Gas was hot. Now it’s not.
Owing to the past couple of years when highly productive shale gas plays have sprouted like weeds in myriad locales in the United States, essentially in sync with cratering demand, oil is king – for now.
Given the current oil-gas price differential hovering around 15:1 or more, it comes as no surprise that a number of E&P folks, principally independents, are moving at near warp speed to stake their claim in oil plays, particularly oil shales and those rich in NGLs.
Meanwhile, some of the Big Guys, e.g., ExxonMobil, BP, Total and others, have bought into the shale gas plays via joint ventures and acquisitions, with the long term in mind.
In addition to these deals, some of the independents’ positions in shale gas have begun to pay off, so these trailblazers in commercial shale gas have cash on hand to dig into something currently more lucrative.
This is good news for the Rocky Mountain region, which has been pummeled by low prices and sinking demand for natural gas.
There’s oil in them thar’ hills.
For example, operators have been working diligently the past couple of years to successfully wrest oil from the high profile Upper Devonian-Lower Mississippian Bakken shale play in Montana and North Dakota.
According to a U.S. Geological Survey assessment, the Bakken harbors an estimated 3.65 billion barrels of undiscovered, technically recoverable oil, 1.85 Tcf of associated/dissolved natural gas and 148 mbo of natural gas liquids.
Early attempts to produce the Bakken economically were an exercise in frustration for the operators, and it was usually looked on as a bailout zone. AAPG member and 2006 Explorer of the Year Dick Findley is credited with cracking the code for the Bakken in 1995, ultimately leading to development of the giant Elm Coulee Field in the Bakken in eastern Montana.
Today, the prolific Bakken has some respectable competition.
For example, the underlying Three Forks formation – which now is considered to be separate from the Bakken – reportedly may contain as much recoverable oil as the Bakken, which has more oil overall.
The North Dakota Department of Mineral Resources has released more conservative numbers than the USGS estimate. It reportedly credits the Bakken with a mere two billion barrels recoverable, but also forecasts two billion as well for the Three Forks, which contains about one-eighth the total oil of the Bakken.
Higher up the geologic section in the Cretaceous, there’s apparently a mother lode just waiting to be seriously exploited.
“When you ask what’s happening in the Rockies, the answer is oil shale plays,” said Denver-based AAPG member Randy Ray, “and the hot topic is the Niobrara.
“The Niobrara is part of the Cretaceous seaway that covered the whole middle of the U.S,” Ray noted. “We’ve had cycle after cycle of exploration for Niobrara fractures, mainly oil but some gas where it’s buried deeper.
“The big excitement here in Denver is the expansion of the Niobrara oil play between Denver along the Colorado-Wyoming state line,” Ray said. “It’s exploded in the last six months.”
Fueling the excitement about the play is the successful Niobrara wildcat well completed recently by EOG Resources. Dubbed Jake, the well produced an average of 555 bopd during the first three months of production, according to the company.
Some industry experts say a typical new oil well in the DJ Basin might produce 100 to 150 bopd.
“When EOG released the information, I think everyone was shocked at the production being so big,” Ray said. “We all knew the oil was there, but no one pursued it with the new horizontal drilling and staged fracs that were fine tuned in all the shale gas plays.
“This year the company announced a huge acreage position, and they recently announced they’ll drill 40 wells in the play,” Ray said.
Other companies reported to be going after the grease in the Niobrara include Anadarko, MDU Resources, St. Mary Land & Exploration, Petroleum Development Corp., Noble Energy and committed shale gas devotee Chesapeake Energy.
Ray, who heads the annual (and highly successful) 3-D Seismic Symposium in Denver, noted the Niobrara is comprised of an interbedded rich source rock and brittle basically limestone beds that are usually referred to as chalk. It fractures naturally because the brittle facies is between more ductile shales.
“It’s present all over New Mexico, Colorado, Wyoming, Kansas, Montana, North and South Dakota,” Ray said. “It covers a gigantic area, so there’s plenty of areas to prospect.
“We’ve always gotten oil shows out of the Niobrara all over the Rockies,” Ray said. “It’s a result of horizontal drilling and staged frac technologies that you can now make the play economic.
“The excitement is if you get a large area that’s mature where the source rocks have generated the oil, then it becomes a big resource play,” he noted. “You just drill all the locations using long laterals and multi-stage fracs all along them so you can drain a large area.”
Niobrara is one of the few formation names used in virtually every basin in the Rockies. In contrast, nomenclature varies for the shale associated with the Niobrara, e.g., Mancos, Cody, Steele, Baxter.
“Every state where there’s an outcrop, that same marine shale deposited in the Cretaceous seaway has a different name yet the limestone in the middle is always called the Niobrara,” Ray emphasized.
He noted the Niobrara has a unique fault and fracture pattern principally because it’s so brittle. He likened it to a brittle sandwich, with the limestone facies between two organically rich shale zones that source the chalk.
Ray coined “crackle frac” to describe the regional natural fractures.
“It’s like a sheet of glass where you flex the glass and it shatters,” he said. “It’s brittle, and it crackle fracs – it fractures over a wide area having only a little bit of flexure.
“There’s usually high TOC in the shale sourcing zones, and when the shales heat up they generate oil,” Ray said. “Because the brittle limestone member is in the middle of the sandwich, the oil migrates into the crackle fracs.
“The old Niobrara model was it had to be on a structural feature or next to a fault zone or some tectonic influence to get the fractures,” he noted. “Now we know the formation naturally fractures – and it may have something to do with maturation of the source rocks.
“When they’re heated, there’s expansion when the oil is generated,” Ray said. “I think part of the sourcing creates the crackle fracing.
“Also, because it’s a very brittle bed between more ductile beds, any regional compression or slight fracturing will crack the limestone first – it’s fairly thin and so much harder,” he said.
“There’s definitely something different about the fault and fracture pattern in the Niobrara that’s not in units above or below,” Ray emphasized. “You see evidence of this unique characteristic in surface outcrop exposures and on seismic lines.
“It definitely has a fractured personality,” he said.