Paula Dittrick
Senior Staff Writer
Companies using horizontal drilling and multistage fracturing are taking a fresh look at the Niobrara shale play in the Rocky Mountain region. Technology is helping industry turn a formation previously developed only on isolated structures into a promising new resource play.
"This is a play that has come back alive," said Stephen A. Sonnenberg, a Colorado School of Mines geology professor and director of the industry-sponsored Niobrara Consortium, a group of 25 companies researching the multiinterval self-sourced formation.
Describing the Niobrara as the remnant of a Cretaceous sea, Sonnenberg said local faults and folds will affect natural fracture orientation, and he expects multiple models will emerge as operators develop the play.
"The Niobrara consists of really rich source rocks with total organic content between 3% and 8% in areas, and the reservoir rock primarily is limestone or chalk intervals," Sonnenberg told OGJ.
Several dozen companies are evaluating the formation, which underlies numerous Rocky Mountain basins from New Mexico into Canada. Its equivalent in Alberta is called Second White Specks.
Sonnenberg expects to see "lots of new learning" regarding the causes of natural fractures and the orientation of fracture systems, resulting in many more wells to be drilled.
Niobrara is being drilled in northern and southeastern Colorado, southeastern Wyoming, central Wyoming, and Montana. Mancos, the name for the Niobrara equivalent in Utah and New Mexico, is being drilled in eastern Utah, western Colorado, and northwestern New Mexico.
Colorado drilling
The Colorado Oil & Gas Conservation Commission said the state issued 1,099 drilling permits during this year's first quarter of which 172 permits were for horizontal wells. The three counties with the most permits issued were Weld, 497, Garfield, 390, and Mesa, 45.
Weld County is where EOG Resources Inc. kicked off the present horizontal Niobrara play with the Jake discovery well (OGJ Online, Apr. 7, 2010).
The Jake 2-01H in 1-11n-63w had a first-month initial production rate of 645 b/d in late 2009 with a stable rate of 250-300 b/d since the first quarter 2011. The well's maximum initial rate was 1,558 b/d of oil and 350 Mcfd of gas from a stimulated lateral.
EOG used an August earnings conference call to report "encouraging economic results from 169,000 of 220,000 total net acres to date." Wells are showing low initial production rate and flat declines with long-term stable production rates.
EOG awaits more well production history before formulating reserves estimates. In early August, EOG was running a 2-rig drilling program in the DJ basin where it planned 45 wells during 2011.
Mark Papa, EOG chief executive officer, said during an Aug. 5 conference call that the Niobrara liquids-rich play reminds him of the Barnett.
"It took us several years to turn that into the play that we wanted," Papa said of the Barnett. Calling the Eagle Ford shale in South Texas and the Bakken shale in the Williston basin "slam dunks," he described EOG's progress in the horizontal Niobrara as "probably in the third inning, and it might take five innings to produce a home run."
Noble Energy Inc. has 400,000 net acres in Wattenberg field in southwest Weld County. Wattenberg has produced since the 1970s, but the Niobrara play only became a focus area decades later when Noble and others began drilling horizontal wells in a mature vertically developed section.
The company plans to drill 85 horizontal wells in Wattenberg during 2011 where it has reduced its spud-to-rig release time to 10 days for some wells compared with 15-20 days a year ago. Drilling time is expected to continue to be reduced as the company moves more to pad drilling.
Noble Energy recently drilled a 9,100 ft lateral involving 40 fracs, executives said during a July 28 conference call about second-quarter earnings. The cost of a Noble Energy horizontal well in the Niobrara averages $4.5 million, executives said.
Having DJ basin acreage beyond Wattenberg field, Noble Energy continues to appraise northern Colorado and southern Wyoming where it plans to drill 10 wells during 2011. It is testing fractures, matrix, lateral geometry, and completion designs.
Anadarko Petroleum Corp. believes it has "significant running room" in its Niobrara assets in the DJ and Power River basins. Executives believe Anadarko has knowledge of how to drill and stimulate the Niobrara formation given the company's experience with shallower formations in Wattenberg field where it reported a 41% boost in liquids sale volumes in second quarter 2011 compared with the same period in 2010. The latest quarter sales volume from Wattenberg was 71,700 boe/d.
In a second-quarter conference call, Anadarko said it plans to drill at least 40 Niobrara wells during 2011. The company operates three rigs in the DJ basin and has 15 Niobrara horizontal wells on production. It plans to add a rig in the Powder River basin this quarter to test the Niobrara and other formations on 360,000 net acres there.
Wyoming drilling
Some operators, including international companies, are evaluating the Niobrara play in southeastern and south-central Wyoming where the play is considered to be in a very early stage.
Various operators have permits to drill on the northwest edge of the DJ basin in northwestern Laramie County, Wyo., between Silo oil field and the Chugwater community. Silo field was the site of a vertical discovery in the Niobrara that was redeveloped horizontally in the early 1990s.
OGJ published a two-part article by Reed Johnson and R. Timothy Bartshe about using resistivity to assess Niobrara fracture patterns for horizontal wells in Silo and other Denver basin fields (OGJ, Sept. 2, 1991, p. 99, and Sept. 9, 1991, p. 68).
Chesapeake Energy Corp. has drilled in Converse County and Goshen counties. Noble Energy has drilled in Laramie and Goshen counties.
Early this year, China's state-owned CNOOC International Ltd. agreed to acquire a 33.3% stake in Chesapeake's Niobrara-focused 800,000 acres net in the DJ and Powder River basins.
"If it plays out, it's going to take us a very long time to develop this field—it's not a flash in the pan," John Dill of Chesapeake, told the southeast Wyoming Resource Conservation and Development Council during an April meeting in Wheatland, Wyo.
An Australian firm plans to drill for shale oil in southwest Wyoming. Entek Energy Ltd. plans to drill three appraisal wells along the Wyoming-Colorado line this year. Entek owns 55% operating interest through a joint venture with Emerald Oil & Gas NL. Entek has 33,000 net acres.
"We are seeing increased industry activity across leasing, well permitting (both vertical and horizontal), and acreage acquisitions and transactions in the area as the attention shifts from the DJ basin to the Green River basin," said Trent Spry, Entek chief executive and managing director.
When discussing Green River basin access to Niobrara shale, he refers to an area that includes the Washakie basin in Wyoming and the Sand Wash basin in Colorado.
Entek plans to drill vertical wells into the Niobrara, which is up to 1,100 ft thick in the area, Spry said during an investor's presentation. Spry said an Anadarko well 8 miles from an Entek site initially produced 550 b/d of oil.
Spry said the Niobrara shows carbonate rich benches encased in oil-prone black shale. He believes the key to flow is to penetrate natural fractures. Fracing and horizontal drilling can be used to connect zones of natural fractures, resulting in better flow rates and related higher EURs, he said.
Entek's primary objectives for its 2011 vertical well appraisal program are to identify the most prospective Niobrara intervals, gather technical information to execute effective fracture stimulations, and select interval targets for vertical and horizontal wells during 2012.
Several other companies are evaluating the same general area as Entek, Spry said. These include EOG, Gulfport Energy Corp., Samson Oil & Gas Ltd., Perth, Whiting Petroleum Corp., and Quicksilver Resources Inc.
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