Heavy petroleum occurs in limited amounts as tar sands within the western Santa Cruz Mountains. The largest accumulation of petroleum is in the middle and late Miocene Santa Margarita Formation. The Santa Margarita rests disconformably on pre-Tertiary Salinian basement rocks and unconformably on the Monterey Formation (middle Miocene) and older Tertiary rocks. The Santa Cruz Mudstone (late Miocene), which conformably overlies the Santa Margarita Formation, provided an initial seal for petroleum entrapment. The distribution of petroleum apparently is related to the depositional environment of the Santa Margarita and to later structural development.

The Santa Margarita Formation is a tidal dominated marine shelf deposit. An 8-km wide northeast-trending facies of unidirectional, large-scale cross-strata of uncemented sand and gravel represents a zone of intense tidal currents; this facies provided a conduit for initial petroleum migration. Westward homoclinal folding, including northeast-trending and southwest-plunging compaction anticlines, formed structures for initial petroleum entrapment within the cross-bedded facies.

Strike-slip movement on the San Gregorio fault system formed a postdepositional conjugate fault-and-fracture system in the western Santa Cruz Mountains. Where petroleum had accumulated on structures, faulting caused injection of the petroleum sand into overlying siliceous mudstone; these injections range in width from a few centimeters to 200 m. Faulting and associated clastic injections also formed partial seals across structures within the Santa Margarita Formation. The maximum thickness (30 m) of tar-saturated sandstone occurs in fault traps downdip on southwest-plunging anticlines within the cross-bedded facies. Petroleum accumulations also occur in stratigraphic traps where sand pinches out on paleotopographic highs, in structural traps in fault-bounded blocks on homoclinal folds and in possible diagenetic traps where sandstone rests on marble.

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