracking Moratorium) fails  on May 28 – another vote on May 29

    [Editor: I received the following report and call to action from Judi Sullivan.  Read and make those phone calls!  – RS]

    The vote was close.  18 to 16.  21 votes  are needed to pass the Bill.  A repeal was requested and granted.  Another vote will be taken tomorrow on the Bill and that one will be final.

    It was suggested to call or to email the following Democratic Senators, or even better, if you know any of their constituents, to ask them to call and request a YES vote on SB 1132.  The democratic senators who voted against the Bill are:

    S. Lara from Long Beach:  916-651-4033,  S. Torres from San San Diego:  916-652-4032, S. Hernandez from L.A:  926-651-4024.  I’m not sure where these other senators are from but you can look them up.  All represent  the fracking areas.  S. Correia, I think is from Modesto,  916-652-4034, , S. Waso:  I think is from the L A area. I don’t have his number.

    Senator Mitchell’s office representative didn’t think it would be worth it to call the other Republican Senators who voted against the Bill as they aren’t likely to change their minds.

    We still have a chance.  Only three swing votes are needed. I’m going to call all of them again and I hope that some of you will make some calls, too. If you know anyone in the districts that voted against the Bill, it’s important to have them realize that they are the most vulnerable to  the health and safety dangers of fracking.  Any of us can call, but the ones with the most influence  will naturally be those who live in the districts where a change vote could make a difference.

    Even if the Bill fails, a strong stand has been taken by the public.  The oil companies have felt the strength of the grassroots effort. Testimonies given at the hearings were  specific, compelling   and well documented scientifically with none of the statistics re: concern for the health and safety of our earth, air, water, wildlife and people  refuted by the opposition.

    Progress has been made.  Awareness is growing, as is our power base. This may or may not be reflected in the vote tomorrow,  but as a movement, we ARE on the rise and will prevail.

    Much Love and Light,

    Judi

    Later: Another democratic senator to call that was left off the first list

    Democratic Senator Galiano from Orange City:  916-651-4005.

    Explaining concerns in addition  to asking for a YES vote is most effective.

    Passing this  Bill does not effect their district’s current revenue from fracking unless current fracking sites are not following regulations set by SB 4. SB 1132 prohibits more oil stimulation wells from being established until health and safety issues for the population, land , air and water quality can be properly addressed and regulated, extending accountability by requiring a DEIR by July 2015.

    In addition to other comments being made, I also have been mentioning that our city, for the first time in our history, is not receiving a water allotment from the State , emphasizing the drain being experienced up north which is related to the enormous amount of water required for fracking.

    The final vote in the Senate on this Bill for this year is today.  If it doesn’t pass, the oil companies will have free reign to drill more wells.  When this Bill was first introduced, 90 more wells were planned.  That estimate has increased considerably.

    Please do what you can.  It only takes a few minutes.

    Thank you.

    Judi Sullivan

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      Texas fracking verdict puts industry on notice about toxic air emissions

      Repost from The Center For Public Integrity

      Texas fracking verdict puts industry on notice about toxic air emissions

      A nearly $3 million jury verdict against a Texas oil and gas company highlights regulatory failures and health risks linked to fracking

      By David Hasemyer  |  May 28, 2014 
      A TCEQ investigator filmed these "heavy plumes" of emissions wafting from the Aruba facility using an infrared camera. Thirty seconds later he reportedly “felt the physical effects of dizziness and a sore throat”.   Screenshot from TCEQ video
      A TCEQ investigator filmed these “heavy plumes” of emissions wafting from the Aruba facility using an infrared camera. Thirty seconds later he reportedly “felt the physical effects of dizziness and a sore throat”. Screenshot from TCEQ video

      Between February 2010 and July 2011, Lisa and Bob Parr filed 13 complaints about air pollution from gas and oil operations near their ranch in Wise County, Texas. Sometimes they had trouble breathing, they told the Texas Commission on Environmental Quality (TCEQ). They also experienced nausea, nosebleeds, ringing ears and rashes.

      Other families were also alarmed. Between 2008 and 2011, the TCEQ received 77 complaints from Wise County, in the Barnett Shale drilling area in North Texas. One said the odor was so powerful that the complainant “couldn’t go outside,” according to the TCEQ report.

      Frustrated and angry, the Parrs decided to sue. Their attorney warned them that lawsuits against the oil and gas industry rarely, if ever, succeed. But the Parrs persisted and last month won what appears to be the first successful U.S. lawsuit alleging that toxic air emissions from oil and gas production sickened people living nearby. A Dallas County jury found that Aruba Petroleum, a privately owned company based in Plano, Texas, “intentionally created a private nuisance” that affected the family’s health and awarded the Parrs almost $3 million in damages.

      “When you don’t have a strong regulatory system, a system to prevent what happened to this family, the only place left to turn for help is the courts,” said Robert Percival, director of the University of Maryland’s Environmental Law Program.

      There are no assurances the verdict against Aruba will survive an appeal or lead to regulatory changes in Texas or any of the other states where people complain their health is jeopardized by gas and oil drilling. The issues are so complex that the industry, the public and policy makers may be sorting through them for years.

      Aruba has asked Judge Mark Greenberg, who presided over the Parrs’ case, to reverse the jury’s verdict. Greenberg is expected to hear arguments over the verdict in June.

      “This case will be looked at very, very closely because it has set the stage in a way that has never been set before,” said attorney Tomas Ramirez. He represents two families in similar lawsuits in the booming Eagle Ford Shale of South Texas, where emissions are raising the same alarms that have been sounding in the heavily developed Barnett Shale region the Parrs call home.

      Aruba used two long-standing industry arguments in its defense: That the emissions could have come from one of its competitors’ wells, and that it was in compliance with Texas environmental rules.

      The fact that those arguments failed in this case “exposes every company to more possible litigation,” said Thomas McGarity, a University of Texas law school professor who specializes in environmental and administrative law.

      “Losing this case was not good for the industry,” McGarity said. “My guess is the industry will coalesce around this case. The industry will want to stop the dam from breaking wide open … This is where they will take a stand.”

      Aruba officials declined requests for interviews but released a statement though a public relations firm that said: “We contended the plaintiffs were neither harmed by the presence of our drilling operations nor was the value of their property diminished because of our natural gas development.”

      In a motion to overturn the verdict, company lawyers argued “there is no evidence that Aruba engaged in any conduct intended to cause harm … Aruba’s operations complied with best industry practices and met the standard for a reasonable and prudent oil and gas operator.”

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