Billionaire helps poke holes in oil industry's argument for drilling Monterey Shale

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Tom Steyer is a billionaire and also

“We’ve been told that there’s a great oil boom on the immediate horizon,” billionaire investor and Pac Heights resident Tom Steyer noted at the start of a March 27 talk in Sacramento. 

But Steyer (who has pledged to spend $100 million on ad campaigns for the 2014 election to promote action on climate change) wasn’t there to trumpet the oil industry’s high expectations. Instead, he introduced panelists who dismissed the buzz on drilling the Monterey Shale as pie-in-the-sky hype.

Dr. David Hughes, a geoscientist with the Post Carbon Institute, and researcher Robert Collier had been invited to speak by Next Generation, a policy group focused on climate change that was co-founded by Steyer.

Last year, researchers from the University of Southern California released a study that wound up being cited time and again as the basis for the oil industry’s arguments in the context of a statewide debate on fracking ignited by environmentalists.

Partially funded by the Western States Petroleum Association, oil industry lobbyists, the USC report outlined a rosy economic outlook stemming from oil extraction in the Monterey Shale, a vast geologic formation touted as “a new, economy-spurring natural resource.”

The Monterey Shale spans 1,750 square miles, running beneath much of the San Joaquin Valley and into Southern California. Authors of a private-sector report produced by INTEK, referenced by the USC report, estimated that 15.4 billion barrels of oil could be extracted from the shale formation – mostly through nontraditional methods such as fracking or acidizing, a process that involves pumping acid underground.

But Hughes, the geoscientist, characterized this estimate as unrealistic. “The Monterey Shale certainly will produce more oil and gas, but likely only a very small fraction of what’s been reported in the INTEK report,” he said. “Projections are highly unlikely to be realized.” The Post Carbon Institute and Physicians, Scientists and Engineers for Healthy Energy published their own report, Drilling California: A Reality Check on the Monterey Shale.

Also unlikely to be realized are the optimistic figures on job creation and economic activity, Collier noted.

California is the nation’s fourth largest oil producer, but its production has been on a steady decline for the past two decades. “So the hopes for the Monterey Shale come in the context of a gradual decline, and the hopes that California will echo the big boom of North Dakota and Texas,” he said.

The USC report contained sensational projections, predicting that 2.8 million net new jobs would be created statewide in sectors indirectly or directly associated with oil. The most optimistic scenario predicted 4.4 million net new jobs. The report also predicted that opening up the Monterey Shale for drilling would result in a 14 percent increase in per capita GDP, as well as  $24 billion in state and local tax revenues.

And as the debate about regulating fracking raged on, the findings in this study were “echoed by politicians of both parties,” Collier noted.

But prominent economists, tapped by Next Generation to analyze the study, said they could find no basis for certain claims.

Next Generation researchers turned to University of California economists Jerry Nickelsburg of UCLA, Jesse Rothstein of UC Berkeley and Olivier Deschênes of UC Santa Barbara. “They said: ‘We cannot see any justification for these incredible numbers,” Collier reported. “They seem too big to be believable.”

Instead, the economists believed the potential job creation was closer to 100,000 in total direct and indirect employment, he added. More information is presented in Next Generation's report.

So arguments that the oil industry has been using in favor of opening up the Monterey Shale might be based on flimsy math. 

Steyer, at the close of the talk, put in a plug for focusing on clean-energy sector growth instead.

“When we sit here and talk about jobs, let’s remember that the clean energy jobs are most likely to solve our employment problems,” he said. “If we want a boom in energy production, then we have a boom in energy production. I think it’s clear, our future is in advanced energy.”

Comments

I thought we were supposed to be on a steep decline by now with both - heading to exhaustion of all domestic petroleum resources and the end of life as we know it?

Can someone explained what happened? Perhaps the city-funded commission planning for "peak oil?"

Posted by Guest on Apr. 01, 2014 @ 5:04 pm

Peak oil pollution is here. Shhhhh! Don't mention it. The obvious solution is for each city to have a solar feed in tariff payment policy (FiT) requiring PG&E to pay anyone feeding solar onto the grid $0.49 kwh.
This FiT will shift our economy from oil to solar & stop global warming.
There are now more people working in solar than in the auto industry in Germany.
Solar made Germany the richest nation in Europe.

