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vertical wells. Horizontal drilling and hydraulic fracturing are now unlocking resources formerly out of reach.
Geology
The Niobrara play gets its name from the Niobrara formation, which is found over a vastly larger area than the areas of interest for the play itself. In fact, the Niobrara formation stretches from the Gulf of Mexico to the Arctic, formed roughly 80-90 million years ago when the Western Interior Seaway split the North American continent. It comprises a variety of rock types, and tends to be much thicker on the western side than on the east. On the western edge, rocks of Niobrara age tend towards sandstone, transitioning to chalky shale and then to chalk and limestone towards the east. Interbedding of varied rock types is common.
The Niobrara is found at greatly varied depths, with the deeper portions of the Niobrara (ranging from 6,000 to 13,000 feet) of special interest to producers. Depth has led to physical compaction and chemical processes that have made the rock much less permeable, yet also more favorable as a source rock. The richest oil content has been found in the Denver-Julesburg Basin (or D-J Basin, for short) in the northeast corner of Colorado and extending into adjoining states. In this region, the Niobrara’s thickness varies between roughly 200 to 500 feet. While we focus here particularly on the Niobrara in the D-J Basin, there has also been recent Niobrara activity in the Powder River Basin (Wyoming), the Piceance Basin (Colorado and Utah), and others. The two major sub-units of the Niobrara are the Smoky Hill Chalk Member and below it, the Fort Hays Limestone. Within the Smoky Hill Chalk there are three major chalk layers interbedded with shale or marl (loosely speaking, something between shale and limestone).
Historically, natural fractures have played a key role in making oil and natural gas accessible in the region. Even before the current surge in activity, the D-J Basin already held some 1,500 known oil and natural gas fields, with more than 50,000 wells drilled. As of 2007, the U.S. Geological Survey (USGS) estimated that 245 million barrels of oil and more than two trillion cubic feet of natural gas had been produced in the D-J Basin. The most recent resource assessment from the USGS for the basin dates to 2002, well before the potential of current technology was widely known. Because of technological innovation and advancements in drilling techniques, the outlook has changed greatly since then. At that time, the USGS estimated a mean of 104 million barrels of undiscovered oil, 52 million barrels of undiscovered natural gas liquids, and 2.5 billion cubic feet of undiscovered natural gas. More recently, figures at the level of several billion barrels of recoverable oil are common.
History
Oil was first produced in the D-J Basin in 1901 near Boulder, Colorado. Although the first discovery well was finally plugged a few years ago, the Boulder Field continues to produce. The Pierre Shale, which lies above the Niobrara, serves as the reservoir rock and owes its productivity over most of that period to naturally occurring fractures, which allow the oil to flow through otherwise impermeable rock. Elsewhere in Colorado, natural oil seeps had been known to the Ute Indians and some development of this surface oil was carried out in the 1860s, according to the Colorado Geological Survey. Colorado’s first commercial oil field, named for the nearby town of Florence, commenced production in 1881, also producing from the Pierre Shale.
Another notable Colorado find outside of the D-J Basin is the Rangely Field, first explored in 1901, with more productive zones found in the 1930s; but because of the Depression and remoteness from markets of the day, it was not fully developed until the 1940s. Rangely helped push the state’s production to a peak of 160,000 barrels per day in 1956, which then dipped to about 50,000 barrels per day by the turn of the millennium. According to the Colorado Geological Survey, oil production from the Niobrara formation first occurred in the northwest corner of the state in the 1920s.
Meanwhile, in the D-J Basin, the discovery of the Wattenberg Field in 1970 brought on a field that ranked among the nation’s top ten natural gas fields and top 20 oil fields in proved reserves by the Energy Information Administration. By the late 1970s, development of this “tight” formation was initially brought about by hydraulic fracturing in vertical wells and targeting the “J” sandstone. Later, attention turned to the Codell sandstone and the Niobrara, and the Wattenberg increasingly transformed into a multi-zone play.
Across the border in Wyoming, the Silo Field would demonstrate the potential impact of horizontal drilling in the Niobrara. Discovered in 1981, the Silo Field produced from natural fractures in the Niobrara, at first in vertical wells. In the 1990s, horizontal drilling greatly improved the well contact with the producing formation, and production spiked.
