The Niobrara play stutters

2012-05-24T00:00:00Z 2014-04-22T08:40:21Z The Niobrara play stuttersBy JEREMY FUGLEBERG Star-Tribune energy reporter Casper Star-Tribune Online

Last year, a University of Wyoming archivist and television crew interviewed residents who live atop the Niobrara Shale in the southeastern part of the state.

The idea was to talk to residents and visit towns in Goshen, Laramie and Platte counties on the cusp of an oil boom.

“That’s been great to get that on camera, because part of this, if impact does occur, we’re going to have a before-and-after snapshot,” said Leslie Waggener, archivist with the University of Wyoming American Heritage Center, in a November interview with the Star-Tribune. “If it’s anything like Pinedale, there’s going to be physical change throughout town.”

Southeast Wyoming has yet to see anything similar to the natural gas boom in the Upper Green River Basin.

Half a year later, observers say, the Niobrara Shale play is stuttering on weak well results as operators seek the best places to find oil in a spottily producing play in the north of what’s known as the Denver-Julesberg Basin, stretching across southeast Wyoming.

“Everybody’s been anticipating this thing for the last two years and we’re not having it happen,” said Tom Doll, Wyoming’s oil and gas supervisor.

Some bright spots

Operators have had a tough time finding the right place to drill, even after snapping up thousands of acres of mineral leases all over southeast Wyoming.

From all reports, Niobrara well results in the area have generally been lackluster, although some bright spots have emerged.

“I’ve heard some positive things about a Fidelity well in Torrington, activity east of Cheyenne that’s positive and up along the Nebraska border there’s been some success,” Doll said. “It’s just not a continuously active area.”

The wells in the state’s southeast certainly “didn’t pan out the way folks thought they would,” said Bruce Hinchey, president of the Petroleum Association of Wyoming. “I think they’re reassessing there and maybe how to complete the wells when they drill them.”

Seismic underground mapping teams have roamed the area, creating a three-dimensional view of the underground formations for operators seeking the best places to drill.

Another crew is bound to map an already mapped area near Cheyenne, said Hinchey.

“I don’t know how many times they can sell this,” he said.

But that mapping is crucial for operators leery of drilling an expensive dry hole, said Michael Filloon, an analyst who keeps a close eye on development in the area for seekingalpha.com.

“They’ve gotten so now they won’t even drill a well before a 3-D seismic shot,” he said.

Finding the fractures

Finding the natural fractures in the formation seem to be the key to unlocking the Niobrara, say Filloon and Doll.

“Don’t get me wrong: there’s a lot of oil there,” Filloon said. “But what they found in drilling in the Wyoming side, the Niobrara in the DJ Basin has hot spots. Those hot spots is where the shale is naturally fractured.”

Doll said he expected 15 to 20 drilling rigs in southeast Wyoming, but usually the area has hosted only two to four rigs.

“We’re seeing some success around that Silo Field that’s been there historically, where there’s been some natural fractures to drill into,” Doll said. “It’s been interesting to see, but it’s not what I’d hoped to see.”

Doll expects the Niobrara play in southeast Wyoming to be slow for the next year or so. Activity may then pick up, not because of any particularly good well results, but because operators’ three-year leases are nearing their expiration dates.

Operators will “have to start making decisions I would think this fall or next spring at the latest,” Doll said. “They’ll have to get out and drill their leases or lose their leasehold interest.”

Filloon thinks there could be some lease buyouts if companies decide the Niobrara play isn’t something they want to solve.

“Some of these companies, if they can’t figure out, someone will come in and buy them and they will,” Filloon said.

Still Filloon said he’s confident the Niobrara play could prove itself.

“Some day that place is going to be littered with oil rigs,” he said. “There’s plenty of oil there, they’re just trying to figure out how to get it out.”

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: @jerenergy.

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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