The Niobrara Shale Play – the Next Bakken?

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The Niobrara shale formation extends across northeastern Colorado, northwestern Kansas, southwestern Nebraska and southeastern Wyoming.  The play ranges in thickness from 275-400 feet deep, with three primary carbonate-rich benches that average 10-25 feet thick with 5-10% porosity

To date, most of the Niobrara’s O&G development focuses on the Denver-Julesburg Basin (“DJ Basin”), with hot spots in the Wattenberg field of Weld County, Colorado, and (to a much lesser degree) Wyoming’s Silo field.  Niobrara operators face unique challenges in this formation, but remain hopeful because of new estimates on overall production expectations over the next few years.

Unique Challenges for Oil & Gas

Niobrara’s geological characteristics can impede effective, economical drilling.  The formation transitions from limestone to chalk to calcareous shale to sandstone, each with differing depth and thickness.  Navigating drills in the thin layers is difficult, and high clay content of the formation makes it less permeable than other areas and complicates extraction.

The variable natural fracturing occurrence that results from the geological variety also impacts successful drilling.  Operators seek sections that experience high natural fracture density, which are likely more productive and easier to tap, versus reservoirs with lower fracture density that yields higher water cuts and lower productivity.  Early interest has yielded select highly explored drilling areas; however operators face challenges finding suitable locations for new horizontal wells that won’t interfere with existing vertical wellbores.

Water has proved an additional impediment in the Niobrara, from industry and environmental standpoints.  The hydraulic fracturing process that revolutionized shale drilling requires high volumes of water.  Summer 2012’s severe drought and rampant wildfires in Colorado rendered water scarce and forced O&G operators to spend more on securing access to water from the Colorado River.

Output Results Thus Far

The complexity of the Niobrara petroleum system complicates cumulative data, but estimates show that almost 2 billion barrels of oil equivalent have been produced from the Wattenberg field alone.  EOG Resources’ “Jake 2-01h” drilled its first well in 2009 in northern Colorado, producing 50,000 barrels of crude oil in the first 90 days and maintaining outputs of 50,000 barrels per month.  Noble Energy’s “Gemini” entered Weld County in 2010 and produced 1,100 barrels per day at its peak.

After a strong start, however, output has been less than predicted.  In Weld County, for example, the first half of 2012 produced 11.5 million barrels of oil and 101.4 million cubic feet of gas.  This compares to 26.5 million barrels and 238.4 million cubic feet, respectively, in 2011.

Looking Forward

Despite lower outputs than expected, interest in the Niobrara play remains high.  Notably, the O&G leaders in the play are independents that plan to continue or expand their drilling and E&P programs.  As of August 2012, 45 rigs were active – four more than in 2011.  New estimates now say that the play is a third bigger than first thought, capable of producing as much as 3.6 billion barrels of oil over the next several years.
An ASD Report estimates that production will pass 3 billion barrels by 2020.

The table below gives a sample of independents with a stake in the Niobrara.  As you can see, future plans for the play show increased production going forward.

Although the geology of Niobrara presents challenges, operators are working around them to increase production in the area, and the forecast for this shale play is expected to increase.

Clover specializes in placing professionals in the oil and gas industry. If you are an Operator seeking to augment Project Teams, contact salman.mumtaz@clovergs.com

If you are an experienced professional looking for opportunities in the Upstream Industry (Alaska, Eagle Ford Shale Play, Bakken Formation, Deepwater Gulf of Mexico), send your resume in complete confidence to christinasantos@clovergs.com

There Are 2 Responses So Far. »

  1. Have you caught up with the results from Austin Energy’s Pathfinder? Nearly blew out their initial infrastructure!!

  2. [...] (whether it be as $15/3yrs or $25/5) is awfully low for the lease bonus. This is where I live: http://wyomingenergynews.com/2013/02…e-next-bakken/ (They've been calling the Denver-Julesburg basin the "next Bakken" for a couple of years [...]

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