At a minimum, the EIA's revision of Monterey's reserves means that at least a few economists will need to rethink some of the rosy job creation estimates associated with the shale boom. A widely publicized University of Southern California study predicted a windfall of nearly 3 million jobs and billions in tax revenues if the Golden State successfully tapped its shale bounty.
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Still, other observers point to the wide swings in recoverable reserve forecasts. Early in the U.S. boom, most estimates were fairly conservative, which changed as rapid advances in hydraulic fracturing technology made it easier to pull oil and gas from the ground.
"Forecasts need to be continually refined, so I don't think this is a death knell for the boom," said Stephen Trammel, director of unconventional energy at research firm IHS. "We now know the Monterey estimates were optimistic," but other U.S. natural gas and oil drilling areas are outperforming despite early lowball estimates, he said.
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"The same technologies we've seen developed ... have created a revolution in oil supplies in the U.S.," Trammel added. "Those same minds will keep working on Monterey to make it pay ... [until the] mystery wrapped in an enigma gets understood enough to make it pay."
Fracking has fed a renaissance in domestic manufacturing, experts say, helping the U.S. drill and export the most oil it has in at least three decades. Investment and technological innovation could go a long way toward turning recoverable reserves into actual barrels of black gold.
"Ten or 15 years ago, nobody would have projected Bakken or Eagle Ford to produce 1 million barrels a day. These technologies weren't in place 10 years ago. Now they clearly are," said Erik Milito, director of upstream operations at the American Petroleum Institute. "We're only about five or six years into this, and companies are finding ways to advance technologies ... and figure out which are worth the trouble."
Tupper Hall, vice president of the Western States Petroleum Association, said he was not surprised by the EIA downgrade, but insisted all was not lost.
Although he said fracking opponents were "gleeful" over the Monterey news, "it doesn't mean the oil isn't there and the technology will not evolve to the point where it can be produced in large volumes," he said.
—By CNBC's Javier E. David.