CASPER, Wyo. — The Niobrara shale formation is the proverbial rock star of Wyoming oil production.
No rock formation in the state has received more attention in recent years than the Niobrara for its potentially vast reserves of hydrocarbons.
And it is true that production from the Niobrara has grown, even if it is less than what was initially expected when the formation started receiving attention around the beginning of the decade.
Wyoming Oil and Gas Conservation Commission data shows that Niobrara oil production increased from 365,000 barrels in 2010 to 3.5 million barrels last year, seventh-most of any formation in the state.
But if the Niobrara is the lead singer of Wyoming’s band of oil-producing rock, the Codell and Sussex formations are the bassist and drummer, steadily lifting the state up the charts from their positions in the background.
When Chesapeake Energy announced it was making a 440,000 acre land swap with RKI Exploration and Production this week, trading property in the northern half of the Powder River Basin for land in the south, the company touted the success of one of its recently drilled Sussex wells.
In 150 days, the well had produced the equivalent of 232,000 barrels of oil, or around 1,500 barrels of oil per day.
“It’s a huge number,” said Jimmy Goolsby, a geologist at the Casper-based firm Goolsby, Finley and Associates. “To their stockholders, (they’re saying) we have just increased our potential in this basin significantly for oil.”
The Sussex has long been a staple of Wyoming oil production. It is the formation that companies drilled in the Hornbuckle Field near Casper in 1984 and the House Creek Field near Gillette in 1968.
But those wells were vertical. Today’s wells are drilled horizontally, sometimes extending as far as 9,600 feet. The total area of the Sussex identified by Chesapeake for its production potential in the southern Powder River Basin is 5 miles wide by 20 miles long, or 100 square miles.
“What they are establishing here is a whole new trend for the Sussex,” Goolsby said. “It may just be a complete linking of multiple fields.”
Farther to the south, in Laramie County, the Codell formation is driving much of today’s oil production. So far this year, the formation has produced 637,000 barrels statewide, more than it did in all of 2013, when output from the formation was slightly above 420,000 barrels.
Those figures lag far behind output from the legacy formations like the Lance and Tensleep, which regularly produce in excess of 5 million barrels annually in Wyoming. But they are a far cry from the production of 2010, when the Codell accounted for just 34 barrels of oil statewide.
The Codell has also usurped the Niobrara as the most productive formation in the Denver-Cheyenne Basin. In the first half of 2014, the Codell has produced 326,000 barrels to the Niobrara’s 278,000 barrels in the basin.
More oil could soon be flowing from the Codell’s sandstone.
Anadarko Petroleum, in partnership with EOG Resources, announced Wednesday that it had drilled 30 test wells in the Codell and Niobrara in 2014. The companies have plans to drill 40 more by year’s end.
Initial results suggest that the wells will be “extraordinarily economic,” comparable to what Anadarko has seen in Colorado’s Wattenberg Field, where production has skyrocketed in recent years, Chuck Meloy, an Anadarko executive, told financial analysts in a conference call this week announcing the company’s second quarter earnings.
“We’ve got some nice rates. They seem to be holding up,” Meloy said, though he cautioned that it is still too early for firm projections on the wells’ economics.
In some instances, formations like the Niobrara and Sussex are stacked on top of each other. Chesapeake CEO Doug Lawler touted the layered manner in which the Niobrara, Sussex and Frontier of Mowry formations all are stacked in the Powder River Basin.
The Frontier, in particular, has been one of the stories in this recent increase in Wyoming oil production. Output from the formation increased almost 1.4 million barrels in 2010 to nearly 2.2 million barrels in 2013.
The combination of those formations means the Powder River Basin has the potential “to be a major oil growth engine for the company,” Lawler said in a release announcing Chesapeake’s recent land swap in the region.
It also makes it easier for oil companies to drill, said Goolsby, the geologist. Today, a company needs only one well pad for multiple wells targeting multiple formations, he noted. That lowers production costs and limits surface disturbances.
He then sounded a cautious note.
“I’ll tell you what it depends on, though: oil prices. This is expensive to do. There is a price. I can’t tell you what, where this can’t be done profitably,” Goolsby said. “New technology is making this possible, but the best new technology is high oil prices.”