New flurry of activity hits old Central Montana oilfield

2012-01-29T00:20:00Z 2014-08-25T14:39:29Z New flurry of activity hits old Central Montana oilfieldBy TOM LUTEY tlutey@billingsgazette.com The Billings Gazette

JORDAN — Talk of a "mini Bakken" beneath this windswept plain has the 350 people of Jordan talking big.

"My daughter thinks we're going to be the next Williston," said Janet Sherer. "I hope not. I'm not ready for that."

Williston, the western North Dakota community at the heart of the Bakken oil boom has become the town to which everyone points when discussing a potential central Montana oil play. The North Dakota community was a quiet farm town until petroleum engineers cracked the combination to oil trapped in a shale formation thousands of feet below. The once seemingly played-out region now rivals Alaska's oil production. Locals fortunate enough to have coveted mineral rights are awash in royalties. The black gold rush is on.

Central Montanans from Lewistown to Jordan also have a seemingly played-out oil field. "The Heath" as it's called in these parts, is a shale formation 250 miles wide from east to west and 150 miles from north to south.

The land that caps the Heath is as empty as it is vast. Here, gravel roads stretch 60 miles or more without crossing asphalt. They must occasionally be shared with range cattle, though rarely with people and can go from concrete hard on a freezing morning to gumbo soft by afternoon. The latter transformation in winter is so common people plan their travels around the freeze and thaw.

In 1922, oilmen punctured the Heath shale after drilling 1,950 feet and began pumping the first of more than 35 million barrels of oil. The last productive barrels reached the surface in the last months of 1990, according to records, at which point engineers dismissed the Heath shale as a geological turnip, its remaining oil hopelessly trapped in minerals too tight for extraction.

Modern oilmen stumbled onto the Heath not even realizing it was there, according to Darcey Matthews, of Endeavour Corp. A rural ranch couple struck up a conversation with Endeavour team members at a café, and tipped them off about the Heath.

Soon after, engineers were studying geological data and landmen were crowding clerk and recorder offices to see who owned what.

Five companies have since bored into Heath shale with vertical wells to collect samples and determine whether the formation is significant enough to be drilled horizontally and cracked, using explosives and extreme hydraulic pressure, to set once-trapped oil seeping into horizontal drill holes.

It's still early in the process, said Matthews, whose company last year launched vertical well projects in four areas between Jordan and Ingomar. The company's next move is establishing horizontal bores this year. At the earliest, Endeavour's sights might begin producing oil in 2013 if all the work up to that point proves worthwhile.

"The Heath oil shale has been the source for the Tyler Sandstone that's been producing oil for a long time," Matthews said. "I don't think there's any doubt there's oil there. I think it's really a question of ‘Does the horizontal technology work in that part of Montana.' "

Matthews said she knows of one competitor who moved on to easier plays after Heath shale proved too thin at one horizontal drilling site. Unlike the thick shale formation of the Bakken, the Heath shale is very thin in places.

Ann Priestman compiled a Heath shale report last October for Hart Energy's Unconventional Gas Center. Buried in geological data, she found belts of Heath shale less than 10 feet thick, too thin to be bothered with for some explorers. In other places the shale was a workable 40 feet thick. Drill depths to the shale varied from 2,000 to 5,000 feet. Those are just some of the challenges drillers face before determining whether the Heath can actually be profitable.

As clerk and recorder of Garfield County, Sherer has an understanding of how long developing the Heath shale has taken. It was 18 months ago that land men poured over the property records at the courthouse in Jordan. They haven't returned, although drilling is under way in the area and production is still at least a year away.

"It's been at least a year since we had a lot of people," Sherer said. "At one time there were 17 of them in our vault. We had them working in our hallway, but it's really slowed down."

In Fergus County, Rana Wichman said when the phone rings at her property records office, it's usually a local calling to see who is buying up all the hotels in Lewistown. The rumor that can't be capped is that oil giant Halliburton has purchased every hotel. No hotels have sold, said Wichman, who as clerk and recorder registers the transfer of title whenever property is sold.

In Petroleum County there are at least five landmen in the vault of Leslie Skinner's clerk and recorder's office in Winnett. There would probably be more, but Skinner set limits on her landmen after it became apparent that she didn't have room for the six or more who were making the 95-mile drive from Billings daily.

Down the street from Skinner's office, at the Kozy Korner diner, owner Buck Wood rattles off directions to local drilling sites with tour guide proficiency, but says crews don't come to town for the Kozy's famous pies and pancakes.

"The guys drilling, they stay in Roundup," Wood said. "When they do come around, they don't say much."

No one is saying much, because they don't want to tip off competitors, said Jason Edwards of Central Montana Resources. Edwards works out of an office in downtown Billings. His private oil and gas company based in San Antonio, Texas, holds mineral rights contracts in six central Montana counties and has partnered with some major players including Endeavour.

CMR last year announced a $47 million investor infusion to further its Heath formation. It's currently building a base of operations, including a warehouse and a pipe yard north of Roundup.

"Yes, this area has been looked at and relooked at," said Edwards, who knows that more than 350 wells have been sunk in the Heath shale over the last 80 years. "The particular formation we're looking at, coupled with the new technology that's come along is what makes it intriguing."

Like the other six companies working the area, Central Montana Resources is very much in the exploration phase, Edwards said. But if and when the wells begin producing oil, the exploration will stop and commercialization will start overnight, he said. The construction of the operations center near Roundup combined with a few key hires should tell people Central Montana Resources isn't leaving soon.

"The 'help wanted' sign is out. It's not neon flashing on the side of the building but it's out there," he said. Right now he needs men with two or three years experience optimizing well production.

"We're just very optimistic about this area," Edwards said. "I'll just leave it at that without going into too much detail."

Contact Tom Lutey at

tlutey@billingsgazette.com or 657-1288

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Follow The Billings Gazette

Popular Stories

Get weekly ads via e-mail

Featured Businesses