No One Expects California's Shale Boom To Happen Anytime Soon

This September, California legislators passed a law that paves the way for continued fracking activity in the state's Monterey shale formation, which the EIA says could contain oil reserves four times larger than North Dakota's Bakken.

But it seems safe to say that at this point, the bill was mostly symbolic.

At a recent breakfast, David Howard, an analyst at Calgary-based energy research firm ITG, said oil companies were still "very far" away from tapping the vast reserve.

In a follow-up email, Howard told Business Insider: "...It is not a focus right now. The market has moved away from really paying attention California unconventional and I follow the market."

There are several reasons why this is so.

The Monterey's geology is extremely complex. The basin is sandwiched between mountains with high degree of structural deformity and is next door to the active San Andreas fault. Once you get past the structural complexity the rock offers many other challenges as it is very thick and has a high degree of biogenic silica which creates a very hard and very tight rock. Howard says it may be possible for drillers to overcome this, but the timeline will be long. The EIA's estimate has also come in for criticism.

Despite its passage, the fracking bill approved in Sacramento also contains elements that could slow down activity. A specific permit must be obtained if a company plans to use hydraulic fracturing in their drilling. Once a driller has notified residents they plan to frack, the residents living next to a site can ask for their water to tested, and the driller must pick up the tab, according to KCET. The bill also mandated the state perform an independent study of the environmental impact of fracking.

"In the success case the regulatory framework could be a choke point to a rapid increase in activity," Howard said.

The real indicator of a play's potential, Howard says, is the presence of independent operators. And right now there are almost none in the Monterey - they're all too focused on all the country's bother booming plays.

"The limited number of independent operators active in the basin is likely to lengthen any growth/innovation cycle", he said.

Indeed, among companies' quarterly earnings calls, the Monterey has only come up eight times this year and 21 times since 2008, according to Seeking Alpha. Compare that with more than 1,500 times since 2008 for the Bakken. Although oil majors like Occidental are already drilling the Monterey, it takes a swarm of smaller companies to start a boom, and they're not interested.