After much promise but little action, the area of the Niobrara Shale play extending into southeast Wyoming has energy stakeholders in that state scratching their heads. The prospect of more seismic testing has at least one high-level state official encouraged.
Companies with drilling rights are just beginning to get recent collected data together, and that could spur more drilling finally in the area, according to Tom Doll, supervisor of the Wyoming Oil and Gas Conservation Commission (OGCC). Operators are looking for the sweet spots to begin horizontal drilling, Doll told local news media at last Thursday’s Wyoming Natural Gas Fair in Jackson Hole.
“More than 1,200 miles of Niobrara Shale has had 3-D vibroseis geophysical data gathered in the past 18-plus months,” Doll told NGI‘s Shale Daily late Monday. “Much of that data is just now coming into the exploration market, and that data may provide keys to unlocking the natural fracture systems in the Niobrara.”
However, not all of the information is publicly available. Doll noted that operators can request confidential well status when they submit permit applications to drill. And if the well is a wildcat or exploratory well, data will be held confidential for six months until the completion report is filed or first production is reported, he said.
At the beginning of this year, overall drilling in U.S. shale basins had increased 38% from a year earlier, led by 100-200% jumps in oil- and liquids-rich natural gas plays such as the Niobrara in Colorado and southern Wyoming (200%), according to industry reports (see Shale Daily, Jan. 11). However, the reports also acknowledged that while the Niobrara-DJ [Denver-Julesburg] Basin showed the greatest percentage increase, its well total was smaller than other major plays, moving from 11 a year earlier to 33 on Jan. 7.
“This play has been slow to develop due to lack of drilling rigs, crews and service/simulation contractors, all mainly due to demands in Colorado and North Dakota,” said Doll, although the “real contributor” has been poor initial production (IP) rates that he places in the 450-700 b/d range, rather than the 2,000-3,000 b/d IPs experienced in the northeastern Colorado portion of Niobrara.
OGCC approved 320 drilling permit applications for Niobrara covering the eastern half of Wyoming in the past 18 months, Doll said. This year alone more than 130 drilling permits have been processed in Laramie County; along with 15, 11 and 50 in Platte, Niobrara and Goshen Counties, respectively, while only 40 wells have been drilled (27 completed), he said.
In announcing earlier this year Wyoming’s current evaluation of its energy resources, Gov. Matt Mead said statewide mineral value had topped $15 billion, and he announced the creation of a $1 million supplies and equipment program for rural fire districts where the most drilling activity is expected. The move was aimed at Niobrara and three other counties (Goshen, Laramie and Platte).
“Several large-dollar state and fee lease sales about 18 months ago contributed to the buzz about the potential to exploit the [Wyoming] Niobrara shale for crude oil,” Doll said. “The [OGCC] staff has heard that rigs are planned to be moved into the southeast part of the state for Niobrara exploration for the past several months, and yet the drill rig count remains one to three currently with up to eight rigs operating in the area during the past 18 months.
“The Niobrara has huge upside potential for Wyoming due to sales, severance and ad valorem tax revenues that will be generated for cities, counties and the state, and the jobs associated with the short- and long-term activity.”
Marathon Oil Co. has indicated it will move a drilling rig into parts of the Wyoming portion of the DJ Basin, or Niobrara, following its ongoing work in the Colorado portion of the play, where it has completed two vertical wells, which CEO Clarence Cazalot said were encouraging.
“We have built a position of about 143,000 acres in this play — about half in Colorado and the rest in Wyoming,” said Cazalot at a recent industry conference. He noted that Marathon initially acquired about 180,000 acres and has since sold 30% of that for a price that equaled its entire investment in Niobrara. “It was a good way for us to capture value and minimize our risk while evaluating this play.”
He said the company will move up from Colorado to the Corn Creek area of Wyoming later this year, but he characterized Niobrara as a play in its “early stages with the potential really yet to be determined. There is still a lot still to be identified about this play.”
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