Posted by Paul Kangas on Apr. 01, 2014 @ 7:27 pm

Actually, solar has made Germany one of the dirtiest, most polluting countries in the world. Germany foolishly, and rashly ended their nuclear program and spent a kings ransom building solar, only to import more coal power than ever before. The 'solar success' being touted in Germany is totally illusory, as is much of the 'clean energy' movement.

Posted by Guest on Apr. 02, 2014 @ 7:47 am

In the last year Germany increased power generation by solar and wind by 5.5 TWh, whilst production of electricity by coal decreased by 4.8TWh.

Germany has now has nearly 70GW of installed solar/wind power generation capacity versus 46GW of coal generation.

It is a net exporter of electricity...

http://reneweconomy.com.au/2014/fossil-fuel-production-falls-in-germany-...

Posted by Aussie on Apr. 02, 2014 @ 6:31 pm

This May Germany will set a world record: they will generate fully
50% of their total national energy from wind, berm, solar & hydro,...
for one week.
Not much, but that is a world record!!

Germany is #1, Japan #2, China #3, etc.
California is at the bottom of the heap, # 666.
Why is the US so lame?
The US was #1 in solar after Prez. Carter put solar panels on the White House, then Reagan ripped them off, and destroyed the US solar industry.

Posted by Paul Kangas on Apr. 02, 2014 @ 7:10 pm

You are a #1 idiot.

Posted by Guest on Apr. 02, 2014 @ 8:44 pm

Germany is not the richest nation in europe. It's at place 9. Luxembourg is first. Solar systems are a tiny fragment of exported goods and play no distinct role in the overall economy yet. Still, using oil further is just a guarantee you lot continue the resource warfares. Ob viously you really want to take that on your children's shoulders. Shame on you all.

Posted by Morlott on Apr. 02, 2014 @ 1:04 pm

Peak Oil made incorrect and flawed modeling assumptions, similar to the agenda driven climatologist that are more into ego than the truth. None of the worse case models for dramatic weather and temperature changes have occurred even though the Hanson and Mckibben types cook the books and use a short time frame whereas a few thousand years time frame shows our current cycle of weather and temperature are somewhat normal, and the not too distant past CO2 emissions were 200 times above the current soothsayers limits today set arbitrarily. Pure snake oil is being pedaled to an under-educated and culturally narcissist audience that gets its information of the world from tiny blue screens. There is money and grants behind all of this absurd agitation from some folks that refuse to actually be productive and work for a living, in my opinion. Back to Peak Oil, the oil industry prospected for oil within sandstones and reefs that had pore spaces between the grains to hold fluids for 150 years. The source of the hydrocarbons however was generated from within ocean mud. The hunt for oil is really the hunt for deep oceans that thrived and died millions of years ago. Think being inside a submarine inside the present day Monterey Canyon and all of those billions of tiny organic particles floating down onto the mud piling up over more millions of years. Later the sea floor subducts under another continent and gets cooked back into magma, but the trillions of gallons of ocean water going under with the ocean plate sometimes pops out in volcanoes. Anyway, we never thought that the source rock, shale (prehistoric ocean mud) would ever produce anything as all of the organics had been compressed and squeezed out. However, some real smart scientists in Texas figured out that blowing one or two sand grain size four foot channels into the rock....usually 12,000' under the ground, i.e. sand fracing (it is incorrect spelling to use a "k" in a sand frac completion technique) would work. But, ten or so years ago American ingenuity of the highest order figured it out. It is a game changer and our oilmen and women can look over at the competition overseas, both economically and militarily, and for the first time since the mid 1960's have a home-grown wide grin on their faces. Soon, this country may regain its energy independence as was earned for so many generations. In short, fuel without being held hostage by people who want to kill Americans that we produce at home. All industries will reduce their emissions more and more as technology, a product of industrial might, becomes available.

Posted by Stephen T. Harris, CPL on Apr. 01, 2014 @ 7:46 pm

The Hanson and McKibben types fail to take into account some of the side benefits of fracing. For instance, they assume demand will always increase. Not true. Fracing will not only increase supply but decrease demand. The environmental changes that fracing brings about will eventually cause a major population correction. Especially once the Siberian permafrost starts to melt and releases all the methane trapped within. With fewer people on earth, there will be less demand for oil. Prices should fall in the short term, and there should be enough oil to sustain us for another 200 years. Enough for my lifetime. The correction will happen mostly in the third world which is mostly a collection of AIDS patients and other useless eaters, and possibly Europe because of changes to the jet stream. But either way, those of us in the US need not worry, especially if we're among the more economically successful citizens.

