Environmentalists Cheer California's Latest Plan to Sink Its Economy

Getting oil out of the US’s largest reserve is going to be much harder than expected. So why are some people celebrating?

SACRAMENTO — Environmentalists are gleeful at the news reported last week by the U.S. Energy Information Administration that the amount of recoverable oil from California's Monterey Shale formation — predicted to be the nation's largest reserve of oil — is a whopping 96-percent below original production estimates.

In response, more than 100 environmental groups signed a letter to the California Legislature calling for a moratorium on hydraulic fracturing and other "stimulation" techniques that ultimately would be needed to develop this oil field. They say the new estimates are "undercutting the misguided rationale" for allowing fracking before more studies are done.

"I never saw so much glee from bad economic news," said Tupper Hull, spokesman for the Sacramento-based Western States Petroleum Association. "It does not change the dynamics or the debate about hydraulic fracturing." The oil industry's main point is a good one — there's no less oil in that vast geologic formation that largely lies underneath the Central Valley and parts of the Los Angeles basin.

The reduced production number "is the government's estimate of how much oil drillers can get out of the earth with existing technology and at current prices," said Sabrina Lockhart, spokeswoman for Californians for a Safe, Secure Energy Future, which promotes fracking.

Original estimates produced by a 2013 University of Southern California study assumed that tapping oil in the Monterey Shale would be similar to tapping it in other lucrative oilfields. But test wells were less productive than expected because of our state's twisted geology. Current fracking and horizontal drilling techniques can't get at the oil the way they can in other places.

This problem will fix itself. The oil may be too expensive to extract right now using current techniques, but if oil prices go up there will be increased incentive to figure out how to get it out of the ground.

Economists have been surprised that natural gas has become such an important part of the nation's energy mix in the past few years, but technological advancements have opened up those vast new resources and created an economic boom in economically depressed areas of North Dakota, Pennsylvania and elsewhere. Something similar could happen here with oil if the state doesn't squelch it.

"The fact that the technology doesn't exist today, doesn't mean that it won't exist tomorrow," said Tom Tanton, with the Energy & Environment Legal Institute, which advocates for "free-market environmentalism." Apparently, even the anti-fracking groups understand as much or they wouldn't still be pushing for a moratorium on accessing oil reserves that are not now available.

Last year, Gov. Jerry Brown signed tough new oil-exploration regulations that were nevertheless championed by the oil industry given that they set up a predictable framework that allows new oil-extraction technologies to proceed.

The governor had no response to the new federal estimates, but Brown recently said on national TV that California has been fracking for 50 years and that "we are not going to shut down a third of our oil production and force more oil coming from North Dakota." He has called for careful development of the state's oil resources while "hammering at the demand." Brown no doubt sees a future revenue boom, but it has no impact now.

"There's nothing built into either our economic or revenue forecasts related to fracking," according to Department of Finance spokesman H.D. Palmer. "So regarding EIA's lower estimate, the bottom line is that it isn't a hit to our bottom line."

So the new federal estimates warrant a giant shrug. California will not ban fracking or soon slap an oil-severance tax on producers. There's no effect on the state budget. All the oil is still in the ground. Environmental groups are still issuing dire predictions and letters to the legislature.

The only thing that changes is the rest of us know what many oil-industry experts had always believed: Efforts to fully tap the Monterey Shale will have to wait for the future.

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  • anon||

    Yeah, I really trust the EPA's estimate. Surely they have no ulterior motives whatsoever.

  • OldMexican||

    "I never saw so much glee from bad economic news," said Tupper Hull, spokesman for the Sacramento-based Western States Petroleum Association. "It does not change the dynamics or the debate about hydraulic fracturing."


    Those enviro-wackos would be placing the same letter in a stamped envelope the exact same way even if the real amount of recoverable shale oil came to 96% of the estimate and not just 4%. They don't care.

    Remember, they are NOT about the environment, but about back-door socialism.

  • Sevo||

    "The reduced production number "is the government's estimate of how much oil drillers can get out of the earth with existing technology and at current prices,"

    To be clear, it is and estimate by those who have no skin in the game; it can be heeded or ignored by those risking their money at their choice.

  • UnCivilServant||

    This problem will fix itself. The oil may be too expensive to extract right now using current techniques, but if oil prices go up there will be increased incentive to figure out how to get it out of the ground.

    Maybe by that time, the idiots that have infested California will have been killed off by their own stupidity.

  • anon||

    Please. Haven't you seen Idiocracy yet?

  • UnCivilServant||

    I have no time for Reality TV Movies.

    Once it reaches toxic levels, there is a vast die-off, we just need to isolate the state to prevent the exodus which would extend the zone of infection.

  • anon||

    Yeah, I generally don't either. I watched it a while back when I had time to slack off. I enjoyed the movie though.

  • UnCivilServant||

    It's much easier to watch it play out in California - once we've taken measures to prevent the spread of the contaminant. Usually you can get a generation's worth of immunity after a die-off, but this is not guaranteed. The larger the area of contamination, the more survivors who will pine for the 'good old days' before the collapse (see Russia re Communism).

  • Bill||

    That's exactly what they are after. It's commonly stated in many Ecology and Environmentalism courses that we need to find ways to humanely reduce world population.

  • Brett L||

    Proven reserves can increase by 2500% when the price hits a certain point. That seems like good news.

  • BilboTeabaggins||

    Greenhut gets it right above, but your average Californian who isn't around the industry has no idea what the differences are between proven and unproven reserves are or how mineral leases work. Saying 4% of the reserves are recoverable is not the same as saying 96% of the oil was never there. There is a huge difference in what is recoverable based on a given WTI price.

  • Rev-Match||

    "I never saw so much glee from bad economic news,"

    Enviro-Nazis do not care about economics or humans being prosperous. They care about pushing their socialism under the guise of "environmentalism". As if we are not a product of the environment that is fully entitled, as any species, to better our position in nature by using nature to our advantage to ensure our comfort & survival.

  • Brian||

    How is this possible? With the Koch brothers controlling the entire national environmental agenda? Through their donations to Reason?

    Clearly, this isn't happening.

  • jmomls||

    I bet that when we sell California to the Chinese, they'll find and pump up all that oil lickety split!

  • Bill||

    "Apparently, even the anti-fracking groups understand as much"

    You must not know much about environmentalists ......

  • Mark22||

    "Stimulation techniques" makes it sound so dirty... I like it!

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