FOCUS: UNCONVENTIONAL OIL & GAS — Anadarko, Noble upbeat on Niobrara resource potential

June 4, 2012
Two key operators in the emerging Niobrara play were among a handful of oil companies recently touting the Niobrara's resource potential in Wattenberg field in the Denver-Julesburg basin during first-quarter earnings conference calls.

Two key operators in the emerging Niobrara play were among a handful of oil companies recently touting the Niobrara's resource potential in Wattenberg field in the Denver-Julesburg basin during first-quarter earnings conference calls.

Anadarko Petroleum Corp. and Noble Energy Inc. are focused on producing liquids from the Niobrara shale (see map, OGJ, Sept. 5, 2011, p. 28).

By one estimate, the Niobrara already produced more than 700 bcf of gas in the earliest drilling, said Vince Matthews, Colorado state geologist. Operators have yet to determine how much oil might be recovered.

"Although oil production from the Niobrara strata began early in the 20th century, the new oil wells in Colorado are causing a land rush and drilling boom in many parts of the state," Matthews said.

Colorado's State Land Board in March approved a ConocoPhillips horizontal drilling project on Lowry Range 20 miles east-southeast of Denver in Arapahoe County.

A former bombing range, Lowry offers horizontal Niobrara targets in Codell and Greenhorn and vertical targets in the D-J sands.

Meagher Energy Advisors called Lowry range "a highly prospective area" with natural fracturing in the Niobrara oil window. The range offers Niobrara B chalk at 7,000-8,000 ft TVD along with the developed Niobrara C chalk. Both zones have historic oil production.

Niobrara drilling budgets outlined

Anadarko plans to spend $1 billion/year on the Niobrara formation, which involves the Colorado counties of Weld, Boulder, and Broomfield.

The independent set a record for its quarterly sales from Wattenberg field during the first quarter, averaging 80,100 boe/d. Sales volumes of liquids were up more than 40% compared with the same period last year.

In Wattenberg, Anadarko drilled 60 vertical wells using three operated rigs. Anadarko ended the quarter with seven horizontal rigs active in the play and drilled 28 horizontal wells targeting the Niobrara and Codell formations.

The company plans to add three more horizontal rigs this year. Currently Anadarko produces from 36 horizontal wells in Wattenberg field.

Noble Energy has leased 880,000 net acres in the DJ basin where it hopes to increase production from the Niobrara formation to 70,000 boe/d in 2016. The company expects to end 2012 having production levels of 32,000 boe/d with 65% anticipated to be oil and natural gas liquids.

Charles Davidson, chairman and chief executive officer, told a Howard Weil conference in March that Noble Energy anticipates double-digit production growth in the DJ basin over the next 5 years.

The company plans this year to drill about 175 horizontal wells, of which 75% will be from multiwell pads and 85% are in a high-liquids area.

Spending plans call for Noble Energy to allocate $8 billion to develop the DJ basin during 2012-16, with more than 70% to be used for horizontal development. For 2012, Noble Energy plans to invest $1.2 billion or 34% of its total capital program in the DJ basin.

Ted Brown, senior vice-president of northern region operations, said Noble Energy plans to spend $1-1.5 billion/year in Wattenberg where it has 410,000 net acres. Noble Energy operates that acreage with 95% working interest.

Brown sees opportunity for increased density and additional zones. Noble Energy is testing increased density of 40-acre and 80-acre spacing with wells as close as 300 ft apart. It's testing B and C chalk zones.

Noble Energy has seven horizontal drilling rigs and most of its laterals have gone 5,000 ft. The Wells Ranch AE29-68HN well involved a 9,120 ft lateral with a 39-stage completion. Noble Energy plans 12 to 15 extended-reach laterals for 2012 at a cost averaging $7.5 billion/well.

Other companies adding rigs

Fred Barrett, chairman, chief executive officer, and president of Bill Barrett Corp., said the Denver company had plans to move an additional rig into the DJ basin during May. During the first quarter, the company had one rig in DJ basin.

"Looking ahead, we have the visibility and large oil drilling inventory to continue this momentum. I am particularly excited about our pace of growth in the Uinta and DJ basins, as well as results to date in Chalk Bluffs where we plan to drill several Niobrara wells this year." Barrett said.

Current DJ net production is 1,100 boe/d. Bill Barrett is planning to drill 28 gross/17 net operated horizontal wells this year targeting the Niobrara formation.

During the first quarter, Bill Barrett initiated drilling on its northeastern Colorado Chalk Bluffs acreage, drilling, and completing two horizontal wells into the Niobrara B chalk.

Bill Barrett holds 17,300 net undeveloped acres in the Chalk Bluffs area. It is too early to determine corresponding EURs, yet horizontal success in the Niobrara opens the potential for sizable expansion, the company said. At Mar. 31, Bill Barrett had 91% working interest in production from 220 gross wells.

Weld County is where EOG Resources Inc. started 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. After a year, the well still produced more than 2,500 bbl of oil per month, Colorado state statistics said.

EOG said its Niobrara wells show low initial production rates and flat declines with long-term stable production rates. It awaits more well production history.

Mark Papa, EOG chief executive officer, said during an Aug. 5, 2011, conference call that the Niobrara liquids-rich play reminds him of the Barnett shale in Texas.

Continental Resources Inc. is assessing results for its first nine Niobrara wells, Continental Chairman and Chief Executive Officer Harold Hamm told analysts during a May conference call. Recent accomplishments include Continental's completion of the Buchner 1-2H in Weld County.

The Oklahoma City independent holds 82% working interest in Buchner 1-2H well. As of Mar. 31, Continental Resources had 92,842 net acres in the Niobrara/DJ basin of which 25,000 net acres are in what executives call the play's oil fairway.

Samson Oil & Gas Ltd., Perth, plans to drill a Niobrara lateral of more than 9,000 ft in Goshen County, Wyo. The Australian firm recently requested a hearing with Wyoming state regulators to allow for 1,280-acre well spacing.

Petroleum Development Corp. (PDC), Bridgeport, W.Va., recently reported the horizontal Niobrara play is driving production growth with 54% of its total production coming from the liquids-rich Wattenberg.

While drilling only horizontal wells in the Niobrara during the first quarter, PDC reported its Wattenberg field production increased 30% compared with the same quarter last year.

PDC has drilled 27 horizontal Niobrara wells and the last 11 wells each had an estimated ultimate recovery of about 350,000 boe with costs averaging $4.2 million/well.

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About the Author

Paula Dittrick | Senior Staff Writer

Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.

Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.