Forget the Niobrara play. Check out the southern Powder River Basin boom.
From Douglas and Glenrock in southern Converse County to Gillette in central Campbell County, an area better known for vast coal mines, oil and gas operators are drilling well after well into multiple formations underground.
“It looks like to me over the next two years there will be enough drilling rigs in that area where an additional 600 wells will be drilled in that area,” said Tom Doll, Wyoming’s oil and gas supervisor.
Of about 40 rigs active in the state in late April, 25 were located in the southern Powder River Basin, with another 10 to 20 rigs expected in the area within the next few months, Doll said.
Those operators are drilling “some pretty doggone good wells,” he said, some initially producing 700 to 1,000 barrels of oil or its equivalent.
“So that’s got everybody excited when the crude oil prices remain high,” he said.
‘Tight’ sands mean money
Operators including Chesapeake Energy Corp., EOG Resources Inc., Yates Petroleum, Samson Resources Co. and others are drilling into what are known as tight oil sands, or somewhat porous sandstone that contains oil.
The operators are punching back into oil fields drilled decades ago, using techniques including hydraulic fracturing and horizontal drilling to get at oil otherwise abandoned.
Those formations, whose swaths cross the area both above and under the Niobrara formation, include the Parkman, Sussex, Frontier and Shannon sandstone, among others.
“I know the Parkman, the Frontier and the Sussex are doing very well,” said Bruce Hinchey, president of the Petroleum Association of Wyoming, referring to formations into which operators are drilling. “They’ve had good success.”
The activity covers Converse County and parts of Natrona, Campbell and Johnson counties, Doll said.
In some of those counties, operators are converting existing pipelines originally meant to carry coal-bed methane gas into oil pipelines.
“I just think that’s going to bode well for the eastern half of the state, particularly the northeastern part of the state, for the next several years,” Doll said.
Lack of rigs a concern
Operators who want to drill into the southern Powder River Basin are still dealing with a shortage of drilling rigs, and that’s slowing development of the area.
“There’s several of these operators who can’t get their hands on a drilling rig,” Doll said. “That’s part of the problem: There’d be more activity if there were more resources available.”
While the booming Bakken oil play in North Dakota is consuming the time of about 250 rigs, only about 40 rigs are running in Wyoming.
“It’s hard to get those rigs back, because they’re going to travel to another state and when they get there they’re under contract, for months and years into the future,” Hinchey said.
The Bakken play is making life difficult for operators elsewhere as well, said Michael Filloon, a analyst who tracks development in Colorado, Wyoming and the Bakken play.
“All the way through the midcontintent, it’s tough to find a rig,” he said.
The Bakken play continues to attract drilling rigs, Hinchey said, and that’ll cause difficulties for Wyoming operators who may not be able to pull the rigs in the Bakken to Wyoming for the booming Powder River Basin development.
“It’s going to be a struggle,” Hinchey said. “They’ll get a few rigs here and there, but if you’ve got the rigs in the state it’s far easier to use them and lose them then try to get them back.”