Advancements in drilling and completion techniques have led to renewed interest in the Niobrara oil play in the Rockies. Although the reservoir has been productive for more than 100 years, several companies have recently established sizable acreage positions in the prospective trend to take advantage of this relatively low-permeability oil reservoir using horizontal drilling and multistage-fracturing completion techniques. With development of the play in an early stage, few well results have been made available, but those that have been released have been encouraging.

Geology

The Upper Cretaceous Niobrara formation in the Rocky Mountain region consists of a widespread deposit of interbedded marine chalk, limestone and organic rich shale. It was deposited in the Western Interior Cretaceous Seaway that extended across much of the midcontinent of North America. The Niobrara is a self-sourced hydrocarbon system. Estimates of total organic carbon content in the Niobrara range from 1% to 7%. It is Type II marine oil-prone kerogen, which has reached thermal maturity in the deeper portions of some basins.

Oil from the Niobrara formation is produced at depths of 6,000 to 9,000-plus feet in the Denver-Julesburg (DJ), North Park and Powder River basins. Average porosity is typically less than 10% with permeability less than 0.01millidarcy (>6,000 feet). The interbedded chalk seems to be the key reservoir facies and is characterized as brittle and often naturally fractured. Fracture systems available for oil saturation were generated during or after oil expulsion. As a result of the brittle nature of the chalk, even small structural features add significant fractured enhancement to permeability. Because the Niobrara is self sourcing and the oil migrates only locally, the area of thermal maturity defines the boundary of the exploratory play.

Hydrocarbon production from the Niobrara has occurred for many years as biogenic gas in shallow regions such as eastern Colorado, northwestern Kansas, southwestern Nebraska and northcentral Montana. Oil production has come from mostly vertical wells in the deeper, more mature portions of the DJ, Powder River, and North Park basins from fields including Silo, Wattenberg, Teapot, Sage Creek and Buck Peak.

Areas of Interest

Current focus areas in the Niobrara oil play are primarily in and around Wattenberg Field in Weld County, Colorado, and in Laramie, Platte and Goshen counties, Wyoming, around Silo Field. Other spotlights are in the southern portion of the Powder River Basin, in Campbell, Converse and Natrona counties. An additional area of interest is North Park Basin in Jackson, Routt and Moffat counties, Colorado.

The play is primarily being exploited using horizontal drilling, with reported lateral lengths of 3,500 to 5,500 feet, multistage fracture stimulations and well costs of $3- to $6 million.

Competitor Analysis

The Niobrara oil play is in the early stages of investigation, with several companies expanding their acreage position in recent months. As operators in the trend develop an increased understanding of the geology and engineering (drilling, completion and stimulation approach) of the Niobrara, focused areas of interest will likely be defined.

Early movers include EOG Resources, with some 400,000-plus prospective net acres in the Niobrara. EOG holds interests in Weld and Jackson counties, Colorado, and Converse, Campbell, Goshen, Laramie and Platte counties in Wyoming. EOG’s Jake #2-01H, drilled in the northern portion of Weld County, reportedly had a 40-day average production rate of 1,000 barrels of oil equivalent per day. EOG has also drilled several wells in North Park Basin with encouraging results.

Noble Energy holds a large leasehold position of approximately 800,000 net acres, primarily in Wattenberg Field, Weld County, Colorado. Noble also has a position in Laramie County, Wyoming, which it recently acquired from Cirque Resources in a joint venture. Noble is an active driller of horizontal Niobrara wells within Wattenberg Field and is planning to expand beyond the field boundaries.

Chesapeake Energy continues to expand its position in the southern portion of the Powder River Basin in Wyoming and northern Colorado, where it holds some 400,000 net acres. Chesapeake has been targeting both the Frontier and Niobrara formations in the Powder River Basin and has drilled a couple of encouraging wells.

The company recently acquired additional Niobrara interests from American Oil & Gas.

American had reentered several existing wells in Fetter Field to perforate and fracture stimulate the Niobrara. Results of the wells were reported to have varied from 80 to more than 550 barrels of oil equivalent per day.

Additional lease holders/operators include SM Energy (some 24,000 net acres, Weld and Laramie counties); Petroleum Development Corp. (72,000 net acres in Wattenberg Field area); Fidelity Exploration and Production (80,000 net acres in Laramie and Goshen counties, Wyoming); and Anadarko Petroleum, which also has a large position in the Niobrara play by way of the Union Pacific Resources Land Grant.