The Monterey is not a new play, in fact far from it. The major oil companies have produced from the Monterey heavy oil pools since the 1900s. Most of the acreage in the Monterey in California has long been controlled by the major oil companies. This has meant that the smaller independents have not had much of a presence.
What not having that independent presence has likely done is delay the application of new technologies to the Monterey shale. The shale is the zone much deeper than where the majors have produced from conventionally. The majors have been slow to embrace the unconventional oil and gas revolution which has been led by independent producers like Chesapeake and XTO.
The Monterey Shale Play is enormous. The EIA (numbers taken from the Venoco presentation linked earlier) estimated in its report the following numbers with respect to technically recoverable reserves:
The Bakken 3.6 billion barrels The Eagle Ford 3.4 billion barrels The Monterey 15.4 billion barrels
How is that you say? More than four times the size of the Bakken ?
Don’t get too excited. So far drilling results being reported by the two main land holders Oxy and Venoco are mixed. So this is going to take some more time. But the Bakken was exactly the same. We always knew the oil was there, and through trial and error over a five year period the industry figured it out. The first few wells were disastrous, but a necessary part of the learning process.
I think the industry likely will figure out the Monterey as well, and with Chesapeake moving in I feel like that might be sooner than later.
The major oil companies have produced from the Monterey heavy oil pools since the 1900s. Most of the acreage in the Monterey in California has long been controlled by the major oil companies. This has meant that the smaller independents have not had much of a presence. THIS IS NOT AN ACCURATE STATEMENT SIR, SORRY. The major shale plays in the monterey are NOT where the Majors have long held acreage and production. Those areas, Lost Hills, Belridge etc, are areas where there is a structural feature, typically anticlinal, traping and most importantly, fracturing the Monterey. The shale play is in areas that have not been naturally fractured and thereby are not in structurally advantaged positions. All the areas currently being pursued by the likes of Oxy, Hess, Venoco and others are in areas with little or no structural feature, and some are even in depositional synclines where thick Monterey was deposited. These areas are very under-explored because of this. The vast majority where unleased just a couple years ago, and many still are since no one has yet "uncorked" the potential. We all know the oil is there as it is the source rock for all the oil you accurately mentioned. This is a play concept a company such as Royale could have and still can pick up thousands of acres at low cost. The costs have risen in other resource plays POST discovery. One of the many oil related things this company should doing. Who knows if, when or where the Monterey (or some other shale play) will be established as commercial...not all of them work......words of quasi wisdom from an old retired rock-jock. The Dr. is out