A New Turn of Events
With EOG Resources’ Jake Well in Weld County in September 2009, horizontal drilling and hydraulic fracturing showed their combined effectiveness in the Niobrara, with the well initially producing more than 1,500 barrels per day and averaging more than 500 barrels per day for the first three months. Another major well, Anadarko’s Dolph 27-1HZ, also in Weld County, demonstrated initial production rates exceeding 1,500 barrels of oil equivalent (BOE) per day and paid out in less than four months. As a result of these successes and many others, horizontal drilling in the region has grown steadily. Two years ago, about a third of the wells were being drilled horizontally in the play, but more recently the share of horizontal wells has exceeded 85 percent. While much of the production from the Niobrara is in the Wattenberg area and may be commingled with other production, other development has occurred outside that field’s production area.
Economic Impact
The latest developments in the D-J Basin and the Niobrara in particular are part of a larger pattern that has boosted the region’s economy. Employment in oil and gas extraction, drilling, and support activities in an area centered around northeast Colorado have tripled over the last decade to more than 6,500 jobs in 2011. This is reflected in Colorado’s statewide increase in industry jobs from about 7,000 in 2001 to more than 22,000 in 2011, based on data from the U.S. Bureau of Labor Statistics. Weld County alone collected more than $150 million in ad valorem taxes from its two largest operators in 2012 – Anadarko and Noble Energy. This does not include the beneficial ripple effects on other supporting industries and the general boost to local economies as the increased wages are spent on consumer goods, housing, and services.
A Look Ahead
While the D-J Basin has been the primary focus for industry in the Niobrara, exploration is at an early stage, and other basins are seeing increased activity as well. Advances in downhole information and control, geologic insights, and smarter completion strategies are refining the ability of horizontal drilling and hydraulic fracturing to access these resources efficiently, while efforts to manage water and other resources more efficiently have been reducing the surface impact, including trucks on the road and their associated emissions. The Bakken and the Eagle Ford may often be the headliners of the shale revolution, but the Niobrara is also contributing significantly toward increasing U.S. energy sources, reducing energy imports, and providing jobs that add value to the economy for both workers and consumers.
vertical wells. Horizontal drilling and hydraulic fracturing are now unlocking resources formerly out of reach.
Geology
The Niobrara play gets its name from the Niobrara formation, which is found over a vastly larger area than the areas of interest for the play itself. In fact, the Niobrara formation stretches from the Gulf of Mexico to the Arctic, formed roughly 80-90 million years ago when the Western Interior Seaway split the North American continent. It comprises a variety of rock types, and tends to be much thicker on the western side than on the east. On the western edge, rocks of Niobrara age tend towards sandstone, transitioning to chalky shale and then to chalk and limestone towards the east. Interbedding of varied rock types is common.
The Niobrara is found at greatly varied depths, with the deeper portions of the Niobrara (ranging from 6,000 to 13,000 feet) of special interest to producers. Depth has led to physical compaction and chemical processes that have made the rock much less permeable, yet also more favorable as a source rock. The richest oil content has been found in the Denver-Julesburg Basin (or D-J Basin, for short) in the northeast corner of Colorado and extending into adjoining states. In this region, the Niobrara’s thickness varies between roughly 200 to 500 feet. While we focus here particularly on the Niobrara in the D-J Basin, there has also been recent Niobrara activity in the Powder River Basin (Wyoming), the Piceance Basin (Colorado and Utah), and others. The two major sub-units of the Niobrara are the Smoky Hill Chalk Member and below it, the Fort Hays Limestone. Within the Smoky Hill Chalk there are three major chalk layers interbedded with shale or marl (loosely speaking, something between shale and limestone).
Historically, natural fractures have played a key role in making oil and natural gas accessible in the region. Even before the current surge in activity, the D-J Basin already held some 1,500 known oil and natural gas fields, with more than 50,000 wells drilled. As of 2007, the U.S. Geological Survey (USGS) estimated that 245 million barrels of oil and more than two trillion cubic feet of natural gas had been produced in the D-J Basin. The most recent resource assessment from the USGS for the basin dates to 2002, well before the potential of current technology was widely known. Because of technological innovation and advancements in drilling techniques, the outlook has changed greatly since then. At that time, the USGS estimated a mean of 104 million barrels of undiscovered oil, 52 million barrels of undiscovered natural gas liquids, and 2.5 billion cubic feet of undiscovered natural gas. More recently, figures at the level of several billion barrels of recoverable oil are common.
