This article relates to OIL SHALE in Colorado and is over a...

This article relates to OIL SHALE in Colorado and is over a month old... However it does make for good reading...


New form of drilling for oil sparks boom
By Sharon Dunn Greeley Tribune, Colo.
Publication: Greeley Tribune (Colorado)
Date: Saturday, June 12 2010
You are viewing page 2
Jun. 12

Every day, about 15 briefcases are lined up at the door of the Weld County Clerk and Recorder's Office in north Greeley, each saving a place in line to sit at one of 10 available research stations.

Here, from morning until the office closes, landmen are looking up mineral rights records to make inroads into the latest oil boom in Weld County. Since January, the buzz created by new discoveries in the Niobrara oil shale formation in northern Weld has become an audible rumble echoing throughout the country.

From the heavy use of the Weld Clerk and Recorder's Office to the many new oil and service companies turning their sights north and planting roots, new discoveries in the Niobrara have caused a huge stir.

"There's no comparison at all to last year," said Gaye Florio, chief deputy clerk and recorder for Weld. "Then, we had maybe two or three in here a week. At the end of January, when this started, they're lined up at the door every morning with their briefcases."

The Niobrara formation, an oil-prone, mature-source rock field, extends beyond the Wattenberg Field, Weld County's major oil play in the Denver-Julesburg basin, and it's nothing new. Oil and gas developers have been tapping this play for years.

What's renewed interest in the field is new technology that allows for horizontal drilling, which taps into areas impenetrable to vertical drilling.

A horizontal well drilled by Houston-based EOG, formerly Enron Oil and Gas, surpassed normal oil production by 1,000 barrels of oil in just one day. That one well was producing 1,770 barrels per day, which to those in the Weld oil and gas industry was "staggering," said Bill Crews, a landman with Crews & Zeren LLC, an oil and gas title and contract consulting company in Greeley.

Now, six months later, interest in the Niobrara is soaring, as companies from throughout the country take a second look. Weld mainstays Noble Energy, which just awarded a multimillion-dollar contract to a Houston-based Production Services Network, an oil and gas service company, as well as Petroleum Development Corporation, have increased their activity. Synergy Resource Corp., based out of Platteville, also is joining in.

Out-of-state companies increasing their stakes in Weld include Oklahoma-based Gulfport Energy Corporation and Rex Energy Corporation, headquartered in Pennsylvania. Devon Energy, also out of Oklahoma, has announced it had pulled out of the Gulf of Mexico, the sale of which was final in January, and is exploring the Wyoming side of the Niobrara.

That's why landmen are flooding the clerk's office, to find the mineral owners to negotiate leases.

"Acreage we couldn't give away 10 years ago is now going for just insane prices," Crews said. "This stuff up north is going to make some multimillionaires."

Interest in the play remains high, as evidenced by a recent conference that Hart Energy Publishing held in Denver, which drew 800 attendees. A similar play in North Dakota called the Bakken formation, has for the last three years energized an economy and refocused an industry.

"Success in the Bakken has been very strong, and that has prompted companies to look for those types of exploration plays in other oil-prone shales," said Peggy Hart, director of unconventional resources for Houston-based Hart Energy Publishing, which publishes Oil and Gas Investor magazine. "The Niobrara is rapidly becoming an interesting target."

The activity is increasing among oil and gas services companies, too. Production Services Network just won a multimillion-dollar contract with Noble and is about to lease a building for a home base in Greeley. Initially, the company said it would hire about 40 workers.

DCP Midstream, a natural gas gatherer and processor based in Denver, recently bought the Frac Tech Services building, 3026 4th Ave., south of RR Donnelley, for $1.638 million so it could expand. The company reported it planned to invest $125 million in the next year or so throughout Weld.

Sterling Black Gold LLC, also an oil services company out of Sterling, recently bought a property at 3026 1st Ave. in Greeley.

The extra industry will put idle real estate back to use, as well as take workers off the unemployment rolls.

The added interest also has the potential to not only boost county tax revenues in the next few years, but the livelihoods of small towns up north, such as Nunn and Carr, especially their restaurants and lodging, Crews said.

But the jury is still out on just how much of a boon the Niobrara can be, Crews warns.

The added element of how much oil can be extracted also is an unknown, Hart said. Typically, she said, drillers expect a 2 percent to 4 percent extraction of the oil beneath the ground.

"You'll see these giant numbers being bandied about for how much oil is there, and unquestionably it's there," Hart said. "People in these kinds of plays talk about how can we get recovery to 10 percent. There's a lot of engineering. Work goes on how to best drill the well, how to best complete, and coax the most oil out of these zones. They don't give it up easily. These will never be like the oil reservoirs of old, where you could just drill a well down and stick a pump on it and go."

While Weld has seen the industry heat up more than it has in a good 20 years, many are still waiting on the sidelines, Hart said.

"It's significant activity from an exploration standpoint, but these things take quite a bit of time to work through," Hart said. "You're looking at the early stage of the play. High-interest people are watching these wells to see how consistent the results will be and how broad of an area they will cover."

Weld County hasn't seen this kind of interest since the early '80s, back when landmen would get into fistfights over mineral rights research at the county clerk's office. Crews said this time around is much different.

"I think this is major league compared to what we had before," said Crews, adding that he's been in the industry for 30 years.

Florio, in the clerk's office, is a little worn out already.

"It's getting busier every day, and we keep thinking it's going to slow down and it hasn't," she said. "We see new faces all the time. They're very secretive. It would be nice (if it would slow down), just a little bit."



http://www.allbusiness.com/mining-extraction/oil-gas-exploration-extraction-oil-oil/14617641-1.html