The oil is there, there's a way to get it, and now the money is right.

The price of oil surged past $100 a barrel recently, up from $80 a year ago.

While new technology makes that exploration and drilling potentially profitable, it's the good price of oil that keeps energy companies looking for the next big strike in the Niobrara Shale.

"When the price of a barrel of oil is $105 a barrel, you want to put as many barrels in the tank as you possibly can," said Mark Northam, director of the University of Wyoming's School of Energy Resources.

The price of crude oil should stay high throughout the year, according to the U.S. Energy Information Administration.

The average cost of crude oil should stay above $100 through the year as supplies tighten due to unrest in the Middle East, the analysts stated in a March 8 energy outlook.

Along with higher cost of oil, lower costs of production also mean that producers don't have to generate as much as in the past to make their wells pay.

Roger Parker, chief executive of the Denver-based Recovery Energy Inc., said his company can break even with relatively low production totals.

"We only need to recover 70,000 barrels of oil to achieve payout," he said.

EOG Resources' Jake 2-01H showed producers the potential of the Niobrara when it produced 50,000 barrels of oil in the first 90 days of production from its Weld County, Colo., site.

Northam said he would expect that if prices dropped back down to $60 a barrel, companies would likely slow down their pace of development in the Niobrara.

"I think the low costs (of production) are what have made this a play," he said. "The high value of the product is what's feeding the frenzy."

 

Reach Jeremy Fugleberg at 307-266-0623 or jeremy.fugleberg@trib.com. Read his blog at http://trib.com/news/opinion/blogs/boom/ and follow him on Twitter: @jerenegy.

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