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California drillin'

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California drillin'
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On the surface, North Dakota and California are two states that don't have much in common.

California has the Golden Gate Bridge and is known as the "Golden State" while North Dakota has golden fields of wheat and sunflowers. California has Redwood trees; North Dakota the Red River Valley. California has Napa Valley while North Dakota has, well, Napa Auto Parts stores.


Looking beneath the surface, however, reveals that the two states -- often light years apart in lifestyles and political views of the majority of their citizens -- have at least one thing in common: oil.

Though it has not garnered near the national attention of the Bakken and Eagle Ford shale plays in North Dakota and Texas, respectively, the Monterey formation in the central part of California holds more oil than either of the previously mentioned formations, according to the U.S. Energy Information Association.

Besides the sheer volume of recoverable oil in the Monterey, the formation also stands out, for a number of reasons, as an energy industry wild card.

"California peaked in its oil production in the mid-1980s," said Western States Petroleum Association vice president Tupper Hull. "Last year, for the first time since the 1980s, oil production increased year over year. The increase was very small, but it was significant that we did not see a continued decline."

Located in the heart of the vast San Joaquin Valley, the Monterey could have as much as 15 billion barrels of recoverable oil beneath its surface, according to EIA projections.

Unlike in places like North Dakota and Texas -- and even Pennsylvania with its Marcellus shale play -- California is home to a political climate that is more hesitant to potentially jeopardize its natural resources with practices like hydraulic fracturing and acid-based fossil fuel recovery methods.

"The Monterey is home to two-thirds of the nation's supply of shale oil," Hull said. "It's not a terribly large formation but, for some reason, it has a boatload of oil in it. Can this resource be developed economically like what's being done in North Dakota and in parts of Texas? That's the million-dollar question. Our official stance is that the jury is out because we just don't know at this point."

Californians -- for better or worse, depending on a person's point of view -- have traditionally been reluctant to dive head-first into fracking on a large scale, though the practice is done in the state. Yet, another non-political obstacle also stands in the way of a San Joaquin Valley oil boom: difficult terrain.

"The underlying geology of the state is much more heterogeneous and fractured than, for example, the Bakken," Hull said. "The shale layers are already jumbled and fractured. In the Bakken, with directional drilling, you can go down and get this very extensive exposure to the resource. In the Monterey, if you go down, you may hit a nice, rich shale strata, but it's gone in 100 yards because of seismic activity. The shale is just not as uniform and, therefore, not as predictable."

Assuming environmentally-minded citizens and environmental groups don't get their way -- not an easy task in California -- a Monterey boom could do wonders for a state that has gotten a lot of national press in recent years for being economically downtrodden, something that isn't lost on California's elected leaders.

Known for most of his career as an ardent environmentalist, Gov. Jerry Brown, D-Calif., said publicly earlier this year that California needs to consider various forms of fracking as a way to unlock the state's massive fossil fuel trove.

The trick for Brown and other Golden State politicians is to maximize the economic benefits of a large shale play while also keeping the state's environment and environmental reputation intact. California has long been a leader in the drive to reduce greenhouse gases and in the clean energy department.

"About two years ago, people became aware that fracking was being done in California and of the report by the EIA detailing the state's shale resources," Hull said. "People began to ask if the activity was properly regulated. Anyone involved in the energy industry in California will tell you that this is a heavily regulated state, but there are no specific regulations for fracking yet, but there will be. We've done the research and a little more than a third of the people in California don't want fracking."

Though legislation was presented recently in California that would have banned fracking in the state, no moratorium bills on fracking were passed in the last legislative session, said Hull.

"I think we've moved into a constructive conversation," Hull said. "We're talking about ensuring the safety of (fracking) instead of banning it. That's not to say there will not continue to be a fight. But, at the end of the day, I think the mood is shifting somewhat."

To expand on Hull's point, North Dakota Department of Mineral Resources Director Lynn Helms actually paid a visit to California earlier this month to give a presentation to the California Independent Petroleum Association on the safety of fracking.

Though a flood of major oil industry players to the Monterey could eventually change the landscape of U.S. shale oil development, such a change is not expected to happen overnight for a number of reasons.

One well-known oil company with ties to both the Bakken and Monterey plays is Occidental, known as Oxy, which is based out of Los Angeles.

When contacted for this story, Oxy spokesperson Heather Margain-Martinez said she could not comment on the specifics of her company's presence in the Bakken and Monterey plays.

Despite concerns and the majority of its citizens opposing enhanced fracking, Hull said he expects the Monterey to become America's next big thing in shale exploration.

"I think it's very likely there will be significant growth in energy production from the Monterey in the fairly near future," Hull said. "There is a tremendous amount of effort being put into it now to try to figure out how to get that resource to the marketplace."

Bryan Horwath
A Wisconsin native, Horwath has been covering news in the Oil Patch of North Dakota since 2012. Horwath currently serves as the senior agriculture and political reporter for The Dickinson Press and, despite the team's tendency to always let him down, remains a diehard Minnesota Vikings fan.
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