Promising Future for Companies Working in the Niobrara Shale Play
The Niobrara shale is a hydrogen-rich play located primarily in northeastern Colorado, spreading into parts of Wyoming, Nebraska and Kansas. Oil is the main resource extracted from this play in the Denver-Julesburg (DJ) Basin. This area has produced both oil and gas for years, but as companies have begun exploring and developing the Niobrara, it has gained the reputation of being the next Bakken formation.
EOG holds 400,000 acres in the Niobrara shale play which have begun to generate high return rates with consistent well results. The holdings are primarily in the DJ Basin in Laramie County, Wyoming, and Weld County, Colorado. In 2013, the company completed three horizontal wells. These initially produced an average rate of about 700 barrels per day. Over the next several years, EOG expects their rigs in the Niobrara to make significant contributions to their crude oil production.
As one of the top players in the shale formation, Anadarko has plans to invest $1 billion in its reserves in Niobrara this year, estimating these at the equivalent of 1.5 billion barrels. Plans include drilling more than 360 wells by the end of the year. The DJ Basin the region receiving the focus of Anadarko’s expansion. The company’s U.S. onshore portfolio has the strongest returns from the program in that region.
Noble Energy is another of the most active players in the region. The company holds 609,000 acres, and an oil window of 87 percent. Its reserves are estimated at about 2.1 billion barrels of oil. The company is currently downspacing by 24 to 32 wells in each section. Noble plans to lower development costs by eliminating tanks while adding distribution lines, pad drilling and extended reach laterals. The company anticipates investing nearly $2 billion in Colorado during 2014.
WPX currently has two wells producing 2.5 billion cubic feet of natural gas. Their third well had a casing failure before completion, but the company plans to use the same location to drill another well later in 2014. WPX has two more wells in production, and plans to spend around $75 million in the Niobrara play this year. The company’s natural gas discovery in the play was recently recognized by the Oil and Gas Investor magazine with the Best Discovery award.
ConocoPhillips has leased 130,000 acres of mineral rights in the Niobrara shale play. Since acquiring the acreage, the company has been studying the rock formations in the shale below in search of ideal drilling sites. Currently, the wells belonging to ConocoPhillips average over 600 barrels of oil equivalents per day.
These companies are not the only ones profiting from the Niobrara’s abundant resources. The future looks bright for all those taking their cues from the larger exploration and production companies staking a claim in the Niobrara formation. Among these following suit include:
- SM Energy
- Marathon Oil
- Whiting Petroleum
- Quicksilver Resources
- MDU Resources Group
- Bill Barrett Corp.
secured land, but are taking a slower approach in the area. Between 2009 and 2012, Colorado’s oil production rose 46 percent. The predominant county of the Niobrara boom is Weld County, home to around 18,000 wells producing oil and gas.