Posted by Guest on Apr. 02, 2014 @ 7:23 am

The fact that industry has been forced to costly and lower quality extraction of oil and natural gas ("fracking," tar sands, deepwater) is the manifestation of peak oil. So to are the facts that the price for oil has gone up three fold and the CAPEX double since 2005, while production of crude oil has only gone up about 0.3% per year in that time.

Tar sands and tight oil have been the only things that have kept global oil production on a plateau, temporarily offsetting the ~4mbd/year declines in conventional fields. But even the EIA acknowledges that the tight oil boom in the US will peak within the decade.

Posted by Asher Miller on Apr. 02, 2014 @ 10:22 am

You are an idiot if you believe any of the rubbish you have written here.

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Posted by clipping path on Apr. 01, 2014 @ 5:12 pm

To avoid the fracking of California, plug your Tesla S electric car into your household, solar array.

Posted by Earl Richards on Apr. 01, 2014 @ 5:14 pm

Your home can be a Mini-utility if you have a feed in tariff. Free energy, plus you can make $20,000. a year from selling solar energy to PG&E.

Posted by Paul Kangas on Apr. 01, 2014 @ 7:29 pm

Yes, you are correct,
if California has a solar feed in tariff policy ( FiT ) that requires Utilities to pay any one harvesting solar & feeding it onto the grid
$0.49 kwh, we can all be as rich as the Beverley Hill Billies,
plugging our Tesla's into our home solar,
plus selling the surplus onto the grid for $3,000. a month income.
This would make investing in solar attractive to every home owner.
Banks would gladly loan $20 K for 33 solar panels.
This would create millions of jobs.
Jerry Brown would be happy to support a FiT.

Solar makes fracking unnecessary!!!

Posted by Paul Kangas on Apr. 02, 2014 @ 7:08 am

On LED, solar panel technology, and some other cutting edge stuff would make that guy richer and work out better for all involved.

Posted by Guest on Apr. 01, 2014 @ 5:30 pm
Posted by Guest on Apr. 01, 2014 @ 5:52 pm

Californians use 360 billion gallons a year in transportation fuels. 99% of those fuels are fossil fuels! If Steyner wants to cover two Kansas size states with windmills, chopping up anything that flies, and uses enormous amount of toxic rare earth elements (fire hazards as well) or seven Kansas size states to cover one day's worth of oil and gas needs this country lives and thrives on - for all of us - he will most certainly be the smartest man alive. Maybe to appease the Tesla and EV folks, without subsidizing and gouging with the money part, he can use a bargain - only five Kansas size state's land masses of nothing but solar mirrors....but only during the day, cause the sun don't shine at night. The heat BTU amount of energy packed into a hydrocarbon molecule (includes carbon, which whether on an asteroid or this planet, is the building block of all life) has no comparison except nuclear. All other forms of energy efficiency from alternative generation are mere fractions of the petroleum energy mass that smart men and women over time figured out how to use for the benefit of humans. Finally, due almost entirely to oil, coal and gas production over the past 100 years, this country has reduced its environmental caused deaths by 98%. More maturity and less adolescent thinking will be necessary to deal with energy needs, like the other two needs all countries depend on (food and shelter) that is determinative of survival.

Posted by Stephen T. Harris, CPL on Apr. 01, 2014 @ 7:13 pm

All it will take to make SF 100% solar powered is if we put 33 solar panels on just 10% of the homes in SF.
Stanford Prof. Mark Jacobson has written hundreds of articles on how easy it will be for each city to become 100% solar.
So have I.
I will be speaking Wed. with Mark Jacobson in SF.

Posted by Paul Kangas on Apr. 01, 2014 @ 7:35 pm

did you mean to say that 10% with 33 (6' x 6') panels (which standard?) of the houses are also powering the other 90%? of what - all residential, all commercial, the buildings, and port structures, in short, everything? You state to make all of SF 100% solar powered? And it only takes 10% of the "normal," "large," or "small" size homes in the city for all of SF to be run off solar?

