Optimism trumps the blues

Rocky Operators Cautiously Move Ahead

They call it The Beast: WPX Energy’s Cyclone rig 17 on the GM 41-4 well and MV 7-4 pad production equipment – a big Niobrara sweet spot in the Piceance Basin. Photo by Jim Blecha/Courtesy WPX Energy
They call it The Beast: WPX Energy’s Cyclone rig 17 on the GM 41-4 well and MV 7-4 pad production equipment – a big Niobrara sweet spot in the Piceance Basin. Photo by Jim Blecha/Courtesy WPX Energy

Ask a Rocky Mountain operator how it’s going, and the answer might well be a non-committal “it’s going.”

There’s both oil and gas aplenty in this region, but as is the case elsewhere, gas prices here continue to languish in life support mode.

This can be a downer in the major gas-prone areas where deep horizontal wells requiring multi-stage fracturing have become the rule rather than the exception.

These big babies are expensive to drill and complete.

But optimism trumps pessimism, and the operators go about their business.

Steve Sonnenberg
Steve Sonnenberg

“Across the Rockies, people are having success if they’re careful where they’re drilling,” said past AAPG president and Honorary member Steve Sonnenberg, professor and Boettcher Chair in petroleum geology at Colorado School of Mines, Denver.

“One of the exciting things going on is the development of the Niobrara in the Wattenberg field in the DJ Basin in Colorado,” he said. “Operators are drilling horizontal laterals about 4,500 feet and using multi-stage hydraulic fracturing.

“The wells are coming on from 100 to 700 barrels of oil equivalent a day,” he noted. “The total resource in Wattenberg may be four billion barrels equivalent, according to (a couple) operators.

“The Niobrara in the southern Powder River Basin is also doing very well,” Sonnenberg added.

He emphasized that the good news about the Niobrara is the kerogen associated with it is Type II and will give both gas and oil.

The Beast

The Cretaceous-age Niobrara is one of the few formation names used in just about every basin in the Rockies. It might be viewed as being a bit offbeat in the geological sense in that it’s a shale, but also not a shale.

“The Niobrara petroleum system is a major petroleum system in the Rocky Mountain region,” Sonnenberg noted. “It consists of really rich source rocks with total organic content between 3 and 8 percent in areas, and the reservoir rock primarily being limestone or chalk intervals.”

Nomenclature varies for the shale associated with the Niobrara, e.g. Mancos, Cody, Steele, Baxter.

Often targeted for oil production, the Niobrara has proved to be gas-rich in a number of areas. These include the well-known Piceance Basin, which is a major gas basin in western Colorado.

“The Niobrara shale play kicked off about three years ago,” Sonnenberg noted. “It kicked off in a stealth manner because people were having such great success in the Bakken.

“A lot of acreage was picked off, and there are more land plays going on now,” he said, emphasizing “there are sweet spots.”

WPX Energy found a big Niobrara sweet spot in the Piceance Basin where it drilled a whopper in 2012 that came to life at 16 MMcf/d – choked back.

“It’s probably one of the biggest wells seen in the Rockies,” Sonnenberg exclaimed.

“It was nicknamed The Beast.”

WPX announced the well produced more than one Bcf of natural gas in just over 100 days. It tallied an average production rate of almost 10 MMcf/d over the first 90 days, even while choked back substantially.

Ralph Hill, president and CEO at WPX, noted “the well is demonstrating tremendous strength, and we’re very pleased with what we’re seeing.”

This might be called an understatement given the company expects that in the first four months the well will produce what a typical well in the shallower Williams Fork formation in the Piceance produces over its estimated life cycle of 25 to 30 years.

The 4,000-plus wells the company has drilled in the Piceance Basin have targeted the Williams Fork tight sands, for the most part.

Plenty More to Come?

The Niobrara and Mancos shales in general are located at depths of 10,000 to 13,000 feet and the Williams Fork at 6,000 to 9,000 feet.

WPX plans to drill four horizontal Niobrara wells in 2013. The spud date for its second Niobrara well was April 3.

The Beast itself would be a company maker for many operators, but there apparently are a lot more molecules trapped in the neighborhood, awaiting release.

“Based on early indications from this discovery in the Piceance, we’re talking about the potential to ultimately more than double our current 18 trillion cubic feet equivalent of 3P reserves,” Hill said.

“We see hydrocarbon saturation across tremendous thickness in a highly over-pressured environment,” he noted. “These shales are located directly underneath our current Williams Fork production in the Piceance.”

The prediction is that much of this gas can eventually be produced economically owing to horizontal drilling advances and the company’s completion engineers’ finesse in applying multi-stage fracture technology, according to AAPG member Steve Natali, senior vice president of exploration at WPX.

When queried whether Rockies operators in general see the glass as half-empty or half-full given the current state of gas prices, WPX media spokesman Kelly Swan replied pragmatically.

“We believe a resurgence will take place in the Rockies in terms of opportunities out there in the right price environment,” Swan said. “The resource is there; it will just take the right price to go after it a little bit more full bore.

“In the Piceance around 2007, 2008 we had 25 rigs running in western Colorado,” he said, “and we’ve been running five rigs there in today’s much more modest price environment.

“We’re running everything very disciplined.”

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Emphasis: Offshore Developments