Like many oily basins in North America, the Powder River Basin has seen a dramatic increase in drilling activity in the past several years. The targets are oil fields that produce primarily from Upper Cretaceous sandstone reservoirs that were developed with vertical wells in the 1970s and 1980s. These fields have been revitalized by operators utilizing modern technology including horizontal drilling and multistage fracing to exploit the lower-quality reservoirs that were less economically viable to develop.

Target reservoirs for this play include the Parkman, Sussex, Shannon and Frontier sandstones, along with the Niobrara formation and the Mowry shale. Current production is around 45,000 barrels of oil equivalent (BOE) per day, having grown from less than 10,000 BOE per day in just three years.

More than 350 horizontal wells have been drilled in the basin since 2009, with permit activity similarly on the rise. Although the overall area of the play is large, the trends of the target sands are distinct and form relatively narrow productive corridors.

Geology

The current horizontal activity in the Powder has been in the central and southern portion of the basin where the Niobrara source rock is in the oil generative window. The plays are defined by the occurrence of hydrocarbons in stratigraphic traps, primarily in narrow offshore marine shelf sandstones. Sands have a range of facies and reservoir characteristics; porosity from 10% to 15%, relatively low permeability, and depth to reservoir ranging from 8,000 to 13,000 feet.

The Parkman, Sussex and Shannon are key horizontal sand targets for this play. In general, each sand interval forms a long, narrow productive trend stretching in a northwest-southeast direction. Traps are updip pinchouts of the sandy facies that interlock with the Steele member of the Cody shale.

The Sussex in House Creek Field provides a typical succession of gradational facies ranging from sandstone through interbedded sandstone and mudstone, to silty mudstone. And although the sandstone body is long and narrow, the complex as a whole is extremely broad, and of generally low relief over a distance of many miles. This variation in facies has provided targets for both historical vertical and modern horizontal well development.

The Frontier formation, including the Wall Creek and Turner sandstones, has been a key drilling target for exploitation in the basin for many decades. The Frontier consists of a clastic wedge that pro-graded east, away from the Sevier orogenic belt, and lies between two thick marine shale intervals. Oil and gas accumulations occur in stratigraphic traps in discontinuous offshore marine shelf sandstones, typically in large high-energy bar complexes, located in the deeper parts of the basin.

The Niobrara, considered to be the primary source rock for Upper Cretaceous reservoirs in the Powder River Basin, is also a target for horizontal drilling. Most of the drilling activity has been in the southern and deeper portions of the basin where the interval is in the oil/condensate window. The Mowry shale is a black, organic-rich source rock, considered the main source rock for Lower Cretaceous reservoirs in the basin.

Production trends

Significant horizontal drilling activity has occurred in Hornbuckle, Spearhead Ranch and Scott fields in the Sussex and Frontier, and in southern Campbell County targeting the Turner sandstone. In Hornbuckle Field, vertical well development began in the early 1980s. The approximate 60 vertical Sussex wells drilled in the field generally initially produce (IP) at 65 BOE per day and produce about 9,000 barrels of oil over the first 12 months of production.

Samson Resources began drilling the tighter reservoir facies along the edge of the field using horizontal wells in 2011. These wells, on average, IP at 260 barrels per day and produced some 45,000 barrels over the first 12 months. The shift to horizontal development yielded a fourfold increase in initial performance and a fivefold increase over the first year.

More than 80 horizontal Turner wells have been drilled by EOG Resources, Yates Petroleum and others in the southern portion of Campbell County. The average 30-day IP of all wells is some 500 BOE per day, with average 12-month cumulative production of 120,000 BOE. These wells are on trend to recover 450,000 BOE per well. EOG has drilled 27 Turner wells since 2010. Their average 30-day IP was 550 BOE per day with average 12-month production of 150,000 BOE.

Powder River tight-oil operators include SM Energy, Samson Resources, Bill Barrett Resources, Resolute Energy, Devon Energy, Petro-Hunt and EOG.

SM Energy has concentrated on the Frontier in northwest Converse County. One of its recent Frontier wells, the Loco Federal 9-4-1FH, had a 30-day IP rate of 1,400 BOE per day. It estimates that its Frontier wells will produce 1 million BOE (on 1,280-acre spacing). In Campbell County, Bill Barrett’s first five Shannon wells had an average 30-day IP of just over 500 BOE per day (on 4,000-foot average laterals, 17 to 18 frac stages, and well costs of about $7 million). Its two Frontier wells in Converse County had an average 30-day IP of more than 1,000 BOE per day (4,100-foot laterals, 18 frac stages, well cost of $9.5 million).

Resolute Energy is targeting the Turner and Mowry around Hilight Field. The company successfully drilled and completed its first horizontal Turner well, the Castle 3-21TH, with a 24-hour peak rate of 607 BOE per day. Its horizontal Turner type curve suggests an estimated ultimate recovery of 230,000 to 350,000 BOE with well costs of $5.8- to $7.3 million.