[copious.abundance]

Yet another unconventional, Bakken-esque play to keep an eye on.

>>> Niobrara Oil Play Heats Up In The Rockies <<<

Niobrara Oil Play Heats Up In The Rockies
February 1st, 2010

North American unconventional-oil plays have gained increased attention as results improve. One of the plays explorers are closely monitoring is the Cretaceous Niobrara shale in the Rocky Mountain region.

[...]

There are plenty of places to prospect for Niobrara, as the shale occurs across a vast, tectonically active area. It can be anywhere from 150 to 1,500 feet thick, and its TOC ranges up to around 5%. It contains Type II kerogen. Additionally, the Niobrara contains a high proportion of carbonates, including brittle, calcareous chalk benches. These appear to enhance its porosity and its ability to be fractured, by both natural and mechanical processes. And the tremendous tectonic legacy of the central Rockies region means that natural fracturing can be extensive.
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[copious.abundance]

A bit more info.

Here are some more details on the EOG well mentioned in the article above:

>>> LINK <<<

[...]

“It's very sweet crude, and there's not a lot of that in the country, so we're happy they're finding that level of quality,” Rademacher said.

The discovery has prompted Holloway's teams to start negotiating more leases in the area, which is about eight miles west of Grover and three miles south of the Wyoming border.

The gusher, Holloway said, had a production rate of 1,770 barrels of oil with 367,875 cubic feet of gas produced in just one 24-hour test.

[...]

And here's a well EOG driled into this thing in 2008:

>>> LINK <<<

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The company drilled a lateral in the Niobrara in the little intermountain basin, which has seen only light activity. The well, in Section 32-7n-80w, featured a 4,000-foot single lateral and was completed with multi-stage fracs. The discovery initially produced 550 barrels of oil per day; during its first month on line, it averaged 320 barrels per day. Gravity is 38 degrees.
[...]

[copious.abundance]

They're excited about this in Wyoming too! Plus there appears to be an associated sandstone in the Powder River Basin that Chesapeake is targeting for oil.

>>> LINK <<<

“Landmen are more active in southeast portions of the state that haven’t seen oil and gas activity in a long time,” said Wyoming Oil and Gas Conservation Commission supervisor Tom Doll.

Places including Goshen and Platte counties — among Wyoming’s poorest — could see some significant drilling activity for the first time in decades, Doll said.

Oklahoma-based Chesapeake Energy reported impressive yields from its Wagonhound 23-1H well near the North Platte River just west of Douglas, drilling horizontally for thousands of feet in Frontier sandstone.

EOG Resources Inc. reportedly found initial success with its own horizontal pilot well in the Niobrara shale just south of the Wyoming-Colorado border near Cheyenne.

Historically, the Frontier and Niobrara formations have yielded only marginal results, according to local geologists.

But the players testing the Frontier and Niobrara formations are using some of the same new drilling and completion technologies responsible for unlocking huge shale gas reserves in the Bakken in Montana and North Dakota, the Haynesville in Louisiana and east Texas, the Barnett in north Texas and the Marcellus spanning areas of Ohio, Pennsylvania and New York.

In Wyoming, it appears operators may target the Frontier and Niobrara formations mostly for oil, according to geologist Jimmy Goolsby of Goolsby, Finley & Associates.

[copious.abundance]

Boom status! Huge amounts!

LINK

New oil play could reach boom status
By Tim Monroe
May 14, 2010 --

CASPER — Geologist Jimmy Goolsby believes that huge amounts of oil will be produced from the Niobrara and Mowry formations, with "the shale play generally in southeast Wyoming."

The local geologist told the 5 Trails Rotary Club in Casper on Thursday that new technology enables companies to drill vertically for several thousand feet down to what the company believes is the pay zone. Then a different drill bit is installed to create drilling through several thousand feet of the pay zone horizontally.

Goolsby said the pay zone could be only 50 feet thick, but could stretch for thousands of feet. "We've seen production of 1,000 barrels a day from some of the new wells near Cheyenne. I expect we'll see a tremendous amount of exploration activity from Cheyenne to the southern part of the Powder River Basin."

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[copious.abundance]

Here's the first estimate I've seen on how much this shale might be able to produce:

Continental Resources Q2 Earnings Call Transcript

Harold identified the Niobrara as our third growth opportunity. The Niobrara is a huge crude oil resource play. It covers over 3 million acres and has a potential to produce more than 2 billion barrels of oil. We’ve established a strategic position in the play, leasing almost 60,000 net acres and continue to acquire result. We hold acreage in Platt, Laramie, and Goshen Counties in Wyoming and a well count in Colorado.

Our leases are in proximity to several of the most interesting test wells drill to date. EOG kicked off recent search and drilling with five horizontal wells including the Jake 2-1H, which IPed at 1,558 oil equivalent per day and it average 555 barrels oil per day over its first 90 days.

