At least one oil and gas company claims to have figured out the tricky Niobrara shale play in the Powder River Basin in Wyoming.
Chesapeake Energy executives told investors Tuesday that results from the basin are picking up.
“In the Powder River Niobrara play, we’ve finally cracked the code with numerous recent wells” into newly identified drilling areas, said Steven Dixon, Chesapeake’s chief operating officer and vice president of operations and geosciences.
If the Wyoming Oil and Gas Conservation Commission’s production and permitting numbers are any indication, the company won’t be alone for long.
Nearly 430 drilling permits — which precede but don’t guarantee actual wells — have been doled out for operators in Campbell and Converse counties already this year, just less than 2011’s total of 485 permits. In 2010, drillers in the two counties requested only 168.
The numbers seem to indicate growing interest in the area, including wells sunk into the Niobrara, which has at times confounded drillers. The Niobrara formation is known for hot spots, according to interim state oil and gas supervisor Bob King.
“It’s not just a blanket formation,” he said. “You have to apply some geology and engineering.”
But technology has improved — leading to deeper horizontal wells produced faster than ever. The techniques can help find the most oil-rich spots in the formation.
“I think as operators refine completion techniques, specifically with length and ability to steer laterally, the geology is more favorable,” King said.
According to Oil and Gas Conservation Commission data, operators in the Powder River Basin have produced the equivalent of about 800,000 barrels of oil in the Niobrara formation in 2012, already nearing the 843,000 produced last year. Most data reported by producers is current through the end of June.
Some wells previously averaging mere hundreds of barrels per day now produce thousands.
Returns have been solid in other area formations. Operators have produced more than 3 million barrels of oil and gas from the Turner and Sussex formations this year, holding steady with a much-improved total last year.
The Niobrara results are a vast improvement over recent history. In 2010, the Niobrara in the basin produced only about 170,000 barrels. Operators produced about 1.6 million from the highest-producing formation in the area — the Sussex.
Jobs are also on the rise, according to data released Friday.
Employment in the state rose by 2 percent in the fourth quarter of 2011, according to research by the Department of Workforce Services. Mining — which includes oil and gas — was a driver of job growth especially in Converse County, which added 6 percent more jobs.
And preliminary data shows the trend continuing: Wyoming operators added about 2,100 jobs in mining, oil and gas, the largest employment sector increase in the state in the first quarter of 2012.
The production numbers are a good sign for area producers, said Petroleum Association of Wyoming President Bruce Hinchey.
“This is certainly real good news compared to what it was,” he said. “It’s going to bode well for the state.”