niobrara news april

Item 1

Carrizo sells gas to concentrate on oil in Niobrara, (just south of SSN). 'success in the initial development'

Carrizo Oil & Gas Inc. said Wednesday it has signed an agreement to sell its Barnett Shale Tier 1 natural gas properties to KKR Natural Resources for $104 million. Included in the sale are 13,000 acres with 75 wells with estimated proved reserves of about 122.4 billion cubic feet equivalent.
Our plan to focus our Barnett Shale development drilling on our core properties in Tarrant County and our success in the initial development of our liquids-rich Eagle Ford Shale and Niobrara resource plays made our Tier 1 Barnett property a candidate for divestiture, president and CEO of Carrizo, said in a statement.


Item 2

Brighter gas outlook, Niobrara oil focus at Platts Rockies gathering
April 27, 2011 By admin Leave a Comment

At the Platts Rockies Oil Gas Conference this week, Simmons Company analyst Pearce Hammond cited some events that could be real drivers for increased gas demand, albeit they will take time to work through the system. But they could result in as much as 14 Bcf/d of demand and potentially more by 2020.

For example, Japans damaged Fukushima nuclear facility could indirectly cause a 1 Bcf/d impact on demand if some US nuclear plants slated to come up for re-licensing over the coming decade are taken out of service.
In addition, increased industrial demand from the chemical sector, retirement of old coal plants and the potential for natural gas to come into the mainstream as a transportation fuel, may result in a hefty chunk of new gas demand later in the decade.

Hammond said licenses for nine US nuclear facilities that supply electricity to generating plants are set to expire between now and 2020 and will need federal reviews before being relicensed. But in the same way that the Three Mile Island nuclear accident outside Harrisburg, Pennsylvania in 1979 caused a reduction of the number of such plants built in the US in the years afterward, the Japanese event could result in a second look taken at older US nuclear plants.

In addition, 'if you assume 50 to 60 gigawatts of older coal plants get retired over the next 10 years and further assume that natural gas fills about 80% of that shortfall, thats about 4 Bcf/d of incremental demand,' said Hammond.

Meanwhile, incremental electricity demand of 1%/year over the next 10 years, assuming gas gets the lions share of it, could add another 4 Bcf/d of incremental demand. Growing industrial demand as the population increases, driven by the chemical industry, could also add another 2 Bcf/d of incremental demand.

Waning nuclear and coal, on top of incremental electricity and industrial demand, adds up to 11 Bcf/d of possible future natural gas demand. But that excludes the potential of the transportation fuels market, where not only interest but also actual new infrastructure are steadily, if slowly, rising. A bill submitted in US Congress this month would provide incentives for both sellers and users of the fuel, which is already used to power public buses and even school buses in some large cities. Texas also recently approved a bill to stimulate natural gas transportation use.
Hammond admits its hard to predict just when the tipping point could occur for gas to replace gasoline and diesel. He noted the US uses about 170 billion gallons/yr of both those fuels, but if even 8% of highway diesel were to be converted to natural gas, that could add 1 Bcf/d of new demand. If natural gas were to substitute for the entire 170 billion gal/yr, that would be 65 Bcf/d about as much gas as the US currently consumes. And on an equivalent basis, gas would cost only about $1.79/gal at the pump, less than half the current price.

Also at the conference: Rusty Braziel, managing director of Bentek Energy (a unit of Platts), said even while producers have unveiled plans to drill upward of 300 wells in the Niobrara formation of the Denver-Julesburg basin in 2011, pipeline capacity issues and other factors stand to limit that number considerably. And a shortage of service crews and pipeline capacity issues could trap a lot of the oil expected to be produced out of the Niobrara.

But the production outlook is strong. If production grows at the rate we project, the [Denver-Julesburg] and Powder River production [could] easily get to 450,000 b/d by 2020, Braziel said.