The Monterey Shale's oil reserves could offer California a way out of any economic shortfall, according to Navigant Consulting's energy director.
California Gov. Jerry Brown wants to invest more in education and in infrastructure, and the drilling dollars that could be captured from the "huge" potential of the Monterey could fund all of those plans, said Gordon Pickering.
The California Senate has had several drilling bills up for action, but none include a moratorium on unconventional drilling using hydraulic fracturing (fracking), which also is a positive step for the state, he said. State senators passed SB 4 to cover chemical disclosure requirements and public notice before fracking may take place, but at the industry's urging, no moratorium was included (see Shale Daily, June 3).
"This is probably as potentially market reforming as anything that has happened in the country, including shale gas development," Pickering said of the Monterey. "We're very close to what is happening with the Monterey, and it really is something that everyone will be talking about -- or participating in -- over the next 10 years. It is absolutely huge, and we're encouraged by the two fracking moratorium bills being taken out of consideration in the legislature."
Calling the Monterey "oil and real dollars," Pickering said future development could be used as part of a broader economic development strategy of the governor's to help the state rebound from the economic downturn. Among Brown's plans are to invest more in education and infrastructure, including building a bullet train, all of which could be funded with drilling dollars.
"To the extent that the governor wants to build the bullet train and put more money into education, the funds would be coming from this potential oil development as far as we can see," Pickering said.
Navigant also sees strong potential growth in the domestic natural gas vehicle (NGV) sector, but that may require a regulatory push in a big state, like California, said Pickering. The emphasis now on heavy-duty, long-haul trucking fleets is small potatoes relative to the market potential for lighter duty vehicles, and the sector could expand "if there is a regulatory development" that unleashes "pretty good potential."
"A regulatory development in an informed state [favorable to NGV transportation], such as California, which has a tons of cars, could potentially try to facilitate home refueling," said Pickering. If that were to occur, "we could see that market coming around, but at the present time there are too many distractions, so that's why our outlook doesn't see much increase for the NGV market in total right now."