Noble has announced four wells that produced an average 585 barrels per day over their first 60 days production, including one that average 1,000 barrels oil per day.

And from EOG's Q2 Earnings Call Transcript

We also have some new data on our Colorado Niobrara play. We've completed two additional wells, the Critter Creek #02-03H and #04-09H, and they're producing at managed restricted rates of 570 and 600 barrels of oil per day, respectively. We have 100% working interest here. We have four rigs running in this play. But as we've previously stated, we want to observe production from these and earlier wells until year end, before we make a reserve estimate because the reservoir is heavily fractured. In Southwest Kansas, we also recently completed two nice shallow vertical wells with 100% working interest. The Cynthia 35-1 IPed at 1,700 barrels of oil per day, and the Brookover 8-2 well IPed at 260 barrels of oil per day. Several offsets to these wells are planned for the second half of the year.

So, we know this thing goes up to at least east-central Wyoming, east to western Nebraska, and down to southwest Kansas. That's a lot of real estate! This play is hot!

[copious.abundance]

Hey guess what? A good old-fashioned gusher!



LINK

October 20, 2010, 6:38PM ET
Wyo. oil spill hints at Niobrara Shale's potential
By MEAD GRUVER

Oil spewing at a new well east of Cheyenne could be good news for other companies preparing to drill into the Niobrara (NY'-oh-BRER'-uh) Shale.

The Wyoming Department of Environmental Quality says oil surged through the well owned by Denver-based SM Energy Co. last Friday and sprayed from a flare stack for eight hours, blackening 15 acres of ranch land.

SM Energy says it's cleaning up the site.

Mark Northam at the University of Wyoming says the accident shows the ground holds quantities of oil under pressure -- something oil companies like to see.

Dozens of companies are preparing to drill into the Niobrara Shale near Cheyenne, hoping it will produce as much oil as the booming Bakken (BAHK'-en) Shale in North Dakota.

[...]

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Here we have pstarr, predictably ridiculing the perfomance of one well in a desperate effort to minimize the prospect . . . as if the whole play would or should be developed with just a handful of wells. Maybe, like the East Texas Oil Field, they'll eventually drill 30K wells into this thing. And if those 30K wells averaged a piddly 50 barrels a day, that would be total production of 1.5 million bpd. I wonder what pstarr's excuse would be then?

[Xenophobe]

And if those 30K wells averaged a piddly 50 barrels a day, that would be total production of 1.5 million bpd.

Power in numbers. These unconventionals just take a decent well count, and drilling those wells creates jobs, generates economic activity, tax revenue, etc etc.

Its like a win-win, we get the energy AND the jobs, taxes, technical innovation, etc etc.

While "drill baby drill" seems a bit trite, it certainly covers the concept well.

[copious.abundance]

We have today another indication of how much recoverable oil there appears to be in this thing. Since Chesapeake has already drilled some wells - and others have too - I will catalog this later today as a discovery.

Chesapeake Energy Q3 2010 Earnings Transcript, Courtesy of Seeking Alpha

And our data room is open for the Niobrara Shale JV, in which we own 800,000 net acres, evenly split between the Powder River and D-J Basins. [...] We believe the recoverable resource under our 800,000 net acres is an unrisked approximate 4.6 billion barrels of oil, representing potentially $400 billion of future undiscounted revenue. This is a reminder that the size of the plays that we have chased and have captured is quite remarkable.

And interestingly, immediately following that, he says:

Some of you may be wondering what's next in our liquids plays. I can tell you that we have several new plays under evaluation or development, including an almost 100,000-acre new position in the Williston Basin and a 1 million-acre position in another play that will probably be ready for disclosure in the JV data room in the first half of 2011. We believe there will be worldwide interest in this next big play of ours.

Will be interesting to see what this "next big play" is.

[copious.abundance]

Don't know if this is the "big play" mentioned above, but regardless, it looks like we're going to see a speeding up of activity at least on Chesapeake's holdings in this play.

LINK

Chesapeake strikes $1.2 billion development deal with Chinese company
Chesapeake on Sunday announced a $1.2 billion joint venture agreement with CNOOC International Ltd., a subsidiary of one of China’s largest independent oil companies.
BY JAY F. MARKS
Published: January 31, 2011

Chesapeake Energy Corp. is going back to the Far East for help in funding its operations.

Chesapeake on Sunday announced a $1.2 billion joint venture agreement with CNOOC International Ltd., a subsidiary of one of China’s largest independent oil companies.

The deal is Chesapeake’s sixth industry development agreement and its second with CNOOC. CNOOC paid $1.2 billion for a stake in Chesapeake’s holdings in the Eagle Ford Shale in south Texas in a deal announced in October.

