The fierce debate over "fracking" in California grew louder Wednesday with a new report that drastically reduced the estimate of oil that existing technology could extract from the state's massive underground reserve.

The news, which cut the forecast by 96 percent, weakened hopes for an oil boom that would bring millions of jobs and billions of dollars in new tax revenue to the Golden State, home to about two-thirds of the country's shale oil reserves. But foes of hydraulic fracturing -- which uses pressurized liquid to break rock formations to mine gas or oil -- were over the moon. They argued that the new estimate by U.S. Energy Information Administration scientists makes fracking in California politically unfeasible considering the potential environmental and seismic damage.

"The myth of vast supplies of domestic oil resources and billions in potential revenue from drilling in California by the oil industry has been busted," said San Francisco billionaire Tom Steyer, the former hedge fund manager who founded the nonprofit NextGen Climate to fight global warming.

The earlier estimates of the oil available in the Monterey Shale -- a 1,750-square-mile formation extending from Sacramento to Los Angeles -- had sparked a wave of California speculation not seen since the Gold Rush. Oil companies scurried to position themselves, and many politicians rushed to tally up the economic benefits -- causing a serious rift between environmentalists and Gov. Jerry Brown, who sees himself as a champion against climate change.


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But now the federal agency that keeps track of the nation's energy reserves estimates that current fracking methods could extract only 600 million barrels of oil from the formation -- a far cry from the 13.7 billion barrels once thought to be recoverable. The new estimate was first reported by the Los Angeles Times.

The oil industry, however, was hardly ready to hoist a white flag.

Tupper Hull, vice president of the Western States Petroleum Association, an oil industry trade group, said, "We've always been quite clear that there are challenges to producing oil out of the Monterey" Shale that set it apart from shale formations already tapped in North Dakota, Texas and elsewhere. "I have every confidence that the oil companies possess the experience and the ability to innovate. If anyone can figure it out, they can figure it out."

Severin Borenstein, who directs the University of California Energy Institute, said "this is definitely a huge setback to the expansion of oil production in California, but I would not at all say the game is over. ... It is way too early to say that this is the death of fracking in California. Technology only moves forward, and I am sure there is going to be millions of dollars spent trying to make it better specifically for California because there is so much potential."

A University of Southern California analysis -- funded partly by Hull's association, based partly on Energy Information Administration data and released in March 2013 -- had estimated the Monterey Shale could help California create up to 2.8 million new jobs and generate up to $24.6 billion per year in new tax revenue by 2020.

In May 2013, Brown said "the fossil fuel deposits in California are incredible, the potential is extraordinary." Environmental groups urged Brown to support a fracking moratorium, but the governor resisted. In September, he signed a law creating new fracking regulations, including a permitting process, notification of neighbors, public disclosure of chemicals used and groundwater- and air-quality monitoring.

The governor declined to comment Wednesday.

In a CNN interview Sunday, however, Brown noted that fracking has been around in California for more than 50 years and that the state still consumes a lot of oil. "So, we are not gonna shut down a third of our oil production and force more oil coming from North Dakota -- where they are fracking a lot more -- to come in by train or more boats and ships coming in from all over the world."

Both of Brown's main Republican challengers in the June 3 primary election support more fracking and oil production.

Neel Kashkari made it a cornerstone of his job-creation plan. "It's critically important to aggressively pursue new technologies and advancements that can safely unlock the full potential of the Monterey Shale," Kashkari spokeswoman Jessica Ng said Wednesday.

GOP rival Assemblyman Tim Donnelly agreed: "We've always known the technology would present a considerable challenge to tap the bounty and benefits of the Monterey Shale. What's at stake is a tremendous economic boom, and the biggest impediment ought to be the technology, not the government."

H.D. Palmer, spokesman for Brown's Department of Finance, said "there's nothing built into either our economic or revenue forecasts related to fracking," so the new estimate "isn't a hit to our bottom line."

But Steyer says the bottom line is that climate change will hurt California.

"Our leaders in Sacramento can no longer afford to pin our hopes on the false promises of a fossil fuel windfall -- especially when our state is poised to lead the nation and the world toward a cleaner, more sustainable energy economy," he said. "California must have the courage and vision to address the root causes of the climate crisis."

Zack Malitz, campaign manager for CREDO, a San Francisco liberal activist group, said the new estimate means "there is now no longer any political gain to be had for the governor in supporting fracking and putting our state at risk from water contamination, earthquakes and climate change. He must enact a moratorium."

A push for a moratorium failed in the Legislature last year. State Sen. Holly Mitchell, D-Los Angeles, is carrying a moratorium bill now, but the Senate Appropriations Committee voted unanimously Monday to put SB1132 into the suspense file -- essentially putting it on indefinite hold.

Emotions still run high on the issue: With a unanimous vote of its supervisors Tuesday, Santa Cruz County became California's first county to ban fracking altogether.

The move was mostly symbolic -- there are no known oil leases in the county, nor has it been targeted by prospectors.

Josh Richman covers politics. Contact him at 510-208-6428. Follow him at Twitter.com/josh_richman. Read the Political Blotter at IBAbuzz.com/politics.