The apparent lack of news concerning Utah’s energy resources could lead some to conclude that there’s not much happening in the Beehive state, but it’s actually buzzing with natural gas activity. Gas volumes don’t approach the numbers from better-known gas basins in Wyoming and Colorado, but with more producers exploring the Natural Buttes field in the Uinta Basin, the state issued a record 2,062 drilling permits in 2006, a 27% increase over the previous record set in 2005.
According to the Utah Division of Oil, Gas and Mining, the state’s gas production last year totaled 356 Bcf, up almost 14% from 2005. Utah is only ranked 10th in terms of gas production, but almost half of the growth has come from only one place, the Uinta Basin, which is located in the northeastern part of the state. Last year, the Uinta Basin’s output was 161.947 Bcf.
“Recent successful drilling in Utah has been expanding reserves by about 10% per year, one of the highest rates of gas reserves increase in the country,” said Thomas C. Chidsey, petroleum section chief of the Utah Geological Survey (UGS). “As a basis for comparison, Wyoming produced 2.1 Tcf of natural gas in 2006, and Colorado’s total 2006 gas production reached 1.2 Tcf.”
The Uinta Basin is the state’s most prolific gas region, but producers also are beginning to take stakes in the Paradox Basin, which is located in the southeastern part of the state. Uinta’s potential reserves are estimated at 14-26 Tcf; the Paradox holds an estimated 0.3-11 Tcf, according to the UGS.
Utah’s top producers are Anadarko Petroleum Corp. and subsidiary Kerr-McGee Oil & Gas Onshore LP, which combined to produce more than 27% of the state’s gas volumes last year with 98.78 Bcf. Other leading Utah gas producers include ConocoPhillips, which produced 47.3 Bcf in 2006; EOG Resources Inc., with 39.3 Bcf; and Bill Barrett Corp. (BBC), 18.1 Bcf.
In order to foster more energy development, the UGS established a research program in 2004 to pinpoint all of the state’s hydrocarbon reservoirs and potential new reserves. The program sponsors in-house research conducted by UGS staff and outside research funded through grants.
Craig Morgan, senior geologist with UGS, told NGI that the program is funded with the small amount of mineral lease payments that UGS receives from oil and gas, and coal production, and it is “open to anybody” who wants to submit a research proposal to the agency during the program’s solicitation period.
“Over the past 10 years or so most natural gas wells have been primarily drilled to the Tertiary Wasatch formation, although now some are being drilled to the deeper Cretaceous Mesaverde, and even deeper to Mancos shale,” which are all tight gas zones, Morgan told NGI. He noted that some energy developers “are now drilling even deeper to Cretaceous Dakota formation, which in some areas is 16,000-17,000 feet deep.”
BBC has found a way to make its drilling pay off. After moving into the Uinta Basin in 2002 by purchasing more than 47,000 acres, the Denver-based independent essentially tripled its 2006 gas production to 18 Bcf from 6 Bcf in 2005. BBC’s Kurt Reinecke, senior vice president Exploration, Southern Division, told NGI that most of the gains were from the company’s West Tavaputs properties, located in and around the West Tavaputs Plateau area, which is northeast of Price, UT, in Carbon County.
Some of the West Tavaputs wells are highest producing wells in the Uinta Basin, and BBC has drilled to the deeper Dakota, Entrada and Navaho zones where it has been quite successful The West Tavaputs region was “a classic overlooked field,” said Reinecke. “We were very fortunate timing-wise [to make the acquisition] right before gas prices went up. A well had been drilled 30-40 years ago and the field had basically been neglected [ever since then].”
BBC paid $8 million for the acreage five years ago, and last year, Oil and Gas Investor magazine named its 2005 deep-test well at West Tavaputs the “Discovery of the Year for 2005.” It was the second year in a row that a Utah discovery was given top billing by the magazine.
However, developing West Tavaputs has not been a cake-walk for BBC. There were major “infrastructure issues” related to the field, and BBC had to upgrade the property by installing pipelines and close to a dozen compressor stations.
“It has been a big investment for us,” Reinecke said. In addition, the field is definitely off the beaten path, “two hours from any hard top [road].” There are airstrips on the plateau that some producers have used to access the field, but Reinecke said BBC still has to truck in all of its supplies, including massive vessels that hold carbon dioxide that is used to stimulate wells and “blow frac fluid back out of the wells.”
Despite the lack of infrastructure, Reinecke said he enjoys the fact that Utah is “out of the limelight.” Compared with Colorado’s higher profile, Utah’s low-key gas activity “keeps competition down…you know who the key players are, you know how they operate and you know the neighborhood, unlike in the Piceance Basin where people are coming in with ‘stupid money’ and they don’t do their homework.” [That behavior] “really hinders development of the resource.”
Added Reinecke, “Utah is nice because it’s under people’s radar screens.” And in his opinion, the Uinta Basin “has more potential than the Piceance Basin.”
The state may not be on every producer’s radar screen, but conservation organizations have long had their fingers on the pulse of Utah energy development. The Southern Utah Wilderness Alliance (SUWA) and The Wilderness Society (TWS) are advocating the passage of the Red Rocks Wilderness Act (RRWA), which would permanently protect more than nine million acres of publicly owned and Bureau of Land Management (BLM)-administered “wilderness quality” land in Utah.
SUWA and TWS are concerned that there is a gold rush to lease all of the available Utah acreage for energy development. They contend that oil and gas companies already hold millions of acres of undeveloped federal leases in Utah, and they do not want the BLM to sell more acreage.
“Things are going gang-busters here, and it’s our fear that the next one-and-a-half years we’ll continue to see a ‘fire-sale mentality’ and continued push to lease public lands for the subsequent exploration for gas and oil,” SUWA staff attorney Steven Bloch told NGI. “We are fighting quite hard to block new leasing and eliminate development in hot spots like the Nine Mile Canyon, White River and Desolation Canyon,” but he added that “there are many places in Utah where the conservation community is not standing in the way of development.
Bloch said, “we’re looking for some balance: which lands are going to be in production and which lands are going to be preserved? West Tavaputs is extremely sensitive to many interest groups. It’s an example where there has been a lack of balance, and the drive to explore has trumped all other resources.”
On a positive note, SUWA and Anadarko have reached agreement on a gas project consisting of 95 wells north of the White River, said Bloch.
“We were able to reach an accommodation when they [Anadarko] backed off from drilling so close to the White River,” he said. “They also agreed to reduce the number of well pads and to use directional drilling in places where they had not considered. In return, we were able to green-light the project…It was a learning process for both of us. We went a long way to build some trust on how to work in the future.”
Energy consultants and universities routinely join forces with the energy industry to propose particular studies in areas of mutual interest in the state, and five projects were selected by UGS this year. To learn more about current and past hydrocarbon research, visit the UGS Oil & Gas Research at https://geology.utah.gov/emp/gas_research/index.htm . To learn more about the conservation groups and the RRWA, visit www.suwa.org/site/PageServer?pagename=work_arwa .
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