CNOOC International will pay $570 million for a third of Chesapeake’s 800,000-acre leasehold in the Niobrara Shale in northeast Colorado and southeast Wyoming.

The company also agreed to pay two-thirds of Chesapeake’s drilling and completions costs until it has contributed another $697 million, which Chesapeake expects to occur by the end of 2014.

The deal is expected to close before the end of the first quarter.

“This transaction will provide the capital necessary to accelerate drilling of this large domestic oil and natural gas resource, resulting in a reduction of our country’s oil imports over time, the creation of thousands of high-paying jobs in the U.S. and in the payment of very significant local, state and federal taxes,” Chesapeake CEO Aubrey K. McClendon said.

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[copious.abundance]

Been waiting to hear an estimate on this.

Sounds like a nice biz opportunity for pipeline manufacturers.

LINK

Niobrara shale to reach 350,000 b/d in 2016, overwhelm pipelines
Houston (Platts)--23Sep2011/335 pm EDT/1935 GMT

While the Niobrara shale, an emerging unconventional play in the Rocky Mountains, won't pack the punch of the Bakken, it could develop into a 350,000 b/d producer of crude by 2016, an industry expert said Friday.

And the projected 200% growth over five years from the play's current 112,000 b/d is likely to overwhelm projected pipeline capacity, leaving an eventual overhang of between 6,000 b/d and 46,000 b/d, depending on logistical arrangements, Adam Bedard, a senior director with Bentek Energy said at the Platts sixth annual Pipeline Development and Expansion conference in Houston. Bentek is a unit of Platts, a division of The McGraw-Hill Companies.

The play straddles the Colorado and Wyoming borders and lies within the Denver-Julesburg basin. Chesapeake, EOG, Noble, and Anadarko are the most active of the 14 operators in the region, which has 425 wells drilled to date.

[...]

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LINK

Anadarko hits big in Niobrara
Anadarko’s exploration in the Niobrara formation has led to “confident” estimates that its Wattenberg field can produce between 500 million and 1.5 billion net barrels of oil equivalent, the company said Monday.
Kathrine Schmidt 14 November 2011 23:13 GMT

So far, the company has drilled 11 wells in the Denver-area programme, with initial production rates ranging from 555 boe per day to 1,505 boepd, roughly 70% liquids.

"Our activity, which has primarily targeted the Niobrara formation within the Wattenberg field boundaries, has achieved high liquids yields and excellent well performance with average initial production rates of about 800 boepd,” Chuck Meloy, senior vice president for worldwide operations, said in a statement.

“We expect the alignment of our assets, coupled with future investments in expansion opportunities, will continue to enhance field recoveries, access to premium markets and robust margins."

Initial well costs were between $4 million and $5 million per well, the company said.

After extensive testing, the company said it expects to drill another 1200 to 2700 horizontal wells in the field, expected to become a “cost-efficient” project and “significant cash-flow generator.”

The company expects to divulge more details at Tuesday’s Bank of America Merill Lynch Global Energy Conference.

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Just when news about this play had been kinda quiet and I was wondering if it was going to disappoint, I checked out Colorado's oil production on the EIA website and, lo and behold, it's started heading up very briskly.



Wyoming has been headed up the past year or so as well, but just barely. Might have to wait on that one, or maybe the better spots are in Colorado.

[copious.abundance]

Hmm, this is starting to sound more interesting.

Noble Energy calls Niobrara 'top-tier oil play'

Noble Energy Inc. plans to invest $1.7 billion in the Denver-Julesburg basin, primarily in northern Colorado, during 2013, and the company estimates its net resources in Wattenberg and Niobrara at 2.1 billion boe.

That estimate includes oil and natural gas in the Greater Wattenberg along with oil in Northern Colorado.

Noble is emphasizing liquids development, and its DJ basin holdings are driving the company’s anticipated production growth.
“We have accelerated our development in the DJ basin, which will receive the greatest portion of our capital program,” Charles Davidson, Noble’s chief executive, told reporters during a news briefing following a presentation to analysts. “We really believe the Niobrara has evolved into a top-tier oil play.”

[...]

Noble plans to increase the number of wells drilled in the DJ basin, centered on Weld County, Colo., to 300/year during 2013 and 500/year by 2016. The company’s DJ basin investments are expected to total nearly $10 billion during 2013-17, Davidson said.

Drilling plans calls for an average of nine rigs running next year in the DJ basin, where Noble expects to boost its production to more than 100,000 boe/d by Dec. 31, 2013, up 25% from its 2012 DJ basin production.

The Houston independent has identified 9,500 prospects for horizontal drilling in Colorado. Noble said its Niobrara oil window is at depths of 5,000-8,200 ft. Noble’s holdings cover 410,000 net acres in the greater Wattenberg area and 230,000 net acres in northern Colorado.

[...]