The Problem With The Monterey Shale in California

The Problem With The Monterey Shale in California

How would YOU drill into something like this?
by John Pendleton  |   Monday, April 07, 2014
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Back in 2011 the federal Energy Information Administration estimated that the Monterey Shale formation contains more than 15 billion barrels of recoverable oil. That should make the formation, which reaches almost all the way from Fresno to Bakersfield, the most important play in the United States.

Drillers and rig hands should be flocking to the San Joaquin Valley, drawn by the lure of jobs and lucrative paychecks, but instead they're working in North Dakota, Texas and a handful of other states. There's a lot of exploratory holes being drilled in California, a fact reflected in the price of the average successful bid for an acre of land for oil leasing, which has climbed from $2 to over $500 in the last 15 years.

The reason that Kern County, where most of the formation is located, isn't the center of American oil production is the structure of the Monterey Shale itself. Unlike other oil shale formations across the US, this formation has experienced constant seismic warping that has bent, stacked and cracked the substrate. That forces the oil into accordion-like folds of hard rock at depths as great as 12,000 feet.

In the oilfields of Bakersfield, which have been steady producers for more than a century, it's possible to drill a 1,000-foot well for around $100,000 and it can be reasonably expected to produce for many years to come. Most shale formations, including those in Bakersfield, Texas and North Dakota, reservoirs form pools in orderly layers of rock. Crack that rock open and operators can drill a single well, vertical or diagonal, and then bore multiple horizontal to draw oil from a wide surrounding area.

Because of the complex structure of the Monterey Shale, sinking a hole down to 12,000 feet might cost $5,000,000 with no guarantee of success, and multiple wells will have to be drilled.

The oil is down there, oceans of it, but no one has figured out how to extract it in a cost-effective way. Until engineers come up with a solution to that riddle, it's still "drill baby drill," just not in the Monterey Shale.

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