As shale plays go, the Niobrara shale is the newest big – and lucrative – thing.
The red hot Niobrara play is even being called the “NeoBakken” in some quarters, suggesting its potential is on par with the prolific Bakken shale oil play.
“The Niobrara is present all over New Mexico, Colorado, Wyoming, Kansas, Montana, North and South Dakota,” said Denver-based AAPG member Randy Ray. “It covers a gigantic area, so there’s plenty of areas to prospect.
“The Niobrara is part of the Cretaceous seaway that covered the whole middle of the U.S,” he added. “We’ve had cycle after cycle of exploration for Niobrara fractures, mainly oil but some gas where it’s deeper.”
For the industry folks, lightening struck in 2009 in the form of EOG’s #2-01H Jake well in the Denver-Julesburg (DJ) Basin. The strike ignited the Niobrara play.
The well was reported to yield an average of 555 bopd during the first three months of production. A typical new oil well in the DJ basin would tally 100 to 150 bopd.
“When EOG released the information, I think everyone was shocked at the production being so big,” Ray said. “We all knew oil was there, but no one pursued it with the new horizontal drilling and staged fracs that were fine-tuned in all the shale gas plays.
“In fact, it’s a result of these technologies that you can now make the Niobrara economic,” Ray emphasized. “We’ve always gotten oil shows out of the Niobrara all over the Rockies.”
Help Is On the Way
The formation has a unique fault and fracture pattern mainly because it’s so brittle, according to Ray. He likened it to a brittle sandwich, with a limestone facies between organically rich shale zones that source the crude.
“There’s definitely something different about the fault and fracture pattern in the Niobrara that’s not in units above or below,” he said. “You see evidence of this unique characteristic in surface outcrop exposures and on seismic lines.”
Specifics can depend on location.
“The reservoirs are interbedded with shales, and in the Denver (DJ) Basin there are four main chalk intervals and three main source bed intervals in the Niobrara,” said AAPG past president and Honorary Member Steve Sonnenberg, geology professor at Colorado School of Mines. “There’s a fourth source bed interval that sits on top of the Niobrara that’s part of the lower Pierre shale that’s called the Sharon Springs.”
Getting up to speed on the complexities of the self-sourced Niobrara may not be as difficult as you think.
Help is on the way in the form of an industry-sponsored Niobrara consortium being assembled under the leadership of Sonnenberg. He will run the project with assistance from the School of Mines geology professors, Rick Sarg and John Humphrey, along with geology professor Matt Pranter at University of Colorado.
All are AAPG members; Sarg also has been an AAPG Editor (Memoir 81) and past Distinguished Lecturer.
“The Niobrara is an underexploited petroleum system consisting of really rich source rocks with total organic carbon content between 3 and 8 percent in areas, and the reservoir rock primarily being limestone or chalk intervals,” Sonnenberg said.
He elaborated further, noting the formation demonstrates facies changes that range from limestone and chalk in its eastern end to calcareous shale in the middle and eventually transitioning to sandstone further west. Depth and thickness are highly variable.
“During the project, we’ll address key stratigraphic and structural controls on reservoir distribution, heterogeneity and produceability for this Niobrara interval,” Sonnenberg said. “We want to understand the reservoir rocks and also understand the source rocks associated with the Niobrara, the maturity levels, the total organic carbon content in the Niobrara knowing its regional distribution.”
The research effort will include a combination of outcrop and subsurface study.
“We’ll be developing and looking at the outcrops to look at the reservoirs and also the source rocks and also the types of fractures as they’re exposed in the reservoirs and take that work into the subsurface,” Sonnenberg said.
Close to the Edge
The consortium will be comprised of perhaps 15 companies, and the program will involve a number of student participants, with several already at work.
“We have confidence in offering support to the program,” said Mike O’Shaughnessy, president and CEO of consortium member Lario Oil & Gas in Denver. “It will be a benefit for us and for the participating students – it’s a win-win.”
When queried about the company’s interest in unconventional plays, O’Shaughnessy cut to the chase.
“We like the idea of not drilling dry holes,” he said.
Oil likely courses through this man’s veins considering that his grandfather, I.A. O’Shaughnessy, founded the company in 1916, later incorporating it in 1926 in Wichita, Kan.
Operator and prospect generator Lario is proof positive that smaller companies have the moxie and the know-how to go after the big plays. The company has honed considerable skills in the Barnett and Woodford shales and particularly in the Bakken play where it has more than 300 wells.
AAPG member and Lario development geologist Jeff Ware summarized the types of companies who have jumped into the Niobrara action:
- Those in other resource plays like the Bakken and applying what they learned there.
- Companies who missed the Bakken are heavily gas-weighted and need to get oilier and see the Niobrara as the perfect place.
- Companies who are there by good fortune, such as Noble and Anadarko, who have hundreds of thousands of HBP acres that happen to be in a good place where the Niobrara is developing right under their feet.
Lario has latched onto 24,000 acres net in a solid block on the southeast part of the Wattenberg Field in the DJ Basin where the Niobrara is about 8,000 feet deep.
“We haven’t drilled wells there yet,” O’Shaughnessy said. “We anticipate drilling a science well, which will be a vertical well that will cut core and log and maybe be used on a microseismic monitor in 2011 and be positioned so it will be a standalone vertical with offsetting horizontal wells.
“We’ll use the vertical wellbore to monitor the fractures using microseismic,” he noted.
Many Bakken wells have been drilled without the benefit of 3-D seismic, but the Niobrara is a different game.
“We think 3-D will be key to the economic success in the Niobrara,” Ware said, “because the rock is so much more broken up, more faulted and fractured in the reservoir itself.
“We’re doing more things there that aren’t necessary in the Bakken, such as signing contracts for aeromagnetics and getting bids on specific designs for 3-D,” Ware noted.
He said they think the edges of the Niobrara will be the best parts of the play just as in the Bakken.
“If you can catch an updip edge where the thermal maturity has stopped, we think those will be the sweet spots,” Ware said. “We went after an updip edge, as are others, that we believe is the end of thermal maturity.”
Leasing action in the play has slowed from the earlier frenzy, but leasing overall is a good indicator of just how hot a play is or will become.
“In terms of how important a play has become, we tend to always monitor plays in terms of acreage cost or how much excitement there is,” Sonnenberg said. “Two years ago you could lease at probably $50 an acre, and now a lot of it is a thousand dollars an acre in prospective areas.”