“…There's just not a lot of experience and expertise anywhere in how to complete these wells.”
Bakken oil-play results aren’t readily transferable to the Niobrara oil shale that operators are hotly leasing up and that Wall Street is cautiously optimistic will be the U.S.’ next great oil play. It’s simple, explains Chuck Stanley, president and chief executive of newly public and long-time Rockies-region operator QEP Resources Inc.
“The Bakken is not a shale,” he says in a second-quarter investor conference call. “It is sort of a misnomer.” The Middle Bakken, from which operators are turning in tremendous results, is “a complex carbonate and clastic or sand interval.
“So the Niobrara is a bit unique in that it is a reservoir filled with oil that is a shale and there's just not a lot of experience and expertise anywhere in how to complete these wells.”
QEP holds 89,000 net acres in the Bakken play and has one rig drilling there. In the Niobrara play, It holds some 64,500 net acres in the Denver-Julesburg Basin and is drilling a Niobrara test there now in southeastern Wyoming.
Stanley notes that Union Pacific Resources drilled successful Niobrara horizontals in the 1980s in the D-J Basin in Silo Field near Cheyenne, Wyoming. “The average recovery per well in that field was roughly 100,000 barrels.”
At the time, however, the wells were not fracture stimulated. “One wonders what those wells would have recovered had they been completed with the current technology—multi-stage fracture-stimulation technology that we apply routinely today to gas shales and/or other reservoirs like the Granite Wash.”
The QEP test that was spud a couple of weeks ago “will be on a Silo Field look-alike, so it will be a structure rather than just being on the margin of the basin where the shale is in the oil window. We’ll have an opportunity to test a horizontal well and modern completion technology in a Silo Field-like setting.”
QEP also holds 50,000 acres in the Powder River Basin that is prospective for Niobrara wet gas. The Sussex and Frontier sands there are also prospective for gas. “A lot of it is held by production or has long-term leases that still have quite a bit of primary term left on them.
“We're going to focus first on the oil play in the Niobrara to see if it's a viable play. But it's so early in this play history. We are not sure what makes the play work and what doesn't make it work.”
According to UGcenter.com’s Niobrara center, the Niobrara has the potential to be the industry’s next large oil-shale resource play.” Thickness can range from 150 to 1,500 feet thick; porosity from 4% to 14%; total organic content from 1% to 5%; and vitrinite reflectance typically from 0.6 to 0.9.
Ben Dell, senior E&P analyst, says in an OilandGasInvestor.com article, “The reason the debate (over production oil from shale) is so divisive is simple. Of the five unconventional-oil plays identified today––the Bakken, Tuscaloosa, Waskada, Barnett and Niobrara––only the Bakken is currently producing meaningful volumes of oil economically. More importantly, while operators have garnered economic flow rates from the Bakken, the play is essentially not shale, it is a carbonate sandwiched between two shales. As such, it shares few geologic characteristics with the other plays.”
Irene Haas, an E&P analyst and managing director of Cannacord Genuity investment-banking firm, says in the August 2010 Oil and Gas Investor cover story “The Niobrara” that recent new drilling in the formation will improve the amount of information on sweet spots, and if drilling in structured areas is best. “We’ll learn a lot more about this trend in the next 12 months.”
–Nissa Darbonne, Editor-at-Large, Oil and Gas Investor, OilandGasInvestor.com, OilandGasInvestor.com Today, Oil and Gas Investor This Week, A&D Watch, A-Dcenter.com, UGcenter.com. Contact Nissa at email@example.com.
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