SANTA BARBARA COUNTY, Calif. - A new federal government study could deliver a blow to oil and gas companies looking to expand onshore production on the Central Coast.
The highly touted Monterey Shale formation may have far less oil than previously thought.
The Monterey Shale formation stretches from the Central Valley to the Pacific Ocean and is thought to be one of the largest shale oil deposits in the country.
Some industry estimates the Monterey Shale formation has hundreds of billions of barrels of oil that can be extracted using various techniques and new technology.
But the Federal Energy Information Administration, EIA, is reducing its estimate for recoverable oil from the Monterey Shale formation from 13.7 billion barrels to just over half a billion barrels of oil.
That's a nearly 96 percent reduction of what was previously believed to be recoverable from the formation.
"The oil industry has made extensive claims and invested heavily in attempting to develop the Monterey Shale using unconventional development techniques such as hydraulic fracturing ("fracking") and acidization," the EIA study reveals.
"These controversial techniques were believed to be the answer to tapping into the wealth of the Monterey Shale and replicating the oil boom that is occurring in other regions of the United States."
Energy industry advocates say the EIA study relies only on current extraction technologies.
"Regardless of what the EIA estimate is, innovation is going to continue to go on in the oil and gas industry," said industry advocate Dave Quast.
"At some point, reserves that are not recoverable now will be recoverable in the future," Quast added.
The EIA study shows recoverable oil deposits in the Monterey Shale formation would be enough to meet domestic oil consumption demand for only 32 days.
"Nothing changes, we've got this known oil reserve which is possibly the largest in the world of shale oil," said Quast.
"We've got some companies and some scientists that are trying to figure out ways to unlock the resource and they will continue to do that as long as it make economic sense," said Quast.
An energy industry-backed study by USC describes how exploitation of the Monterey Shale formation could add nearly three million jobs to California and boost tax revenues by about $25 billion a year.
The EIA study comes as the State of California and Santa Barbara County grapple with efforts to ban fracking, steam injection and other high intensity oil and gas extraction methods due to concerns about groundwater contamination, air pollution and the potential for causing earthquakes.
"There's no guarantee that hydraulic fracturing is the right technique in the Monterey Shale, there's really no way to know," said Quast.
"There's probably going to be, as implied by the lower estimate, there's probably going to be technologies that still have to be invented that allows the industry to recover those resources economically," said Quast.