The experts disagree on how much recoverable gas there is in the Rocky Mountains, but economists and E&P and pipeline executives working in the area do agree it is “under explored and under exploited,” with extremely complex geology requiring new technologies that are continuously under development, as well as increased land access and investment in infrastructure.
“The potential in the Rockies is enormous,” Keith Rattie, CEO of Questar Corp., told attendees at the Colorado Oil and Gas Association’s Natural Gas Strategies conference. “This is the most under exploited, under developed region in the U.S and we are on the front end of what we think is a period of at least a couple decades of growth. The issue is not going to be the resource. We are not running out of natural gas in the United States. We are not running out of places to look for natural gas in the United States. We’re running low on places where we’re allowed to look for gas. The access issue is absolutely crucial to whether this region reaches its potential or not.”
Rattie lamented the increased emphasis on imported LNG, saying it would make the U.S. hostage to the same hostile and unsettled regions of the world that the country now depends on for oil.
The gas plays in the Rockies area are definitely different from more conventional areas. It’s a long learning curve, and most of the majors left the area years ago in the late 80s in search of more conventional giant fields, Ray Thomasson, a veteran geologist and currently head of the American Geological Institute, said. He faulted the majors for failing to recognize the gas potential and failing to develop technologies to deal with the area. Instead they opted for the political risk of overseas development.
Others lost heart or ran out of cash tackling the difficult geology, but for those who are persevering, it’s paying off. Williams, which bought Barrett Resources several years ago, is one of those companies making the area pay. The company is the largest operator in both the Piceance and Powder River Basins. Williams has progressively tightened its well spacing to one well every 10 acres in parts of its Piceance development area in order to get the maximum out of tight formations with lateral discontinuances and about 2,000 net feet of pay, according to Joseph Jaggers, Williams vice president E&P Denver Region. “We’re very, very early on the maturity curve,” but Jaggers believes the Piceance area “is one of the emerging energy giants in the Rockies.”
In eight to nine years of operating in the area Williams has decreased its drill times and cut costs through extensive use of 3-D seismic, geostatistical modeling and lots of simulations. The company currently produces 200 MMcf/d from 700 wells in the Piceance Basin and has about 2,500 more locations to drill in its 117,000 net acres. Costs currently are running about $1 million a well. Jagger said their plans call for a 15-rig continuous drilling program for 10 years at a cost of $2.5 billion to bring in about 3 Tcf of gas.
The Piceance is just one area and there are a number of them under development. Rattie pointed out that new areas such as the Pineville Anticline and the Greater Green River Basin “have enormous potential. What occurs there will look a lot like the Piceance.”
Thomasson said the most critical factor in developing the area is expanding the infrastructure to cut the basis differential and bring in the investment dollars.
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