Since the shale rush took off starting in 2005 in Texas, drillers have sprinted from one state to the next, chasing the promise of cheaper, easier, more productive wells. This land rush was fueled by a wild spike in natural gas prices that helped make shale gas drilling attractive even though the costs of fracking were high.

As the selling price of natural gas sank from its historic highs in 2008, much of the luster wore off entire regions that had initially captivated investors, like Louisiana’s Haynesville shale or Arkansas’s Fayetteville, now in decline.

But unlike natural gas prices, oil prices remain high to this day, and investors and policymakers alike remain dazzled by the heady promise of oil from shale rock. Oil and gas companies have wrung significant amounts of black gold from shale oil plays like Texas’s Eagle Ford and North Dakota’s Bakken.

Shale oil, they say, is the next big thing.

“After years of talking about it, we’re finally poised to control our own energy future,” President Obama said in his most recent State of the Union address. “We produce more oil at home than we have in 15 years.”

But once again, the reality may be nothing like the hype. Consider California.

The country’s largest and most closely watched shale oil play is in California’s Monterey shale. This sprawling geological formation spans 1,750 square miles from Southern to Central California. The Monterey is single-handedly responsible for roughly two thirds of the nation’s total predicted shale oil resources, according to federal numbers.

Industry hype made these federal figures pale by comparison by ignoring the limits of technology. The Monterey “has 300 billion barrels of oil in place,” claimed Tim Marquez, chief executive of oil and gas company Venoco Inc., which invested heavily in the play, at a 2010 industry conference. The Monterey could hold as much as 400 billion barrels of oil – roughly half as much as Saudi Arabia’s conventional oil – analysts at IHS Cambridge Energy Research Associates predicted.

With predictions like these, the value of drilling rights in the Monterey skyrocketed. Oil and gas leases that previously fetched $2 an acre started auctioning off for over $1,000 per acre, the New York Times reported in February.

A University of Southern California analysis predicted that the impacts on California’s economy would be stunning. The report – which DeSmog revealed had heavy oil industry ties – forecasts that as many as 2.8 million jobs and $24.6 billion in state and local tax revenue by 2020 could come from Monterey shale oil.

Anti-fracking organizers have also focused their attention on California, warning that the earthquake-associated process should not be adopted near the San Andreas fault, and that the millions of gallons of water required for high-volume hydraulic fracturing could overwhelm already strapped water resources along the West Coast. A pitched battle is underway over how fracking in California should be regulated.

But as the frenzy has heated up, oil and gas companies have quietly reported disappointing results in the Monterey.

Major oil and gas company Chevron tried drilling the Monterey and didn’t like what it found.

“Based on our drilling results, our view is that the oil has migrated out of the formation and is now found in pockets outside of the Monterey shale,” said Kurt Glaubitz, a spokesman for San Ramon, California-based Chevron Corp. (CVX), the second-biggest U.S. oil producer. “We don’t believe it’s going to compete for our investment.”

Major oil and gas companies have a reputation for getting burnt by shale plays. Shell’s retiring CEO Peter Voser told the Financial Times earlier this month that investing $24 billion into North American unconventional oil and gas was one of the biggest regrets of his career. “Unconventionals did not exactly play out as planned,” Mr Voser said, referring partly to a $2.1 billion write-down Shell took in August related to difficulties turning a profit from shale wells.

Some analysts say that smaller oil and gas exploration companies are more nimble than the majors, and that the success of shale plays should be judged by these companies’ results.

In the Monterey, independents have faced poor results as well.

One such independent, Venoco, has tried to coax oil from the Monterey with over 2 dozen wells, investing $76 million in 2012 alone. Venoco held the second-highest amount of acreage in the Monterey, but its early wells proved “uneconomic” and it recently moved to sell off its holdings.

“To date, we have not seen material levels of production or reserves from the program and have, following the completion of the going private transaction, reduced our capital expenditures related to the project,” the company’s most recent annual SEC filing revealed.

That’s a far cry from the CEO’s 300 billion barrel boast in 2010.

“The Monterey shale was supposed to be the greatest thing since sliced bread, but so far has not lived up to the hype,” Fadel Gheit, an oil and gas analyst at Oppenheimer & Co. in New York, told Bloomberg.

Frustrated by poor results from fracking the Monterey shale, some companies have instead tried “acidizing,” or injecting acid into wells to dissolve rocks and release oil, but to no avail. They’ve even explored mixing this acid process with fracking, using a process called an acid-frac that involves injecting hazardous acids into wells at extremely high pressures.

Some state regulators in California have begun to acknowledge the industry’s poor results.

“None of the companies that have tried it so far have had significant success, and it doesn’t appear to be widespread,” Jason Marshall, the California Conservation Department’s chief deputy director, told Bloomberg Businessweek. “It may take an advancement in technology or methodology to unlock the oil production potential of the formation.”

But so far, the feds have barely budged. The EIA has slightly revised its official estimates for how much gas current technology will allow companies to wrest from the Monterey, down to 13.7 billion barrels from the 15.4 billion predicted in 2011.

Environmentalists remain wary that a technological breakthrough could ultimately lead to widespread drilling. “If and when the oil companies figure out how to exploit that shale oil, California could be transformed almost overnight,” Kassie Siegel, a lawyer at the Center for Biological Diversity, told the New York Times.

Relatively little attention has been paid to operators’ actual results, however. Widespread hype has left policymakers focused on shale prospects. “The fossil fuel deposits in California are incredible, the potential is extraordinary,” the state’s governor, Jerry Brown, said in March.

Renewable energy sources like wind and solar have had more predictable results, but lack the gold fever that the potential for an oil rush can unleash.

And indeed, many in California remain entranced by the prospect of the Monterey’s fossil fuels.

“You can’t let a few dry holes discourage the whole thing,” said Neil Ormond, the president of Petroleum Land Management, a company based in Clovis, Calif, “because if you find oil, you make money.”

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