By WAYNE LUSVARDI

Back on Dec. 21, 2011, Gov. Jerry Brown said at a Jewish Menorah-lighting ceremony, “Today’s miracle is not to find more oil, but to utilize the sun.”  Brown was touting solar energy projects.

But the solution to Brown’s structural $20 billion annual state budget deficit may not be in the sky but under his feet.  Particularly if Brown is standing any place where the Monterey Shale Formation is underneath.  That would include the counties of Kern, Ventura, Santa Barbara, Fresno, Monterey, Tulare, San Luis Obispo, Kings, Madera, Merced, Stanislaus and San Benito.

The reason is that there may be a resurgence of the historic oil patches in California. This is the result of updated estimates of the recoverable barrels of shale oil due to new extraction technologies.

The Monterey Shale Formation in California is estimated to have 64 percent — repeat 64 percent — of the recoverable shale oil reserves in the lower 48 states.

Below is a recapitulated table from the U.S. Energy Information Administration report, “Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays — July 2011”:

Recapitulated Table of U.S. Technically Recoverable Shale Oil Resources

Source: U.S. Energy Information Administration .pdf, July 2011

Abundant Shale Oil

California may have more than four times the recoverable shale oil than the Bakken Oil Field in North Dakota, which currently is bringing vast prosperity to that state.  It has more than 4.5 times the reserves of the Eagle Ford Formation in Texas.  And it has nearly 10 times the shale oil reserves in the Avalon and Bone Springs Formations in New Mexico and Texas.

This is how the U.S. Energy Information Administration describes it:

“The largest shale oil formation is the Monterey/Santos play in southern California, which is estimated to hold 15.4 billion barrels or 64 percent of the total shale oil resources shown in Table 1. The Monterey shale play is the primary source rock for the conventional oil reservoirs found in the Santa Maria and San Joaquin Basins in southern California. The next largest shale oil plays are the Bakken and Eagle Ford, which are assessed to hold approximately 3.6 billion barrels and 3.4 billion barrels of oil, respectively.” 

Remember the days when the Southern California economy was built on oil and movies?  The birthplace of the oil industry may have been Pennsylvania, but it quickly spread to Long Beach, Ventura, Huntington Beach and San Luis Obispo County.

Will oil derricks and rigs return to Santa Barbara County and off the coastline? It is unlikely and not necessary with new horizontal drilling techniques.

California continues to try to erect an energy embargo around California with its Cap and Trade regulations and AB 32 mandates to plug its structural $20 billion annual budget deficit.

But ironically, California is sitting on a potential second resurgence of its oil patch that might be able to patch up the state budget deficit and sharply cut unemployment.

The state budget deficits are not solely due to a prolonged economic downturn.  They are a choice.