Two years ago, California Senator Fran Pavley began working on a legislative bill titled SB4. This bill would change California law to regulate hydraulic fracturing in the state.
Following a failed attempt to completely ban fracking in the Golden State, the less restrictive SB4 recently passed through the state Senate and the Committee on Natural Resources in the California Assembly.
The bill will be signed into law if it passes both state houses.
So what does this mean for Monterey Shale production? Nothing substantial.
‘What,’ Not ‘When’
When it comes to timing the market, there’s no such thing as perfection. And while there are plenty of ways to pull this feat off, the ‘what’ is always more important than the ‘when’.
The fact is, there are billions of dollars in tax revenue and millions of jobs on the line – California isn’t just going stop the expansion of fracking. And while regulation is inevitable, after all is said and done, California will have its gold rush once again.
Let’s be honest here: the environmentalists do have legitimate concerns. Fracking fluid contains up to 600 chemicals which can include lead, mercury, and formaldehyde.
This fluid is injected into the ground and can contaminate surrounding water. In fact, over 1,000 cases of contaminated water due to fracking have been documented to date.
And while that may sound like a solid reason to take to the streets, consider the following before you put on your old tie-dye shirt.
We don’t ban medicine because of side effects. And we don’t stop making cars because of pollution. Nor do we stop driving because 30,000 people die on U.S. roads every year.
We don’t stop slaughtering cows just because eating beef clogs our arteries and pisses off a few vegans. And we don’t quit walking because we sometimes trip.
We don’t cut off our hands because they can kill.
In the same tune, California won’t ban fracking because of environmental hazards – the benefits are far too appealing.
Let’s keep in mind that the the Bakken formation in North Dakota has helped to bring down the state’s unemployment rate to 3.2 percent – the lowest in the country. The Monterey Shale is expected to bring 500,000 jobs to California within just two years.
Whether or not you or I want this to happen is a moot point. It is going to happen.
No matter your opinion on the issue, you ultimately have two options: either take action and choose to benefit, or idle around watching others make a profit.
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The Winning Side
The Monterey Shale formation is over 1,700 square miles and contains an estimated 15.4 billion barrels of oil. It covers much of central California and stretches south to Los Angeles.
To put things into perspective, the formation is twice the size of the Bakken and Eagle Ford combined. Those 15.4 billion barrels of oil are approximately two-thirds of current U.S. shale oil reserves.
And several companies are already preparing for this boom – they are drilling test wells, lobbying politicians, pushing PR campaigns, and purchasing mineral rights.
Top producers in the Bakken Formation have experienced absolutely massive gains. One company’s share price has jumped 2,528 percent since 2009.
Considering that the Monterey Formation dwarfs even the Bakken, we are looking at possible growth opportunities even greater than that. The only thing left to do now is to locate those companies that stand to make the most profit.
Luckily for Energy and Capital readers, energy insider Keith Kohl is doing exactly that. Keep an eye out this week, as Keith will inform investors on what he believes to be the most promising Monterey shale plays. You’re not going to want to pass this up.
Turning progress to profits,
Jason Stutman
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