Thousands of feet below some of the nation's most fertile farm land could be 15.4 billion barrels of crude oil.
Billion, with a "B".
The federal government believes the Monterey Shale, which lies under more than 1,750 square miles of central and southern California, has far more shale oil than anywhere else in the lower 48 states — nearly four times the amount of the Bakken Shale in North Dakota.
But this is California. Nothing is easy. Accessing the oil will require hydraulic fracturing, better known as fracking, and even then it may be too expensive to be economical. Oil companies are quietly buying up mineral rights and drilling holes in the earth northwest of Bakersfield to see if they can get lucky.
"It's very different in California," said Gabe Garcia, who is an assistant field officer for the Bureau of Land Management in Bakersfield. He estimated there are 25 to 30 test wells on federal land drilling down as much as 14,000 feet into the Monterey Shale. Unlike North Dakota, the geology in California is impacted by tectonic plates — the rock is folded over — forcing the oil into hidden pockets.
(Read More: Fracking: How It Works, Where It's Done)
The BLM auctions off mineral rights to public lands every quarter, and the auctions are becoming more crowded. "We've seen prices vary from $2.00 an acre back in the early 2000s to $500 an acre here just in 2010," Garcia said. Winning bidders have ten years to develop a working oil well on the land or the lease expires. They pay the BLM an annual rent of $2.00 -to- $4.00 and acre, and the government receives 12.5 percent of revenues from the oil retrieved. "It's good for us," said Garcia. "Last year we brought in $190 million." Half of that goes to the state of California.
Few are watching developments as closely as John Lehn, President and CEO of the Kings County Economic Development Corporation. Unemployment in this county averages 15 percent, he told me, standing in front of a tall test well shooting up out of the valley floor. A Monterey Shale oil boom could change everything. "We're seeing a few local jobs and spending in the local economy for quite a bit of exploration," Lehn said, "but these are relatively small dollars to the potential of what could be."
There's a sense of modern day wildcatting going on in the region reminiscent of "There Will Be Blood," a film depicting California's first oil boom a hundred years ago. Much like then, oil companies are exploring secretively for competitive reasons, refusing to discuss exactly what they're doing, where they're doing it, and what they've found. Firms like Occidental and Venoco directed questions to the Western States Petroleum Association.
"Our companies are not forthcoming on their business plans," said the association's Tupper Hull with a laugh. "These are pretty smart people, they're pretty good at what they do. They're pretty competitive out there."
Not all oil companies claim to see much potential. Chevron, which has been pumping oil conventionally in the area for over a century, told CNBC in a statement, "Chevron does not see the same level of promise in the Monterey Shale as other companies...we have not been encouraged by the results of the wells we have drilled into the formation."
Then there are the concerns some in the state have about fracking in an area near earthquake faultlines and other environmental issues.
"California has no regulations particular to fracking," said Nathan Matthews, associate attorney with the Sierra Club. His organization is suing the state, claiming California is not enforcing existing regulations, and it's asking for a moratorium on all exploration of the Shale until California finalizes rules for hydraulic fracturing. "That oil's not going anywhere," said Matthews. "There's isn't a huge harm in just waiting to make sure we understand what we're getting into."
What are the chances any of this exploration will pay off?
(Read More: Senate Examines Implications of Shale Revolution)
"I don't really know what the break point is for the companies," said Tupper Hull of the petroleum association. "That's what our members are trying to figure out right now."
John Lehn said if he was trying to predict what inning the industry's in In the game of extracting oil. "We're probably in the recruitment phase," he said.
Looking at a test well owned by California-based Aera in Kettleman City, Lehn explained, "These folks that are out early want to be as quiet as they can, secure as much land or the mineral rights as they possibly can before the information gets out to the others. But you're here, so it's not much of a secret, right?"
—By CNBC's Jane Wells; Follow her on Twitter: @janewells
CORRECTION: An earlier version of this story mistakenly identified Aera as based in Canada. California-based Aera Energy is a privately held limited liability company and is not affiliated with the Canadian firm by the same name.