History
Oil was first produced in the D-J Basin in 1901 near Boulder, Colorado. Although the first discovery well was finally plugged a few years ago, the Boulder Field continues to produce. The Pierre Shale, which lies above the Niobrara, serves as the reservoir rock and owes its productivity over most of that period to naturally occurring fractures, which allow the oil to flow through otherwise impermeable rock. Elsewhere in Colorado, natural oil seeps had been known to the Ute Indians and some development of this surface oil was carried out in the 1860s, according to the Colorado Geological Survey. Colorado’s first commercial oil field, named for the nearby town of Florence, commenced production in 1881, also producing from the Pierre Shale.
Another notable Colorado find outside of the D-J Basin is the Rangely Field, first explored in 1901, with more productive zones found in the 1930s; but because of the Depression and remoteness from markets of the day, it was not fully developed until the 1940s. Rangely helped push the state’s production to a peak of 160,000 barrels per day in 1956, which then dipped to about 50,000 barrels per day by the turn of the millennium. According to the Colorado Geological Survey, oil production from the Niobrara formation first occurred in the northwest corner of the state in the 1920s.
Meanwhile, in the D-J Basin, the discovery of the Wattenberg Field in 1970 brought on a field that ranked among the nation’s top ten natural gas fields and top 20 oil fields in proved reserves by the Energy Information Administration. By the late 1970s, development of this “tight” formation was initially brought about by hydraulic fracturing in vertical wells and targeting the “J” sandstone. Later, attention turned to the Codell sandstone and the Niobrara, and the Wattenberg increasingly transformed into a multi-zone play.
Across the border in Wyoming, the Silo Field would demonstrate the potential impact of horizontal drilling in the Niobrara. Discovered in 1981, the Silo Field produced from natural fractures in the Niobrara, at first in vertical wells. In the 1990s, horizontal drilling greatly improved the well contact with the producing formation, and production spiked.
A New Turn of Events
With EOG Resources’ Jake Well in Weld County in September 2009, horizontal drilling and hydraulic fracturing showed their combined effectiveness in the Niobrara, with the well initially producing more than 1,500 barrels per day and averaging more than 500 barrels per day for the first three months. Another major well, Anadarko’s Dolph 27-1HZ, also in Weld County, demonstrated initial production rates exceeding 1,500 barrels of oil equivalent (BOE) per day and paid out in less than four months. As a result of these successes and many others, horizontal drilling in the region has grown steadily. Two years ago, about a third of the wells were being drilled horizontally in the play, but more recently the share of horizontal wells has exceeded 85 percent. While much of the production from the Niobrara is in the Wattenberg area and may be commingled with other production, other development has occurred outside that field’s production area.
Economic Impact
The latest developments in the D-J Basin and the Niobrara in particular are part of a larger pattern that has boosted the region’s economy. Employment in oil and gas extraction, drilling, and support activities in an area centered around northeast Colorado have tripled over the last decade to more than 6,500 jobs in 2011. This is reflected in Colorado’s statewide increase in industry jobs from about 7,000 in 2001 to more than 22,000 in 2011, based on data from the U.S. Bureau of Labor Statistics. Weld County alone collected more than $150 million in ad valorem taxes from its two largest operators in 2012 – Anadarko and Noble Energy. This does not include the beneficial ripple effects on other supporting industries and the general boost to local economies as the increased wages are spent on consumer goods, housing, and services.
A Look Ahead
While the D-J Basin has been the primary focus for industry in the Niobrara, exploration is at an early stage, and other basins are seeing increased activity as well. Advances in downhole information and control, geologic insights, and smarter completion strategies are refining the ability of horizontal drilling and hydraulic fracturing to access these resources efficiently, while efforts to manage water and other resources more efficiently have been reducing the surface impact, including trucks on the road and their associated emissions. The Bakken and the Eagle Ford may often be the headliners of the shale revolution, but the Niobrara is also contributing significantly toward increasing U.S. energy sources, reducing energy imports, and providing jobs that add value to the economy for both workers and consumers.
