Tag: oil

Energy Information Administration (EIA) Reduces Its Estimates of Recoverable Oil in the Monterey Shale to 600 Million Barrels, down 96% from 2012 Estimates

At the May 21, 2014 Oil & Gas Strategies Summit in New York, EIA Administrator Adam Sieminski shocked many with his announcement that the federal agency has drastically cut its estimates of technically recoverable oil in the Monterey Shale from 13.7 billion barrels to 600 million barrels. According to Sieminski’s reported comments, the revision was prompted, in part, by new evidence the EIA and U.S. Geological Survey collected on output from wells where new techniques have been tested.

In 2011, the EIA published a report by INTEK Inc. that estimated there were 15.4 billion barrels of technically recoverable shale oil, or “tight oil” in the Monterey Formation.   Sometime in 2012, the EIA reduced this estimate to 13.7 billion barrels.  Now, the agency plans to release a report in the coming months that will explain why it has decided to severely reduce the estimate to 600 million barrels.

The Post Carbon Institute’s December 2013 report on the Monterey Shale presaged this news.   The PCI report—“Drilling California: A Reality Check on the Monterey Shale”—provided several reasons why the EIA’s 2011 estimates were likely to be “highly overstated.”  For example, the report asserts that:

  • “Existing fields within the Monterey are areally restricted and are primarily controlled by structural and stratigraphic trapping mechanisms, thus the assumption of broad regions of prospectivity is highly questionable.”
  • “An analysis of every well producing from Monterey shale reservoirs reveals that average initial productivity is less than half of the typical horizontal and vertical shale wells assumed in the EIA/INTEK report, and less than a quarter of the ‘typical Elk Hills vertical shale well’.”
  • “Fracking and acidization have doubtless been tried extensively on Monterey shale wells, yet the data do not show any significant increase in initial well productivity or likely cumulative oil recovery for recent wells.”

(J. David Hughes, PCI Fellow, Drilling California: A Reality Check on the Monterey Shale, at p. 46.)