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"This play needs competition."
The Monterey shale already ranks as the largest U.S. oil-shale play, said Tim Marquez, founder, chairman and chief executive of Venoco Inc., speaking at Hart Energy Publishing’s DUO conference in Denver. “It has 300 billion barrels of oil in place.”
Marquez was first presenter in a pair of operating companies spotlighting California’s Monterey Shale. Venoco is a pure California company, and it has a major program under way in the shale. This year, it will spend $48 million on exploration and exploitation in the onshore Monterey, among other activities. It will drill at least 10 wells in the shale, acquire 3-D seismic and continue lease acquisition. Next year, it will ramp drilling up to between 30 and 50 wells.
Venoco started work in the onshore Monterey in 2006; it already owned and operated substantial Monterey assets offshore California. “The offshore has had fairly extensive exploration and development, but surprisingly very little exploration has been done onshore.”
The company now holds 105,000 undeveloped acres in the onshore play and 50,000 held-by-production acres. Two main areas of interest are the Salinas and San Joaquin valleys. “We are delineating and optimizing in all Monterey basins,” said Marquez. “On Venoco’s leases, we have over 10 billion barrels of oil in place.”
Venoco drilled three onshore Monterey wells in the first quarter 2010; its last vertical well logged 1,500 feet of net prospective pay. “We have a discovery in the testing phase,” said Marquez. “We’re very confident we have a very nice play on our hands.”
Western Energy Production LLC, a privately held California-based E&P, holds some 30,000 net acres in the Monterey Shale play in Kern County, said managing director Steven Marshall, the second spotlight presenter.
Remarkably, for such a powerhouse producing state, California can be considered lightly explored, he said. “Common knowledge has generally impeded deeper drilling.”
Western sees the strong production history of the Monterey shale as a guide to its future. Numerous fields in the southern San Joaquin Basin produce from the Monterey, including Lost Hills, Belridge, Rose, North Shafter and Elk Hills. Marshall estimated Monterey shale production at some 75,000 barrels of oil equivalent per day from the San Joaquin alone.
Western has focused its shale efforts on the eastern flank of the basin, between Lost Hills to the west and Rose and North Shafter fields to the east. It likes the area because the shale there is quite siliceous and underexplored. Most previous drilling has focused on the Stevens and underlying sands.
“We continue to grow our acreage as the play evolves,” said Marshall. The company is now transitioning from land acquisition to exploration and drilling, and it is currently looking at joint venture and partnering opportunities.
“This play needs competition. It’s been landlocked for a long time, and a lot of people didn’t have their exploration hats on.”