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Page added on August 9, 2017

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Did BP Just Unlock A New Major Shale Gas Basin?


BP made a potentially groundbreaking discovery in New Mexico, which could open up a new area for shale gas development.

BP was drilling in a little-known area in northern New Mexico, in a place called the Mancos Shale. The British oil giant reported huge figures from the shale gas well, suggesting the Mancos could provide a massive new source of U.S. shale gas.

The initial 30-day production rates of the new well hit 12.9 million cubic feet of gas per day, a figure that tops horizontal wells in the highly prolific Eagle Ford shale, which often see wells producing 8 to 12 million cubic feet per day. And the production figures are the highest in 14 years within the San Juan Basin, which encompasses southwest Colorado and northeast New Mexico, and includes the Mancos Shale.

“We are delighted with the initial production rate of this well,” said Dave Lawler, CEO of BP’s U.S. Lower 48 onshore business. “This result supports our strategic view that significant resource potential exists in the San Juan Basin, and gives us confidence to pursue additional development of the Mancos Shale, which we believe could become one of the leading shale plays in the U.S.” BP plans on relocating its U.S. headquarters to Denver, a sign of how important the British oil company views the Rocky Mountain region.

A USGS report from 2016 estimates that the Mancos Shale holes 66.3 trillion cubic feet of natural gas, enough to rank the Mancos as the second largest shale play in the country, just behind the Marcellus. 

The impressive results come from acreage that BP acquired two years ago, in an area that at the time had no natural gas rigs in operation.

But there still plenty of hurdles for BP and any other company hoping to turn the Mancos into a major source of shale gas. First, they need to prove that the BP well was not simply a fluke. “The next test now will be showing some repeatability,” said Linda Htein, senior research manager of Wood Mac’s upstream research team, according to the Houston Chronicle. “Will they be able to repeat these results in another five wells? They think there’s potential for scalability here.”

Also, costs need to come down. David Deckelbaum, an energy analyst at Keybanc Capital Markets, told Bloomberg that the geology in the Mancos is much more complex than some more well-known shale plays. Drillers need to go deeper and drill through difficult rock formations. That means that it can cost as high as $13 to $15 million per well in the Mancos, about twice as much as typically seen in the Marcellus at $5.5 to $7 million, while the white-hot Permian Basin sees costs on the order of $8 to $10 million per well.

But the Mancos will still struggle to compete with more well-established shale gas basins. Why drill in the Mancos instead of the massively prolific and relatively cheap Marcellus Shale? Or why not drill in the Permian, where you can produce oil as well as gas? Plus, those plays have pipelines and processing facilities that make it easy to offload what a company produces.

But the gusher from BP suggests that investing in this new area could be worth the trouble.

“Given the very strong initial production rates of this well, we believe there is potential for the Mancos Shale to be a large gas play,” BP spokesman Brett Clanton told the Denver Post. “It’s still early, but based on this initial success, we will be drilling more wells in the Mancos this year.”

By Nick Cunningham of

4 Comments on "Did BP Just Unlock A New Major Shale Gas Basin?"

  1. dave thompson on Wed, 9th Aug 2017 8:33 am 

    A new major shale basin? How about another way to dupe the masses into thinking all is well (pun intended).

  2. bobinget on Wed, 9th Aug 2017 9:00 am 

    This pragmatic masses member thinks finding a big stash of NG will be a big help to New Mexico’s flagging economy.
    Once this possible elephant field is proven, next step, getting pipeline approval. No easy task considering BP’s lousy safety records.

    I foresee a time when it’s natural gas, not oil, that gets America to the next station.

  3. rockman on Wed, 9th Aug 2017 12:06 pm 

    “BP made a potentially groundbreaking discovery…” New??? The Mangos Shale was known is one of THE major source rocks in all the Rockie Mountain basins. The Rockman wrote a report on it in 1974 while in grad school. It was known as THE source rock for the 900 MILLION bbls of oil produced from the Rangely Field discovered in 1948. They actually produced an insignificant amount from the MS in the field: why spend time scewing with it when the Weber Sand and other conventional reservoirs had nearly 1 billion bbls of recoverable oil.

    The only surprise in this story is that it took so long for someone to target the MS: there have been numerous reports highlighting it potential going back 8+ years. Even the Bureau of Indian Affairs was trying to stir up interest in the MS on tribal lands many years ago.

    I suspect part of the reason is that companies didn’t want to compete with companies chasing the Eagle Ford Shale. That would have run their costs even higher. Now cost are down and service companies are more willing to travel for some work.

  4. Cloggie on Wed, 9th Aug 2017 12:12 pm 

    If you can frack America, you can frack the planet.

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