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The independent holds around 400,000 net acres in the DJ Basin and hopes to increase production to more than 400,000 BOE/D by 2021. But the existing out here is dedicated for midstream. Relatively few Everybody kind of knows who has what, Denver-Julesburg (DJ) companies have large positions in the and we do development around that." Basin and overlapping Niobrara Shale. Denver also serves surge, attention has been drawn to the nearby competitors. Operators have flocked to West of SRC Energy, previously known as Synergy like in the Bakken and Permian where Texas, southeastern New Mexico, and Resources and one of the region's labor costs and turnover can be high. We don't have a lot of disposal leaner era for the industry. The expansive good rate of return" due mainly to low issues," which are common in areas such Permian alone, which covers more than well and takeaway costs, which makes it as the Permian. "The key is the big players--Anadarko, bulk of US oil production increases and He previously served as completions Noble, and PDC--feel the economics mergers and acquisitions over the last manager for Anadarko Petroleum's DJ compete with the best shale economics couple of years.
The Niobrara Shale in the United States has ramped up into a hot play that could soon bring an explosion of horizontal drilling in Colorado and Wyoming. The combination of horizontal drilling and multistage hydraulic fracturing is transforming the Niobrara from a target that has been drilled vertically and primarily for gas for nearly 100 years into a liquids-rich play that is capturing considerable attention. Speaking at the 2011 SPE Annual Technical Conference and Exhibition in Denver, John Ford, general manager of Colorado’s Wattenberg field at Anadarko, described the growing Niobrara activity as “really the next big thing.”
That optimism was understandable. In November, Anadarko announced that its leases at Wattenberg may hold more than a billion barrels of recoverable oil and natural gas. The statement noted company drilling success in 11 recent wells at the field, including the Dolph 27-1HZ horizontal well that showed initial production of more than 1,100 B/D of oil and 2.4 MMcf/D of natural gas. These latest wells have given the company confidence that it can drill between 1,200 and 2,700 wells in northeast Colorado, with approximately 160 wells planned for this year. Based on results so far, the company expects ultimate recovery of between 500 million and 1.5 billion bbl of oil, natural gas liquids, and natural gas on an equivalent basis.
Anadarko is not alone. Chesapeake Energy, Noble, Encana, and EOG Resources are among the largest acreage holders and the most active drillers of many companies—including numerous small independents—probing the Niobrara. Majors such as Shell and Marathon Oil have significant acreage.
There are more than 50 operators in or near the Wattenberg field alone. Situated north/northeast of the Denver area, Wattenberg is the largest producing field in the Denver-Julesburg (D-J) Basin and one of the largest onshore oil and gas fields in the US.
Reservoir Rock and Producing Regions
Although the Niobrara is usually referred to as a shale, its reservoir rock consists primarily of limestone or chalk intervals, said Steve Sonnenberg, professor of petroleum geology at Colorado School of Mines in a recent edition of the AAPG Explorer (published by the American Association of Petroleum Geologists). “The formation demonstrates facies changes that range from limestone and chalk in the eastern end to calcareous shale in the middle and eventually transitioning to sandstone farther west,” said Sonnenberg, a past president of AAPG. “Depth and thickness are highly variable.”
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.
Colorado voters soundly defeated a measure 6 November that would have restricted the vast majority of new development in the country's fifth largest oil-producing state. The outcome was a big relief for the oil and gas industry, but its existential fight in the state hasn't ended. Proposition 112 would have required new oil and gas development in Colorado to be at least 2,500 ft from areas considered "vulnerable," including homes, schools, and waterways. The current minimum setback is 500 ft. With more than 90% of precincts reporting, about 57% of the electorate voted against the measure.