|Theme||Visible||Selectable||Appearance||Zoom Range (now: 0)|
Years in the making, the recent steady rise in drilling in the Powder River Basin of northeast Wyoming is generating excitement reminiscent of the early days of currently more-established US onshore oil plays. The upturn in activity is resulting in double-digit production growth. Wells are bubbling over with oil, and operators are bubbling over with enthusiasm. This has been most evident in recent industry presentations, where decision makers from the basin's exclusive club of operators have gushed over what is becoming a core asset in their portfolios. Given the basin's oil richness, multiple stacked horizons, and well performance and economics, "we think it's comparable and competitive with the big-name basins--whether it's the Permian, SCOOP, or STACK," Joseph DeDominic, president and chief operating officer of Anschutz Exploration, said at a recent SPE Gulf Coast Section meeting on the basin.
Years in the making, the recent steady rise in drilling in the Powder River Basin of northeast Wyoming is generating excitement reminiscent of the early days of currently more-established US onshore oil plays.
The upturn in activity is resulting in double-digit production growth. Wells are bubbling over with oil, and operators are bubbling over with enthusiasm. This has been most evident in recent industry presentations, where decision makers from the basin’s exclusive club of operators have gushed over what is becoming a core asset in their portfolios.
Given the basin’s oil richness, multiple stacked horizons, and well performance and economics, “we think it’s comparable and competitive with the big-name basins—whether it’s the Permian, SCOOP, or STACK,” Joseph DeDominic, president and chief operating officer of Anschutz Exploration, said at a recent SPE Gulf Coast Section meeting on the basin.
“This is what really gets us excited—the fact that you have 5,000 ft of stacked pay which is very similar to what you see in the other basins,” generating a high-dollar amount per acre, said Aaron Ketter, vice president of Devon’s Rockies business unit, during the same event. Formations are “highly economical” at $50/bbl and under, he said, with the heart of the Turner zone sometimes breaking even in the high $30s/bbl.
Traditionally known for its prolific coal production, the Powder River Basin’s potential for oil became a stronger point of focus in the industry about a decade ago. Operators began moving in on the region, rigs in tow, collecting limited but valuable data on its formations. When the commodity price downturn struck the industry during 2014–2016, operators pulled back investment, resulting in the basin’s failure to launch.
In its current state as an oil play, the basin is still underdeveloped. While lots of vertical wells have been drilled there in the past, “the truth is, when you look at horizontal development, and even using modern completions, it’s really brand new. We’re just getting started,” said Joseph A. Mills, Samson Resources II president and chief executive officer. “Delineation is what’s happening today and that’s probably what’s going to go on for another couple of years.”
Companies that are now ahead of the curve arrived early in the basin, secured operatorships, began drilling years ago, held onto their acreage—and its accompanying data—through the downturn, and patiently waited for oil prices to rise and costs to fall.
“What’s unique about the Powder is just the areal extent of some of these zones aren’t the same magnitude as you see in the Permian or the Midcontinent. So zip code really matters,” said Ketter.
Current Lay of the LandDevon, Anschutz, and EOG Resources have the largest positions in the Powder River at around 400,000 net acres each. Chesapeake Energy and Anadarko Petroleum each has around 300,000 net acres, with the latter firm having just spent some $100 million to expand its position.
Three big deals among big US shale operators hit the newswires in earnest as October ended and November began, and even more upstream industry consolidation could be on the horizon. On 29 October, shale enhanced oil recovery champion Denbury Resources and Eagle Ford operator Penn Virginia reported their agreement to merge in a $1.7-billion pact. A day later, shale pioneer Chesapeake Energy and another Eagle Ford operator, Wildhorse Resource Development, reported their $4-billion combination. And, in the largest of them all, fellow shale players Encana and Newfield Exploration kicked off November by announcing their marriage via a $7.7-billion deal. The second half of the year has seen an explosion of mergers and acquisitions.
Management, and Rockcliff Energy Haynesville position through its purchase involved building a position in Haynesville II are among the most active operators of BHP Billiton's US shale assets. And most people years has aggressively leased and acquired play. "Now that we're a significant player, outside of the region have likely never acreage in North Louisiana. The company we will continue to make acquisitions and heard of them. Such is the story of the bulk of the top because it benefits from the ability to drill Aethon currently has 186,000 net producers in the dry-gas-rich Haynesville, north-south with cross-unit laterals and acres in the Haynesville consisting of a which differs from its peer group forced pooling, said Frank D. Tsuru, president large position in North Louisiana as well of big shale plays that are led by majors and chief executive officer of Indigo, as a less mature position in the Shelby and big independents. While Chesapeake during a recent SPE Gulf Coast Section Trough play of East Texas, a portion of Energy, XTO Energy, and BP each panel discussion of Haynesville executives which it bought from Rockcliff Energy. Most of its position either has the Bossier privately-owned, largely pureplay The Houston-based company has formation underneath it or Cotton Valley operators--with their new completions amassed 435,000 net acres and, through sands above it, he said. "We're already and midstream partnerships--that Momentum Midstream, has "built a doing Bossier development and seeing have accounted for much of the play's fully integrated, very large-scale midstream great success. The Cotton Valley's got a lot output increases. Indigo currently produces around it."
Indigo Natural Resources, Aethon Energy Management, and Rockcliff Energy II are among the most active operators in the revived Haynesville Shale of North Louisiana and East Texas. And most people outside of the region have likely never heard of them. Such is the story of the bulk of the top producers in the dry gas-rich Haynesville, which differs from its peer group of big shale plays that are led by majors and big independents. While Chesapeake Energy, XTO Energy, and BP each has a presence there, it is the lesser-known privately-owned, largely pure-play operators--with their new completions and midstream partnerships--that have accounted for much of the play's output increases. Those companies began entering the play a few years ago when many of the bigger operators were turning away from dry gas.