Long odds face drillers seeking oil payday

2012-03-05T00:00:00Z 2012-03-05T15:25:06Z Long odds face drillers seeking oil paydayBy ROB CHANEY Missoulian The Billings Gazette
March 05, 2012 12:00 am  • 

CHOTEAU — Only one wildcat well in nine hits petroleum.

And just one in 20 drills into a deposit big enough to make money. So the companies spending roughly $9 million for each exploratory well drilled along the Rocky Mountain Front this winter have placed some serious bets.

"Right now, this is just a science project," said Don Judice, a petroleum engineer for the U.S. Bureau of Land Management. "Leasing is at a feverish pitch because there are indications something's there. But nobody's smoking Cuban cigars and drinking cognac yet. We're nowhere near full field development yet."

The Bakken formation along the Front has a distant geological connection to the Williston Basin of North Dakota and Eastern Montana. The oil business along the state border there has taken off so fast that the McDonald's restaurant in Sidney can't find people to staff its dining room. Its drive-through order taker works from a call center in Houston, relaying orders to the cook back in Montana.

But will the Front's geology produce a similar wealth of development?

"I think we might not want to hold our breath," said Tom Richmond, administrator of the Montana Board of Oil and Gas. "They thought there was a big shale gas play by Big Timber a few years ago, and everyone was thinking they'll be up to their ears in oil field trash. Three rigs were running, with great expectations. But then they stopped drilling in 2009 and everyone went home. They found some show, but it was not economical."

Oil exploration has been buzzing along the Front since last summer. Assuming some well pays off its $9 million bet, here's how Richmond expects things would progress.

The first exploratory wells typically drill straight down, as much as 6,000 feet along the Front. About 25 people are involved, including delivery workers bringing fuel, drilling equipment and other supplies to the rig.

Once core samples are recovered, lab analysts spend several weeks or months gauging their value. If enough potential appears, another rig will do horizontal drilling to explore where the deposit goes. The horizontal drilling may also involve hydraulic fracturing, where roughly 1 million gallons of water mixed with sand and chemicals are injected into the horizontal drill holes. The pressurized fracking fluid opens gaps in the rock containing the oil or natural gas, allowing it to be pumped to the surface.

Fracking projects involve a lot more workers and trucks hauling water in and out. But Richmond said they're also relatively quick operations, lasting less than a week.

If oil or gas bubbles up, the company must decide if there's enough to go into production. Richmond said natural gas market prices are so low now that it's unlikely anyone would want to develop a gas production field along the Front. But crude oil remains above $100 a barrel, so a big find would be likely to spur development.

All that could happen by this fall. If production-level deposits appear, the companies might either drill many vertical wells or a few horizontal wells to exploit it. Then they would replace the drills with pump jacks, which require only one or two people to maintain. The production wells would likely be emptied into holding tanks at the well site, with the contents trucked to the closest available pipeline or refinery.

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