The U.S. Energy Information Administration (EIA) has reduced its estimate of recoverable oil in California’s Monterey shale formation from 13.7 billion barrels to just 0.6 billion barrels—a reduction of over 95%.
The original estimate were based on figures release in a 2011 report by the EIA which had stated that there was up to 15.4 billion barrels of recoverable tight oil in the state’s Monterey shale formation, 64% of the nation’s total.
The over inflated figures figures sparked optimism for financial analysts over the state of California’s energy future.
The reduction in recoverable estimates were previously highlighted in a report, “Drilling California: A reality check on the Montery Shale” by geoscientist David Hughes. The report utilised empirical analysis of actual shale oil production data from the Monterey shale formation, basing its figures on data, rather than assumptions.
“We’re pleased that the EIA has corrected what was a groundless and highly misleading over-estimation of the potential of the Monterey,” said Asher Miller, Executive Director of Post Carbon Institute. “We hope that everyone—from the EIA to policymakers and the media—will learn a cautionary lesson from what transpired here in California as we wrestle with questions about what the future of American energy policy can and should be.
A new report from the Post Carbon Institute looks beyond the rhetoric to examine the question “Can unconventional fuels usher in a new era of energy abundance?”
It concludes that:
* The reduction in US energy imports results primarily not from their use of unconventional fuels (shale gas etc.) but from economic decline and recession.
* The rate of energy supply (that is, the rate at which the resources can be produced) for unconventional fuels is very low.
* The net energy yield (that is, the difference between the energy needed to produce the fuel, and the energy contained in the final product) for unconventional fuels is also very low.
* Shale gas production in the US has been on a plateau since December 2011.
* 80 percent of shale gas production in the US comes from five plays, several of which are in decline.
* The very high decline rates of shale gas wells require continuous inputs of capital – estimated at $42 billion per year to drill more than 7,000 wells in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion.
Does this sound like an industry that will benefit Northern Ireland’s economy or like a bubble waiting to burst?
Read the summary of the report here or the full report here.
Photograph: Fracking in Texas, by Tim Lewis (http://www.aireindustrial.net/) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons