Subscribe for 17¢ / day

WHEATLAND, Wyo. — Representatives of two energy companies drilling into the Niobrara Shale in southeast Wyoming say they’re optimistic about the emerging oil play, where growing numbers of rigs are generating productive wells.

Wells drilled by Chesapeake Energy Corp. and others have shown an initial production of the equivalent of 500 to 1,700 barrels of oil per day, said John Dill, a Chesapeake spokesman. Dill estimated an ultimate recovery total of more than 500,000 barrels of oil equivalent per well.

“If it plays out, it’s going to take us a very long time to develop this field. It’s not a flash in the pan,” Dill said.

Oklahoma City-based Chesapeake has four drilling rigs in Wyoming, with three in Converse County and one in Goshen County, Dill said. Houston-based Noble Energy Inc. has eight drilling rigs in the state, with seven in Laramie County and one in Goshen County, said company spokesman John Schwarz.

Dill and Schwarz spoke before attendees of the Southeast Wyoming Resource Conservation and Development Council conference in Wheatland on Thursday regarding energy development in the state’s southeast corner.

Noble, which is active in the Colorado portion of the Niobrara Shale, has experienced positive results there and is optimistic about discoveries in the “exploratory play” of the Niobrara Shale in Wyoming, Schwarz said.

“We’re working to transfer some of the successes there into the north,” he said.

Chesapeake’s exploration in the Niobrara Shale is now largely funded by China’s state-owned China National Offshore Oil Co. through a $1.3 billion deal made this year. The company has planned an aggressive drilling schedule, Dill said.

Chesapeake plans to boost the number of drilling rigs in the state to 10 by the end of this year, double that number by the end of 2012 and have 40 by 2014.

The Niobrara Shale in Wyoming is still under exploration, and industry representatives generally agree it’s too early to tell if the play will prove worthy of the hype.

Houston-based EOG Resources Inc., one of the other companies deeply involved in the Niobrara play, sparked excitement about the formation with the success of its Jake 2-01H well in Colorado’s Weld County in early 2010. The well initially produced an average of 1,558 barrels of oil per day before slowing down to an average of 555 a day over the next three months.

But not everyone has found success in the Niobrara. State College, Pa.-based Rex Energy Corp., which is active in Colorado and Wyoming, announced in March that one of the wells drilled into the Niobrara from Wyoming’s Silo Field was completed but wasn’t producing at a level worth commercial production.

Analysts have estimated that the Niobrara formation might contain 2 billion barrels of oil — liquid energy that grows in value as oil prices climb.

While the Niobrara play is promising, it will take more drilled wells to get a better picture of its worth, said Tom Doll, superintendent of the Wyoming Oil and Gas Conservation Commission, in a Monday panel discussion in Douglas.

Since the beginning of the year, the commission granted 93 horizontal drilling permits in Laramie, Platte and Goshen counties. Operators have drilled 23 wells and completed 17 of them, so there are plenty of drilling permits that have yet to be used.

“We just haven’t drilled enough wells,” Doll said. “I think it’ll take several hundred more wells to know if this is a world-class play.”