Posted by Stephen T. Harris, CPL on Apr. 01, 2014 @ 7:55 pm

Numerous studies have shown that if we cover a small piece of the African desert, just the size of France, with solar, we can power the whole world 100% with solar.
That would give free energy to every city in Africa.
See the free Youtube movie: "Here Comes the Sun - Hermann Scheer", which explains.
However, it would not be very efficient.
The point is, it can be done today.
We don't need oil anymore.
Extrapolating, if we put 33 solar panels on 10% of the buildings in SF, we could ban fracking.
Cuba now has solar on every school. Next year they will put solar on every public building.
If Cuba can do it, so can California.

Posted by Paul Kangas on Apr. 02, 2014 @ 7:15 am

Do you read what you are saying...cover a small piece of land the size of France! It is true that five Kansas size states equals the quads of btu's for one day's oil needs for energy (excluding night-time), but oil and gas has over 6,000 primary products, essentially everything that is not wood or steel having some if not all petrochemical substance that make things work - think plastics, food, clothing, roads, containers - in fact, out of the 20 most important inventions last century (see USC 2010 study) oil itself played a prominent role in 16 of those. Oil drives our cars, partially comprises the components and is the roads that even Tesla has to drive on. Switch to battery cars, clean up after a major crackup on the freeway battery parts and erect more coal and gas fired utilities to make the electricity to power such nonsense OR confiscate five Kansas size state's landmass' for your mirrors and panels...let's see...please refer to the snake oil articulation above. BTW, your You Tube film was discredited a while back as almost entirely fabricated.

Posted by Stephen T. Harris, CPL on Apr. 02, 2014 @ 9:41 am

We need to stop burning oil.

Saudi Arabia is now investing its oil wealth to build cities that are all 100% solar powered.

Wildpoldsried, Germany generates 333% more solar than it uses.
It sells the surplus for $6 Billion a year.

Making each citizen $50,000. a year.

They are paid $0.99 kwh for their solar.
You can Google that.

SF could be 100% solar powered by 2016 when we pass a solar
feed in tariff that pays $0.49 kwh.

The price of solar panels falls every year.
The cost of oil pollution & oil, goes up every year.

Posted by Paul Kangas on Apr. 02, 2014 @ 7:21 pm

Californians use 360 billion gallons a year in transportation fuels. 99% of those fuels are fossil fuels! If Steyner wants to cover two Kansas size states with windmills, chopping up anything that flies, and uses enormous amount of toxic rare earth elements (fire hazards as well) or seven Kansas size states to cover one day's worth of oil and gas needs this country lives and thrives on - for all of us - he will most certainly be the smartest man alive. Maybe to appease the Tesla and EV folks, without subsidizing and gouging with the money part, he can use a bargain - only five Kansas size state's land masses of nothing but solar mirrors....but only during the day, cause the sun don't shine at night. The heat BTU amount of energy packed into a hydrocarbon molecule (includes carbon, which whether on an asteroid or this planet, is the building block of all life) has no comparison except nuclear. All other forms of energy efficiency from alternative generation are mere fractions of the petroleum energy mass that smart men and women over time figured out how to use for the benefit of humans. Finally, due almost entirely to oil, coal and gas production over the past 100 years, this country has reduced its environmental caused deaths by 98%. More maturity and less adolescent thinking will be necessary to deal with energy needs, like the other two needs all countries depend on (food and shelter) that is determinative of survival.

Posted by Stephen T. Harris, CPL on Apr. 01, 2014 @ 7:16 pm

"But Steyer (who has pledged to spend $100 million on ad campaigns for the 2014 election to promote action on climate change)"

It's only immoral when right-wing rich people try to buy elections!

Posted by racer さ on Apr. 02, 2014 @ 8:05 am

"Instead, the economists believed the potential job creation was closer to 100,000 in total direct and indirect employment"

Yeah - 100,000 good paying, blue collar jobs, in a heavily Latino area that is one of the most impoverished parts of California.

Who needs it! Since little direct benefit would be provided to San Francisco or Palo Alto, obviously there is no need for these jobs!

Posted by racer さ on Apr. 02, 2014 @ 9:24 am

You can read the reports and watch the briefing at http://montereyoil.org/sacramento-briefing/, and then decide.

Posted by Evidence-Based on Apr. 02, 2014 @ 10:36 am

Yawn. Just more of Steyer's money going towards producing propaganda.

Posted by racer さ on Apr. 02, 2014 @ 11:14 am

You can read the reports and watch the briefing at http://montereyoil.org/sacramento-briefing/, and then decide.

Posted by Evidence-Based on Apr. 02, 2014 @ 10:36 am

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