“Quicksilver is the company to keep an eye on. They’re more motivated and hungrier to grow their business. Unlike Shell, which seems to move at a snail’s pace because they’re so big.”
— Moffat County Commissioner Tom Mathers
The Niobrara Formation has long been a resource of interest for some of the country’s largest oil and natural gas producers.
After years of research and land plays, companies like Shell, Axia Energy and Gulfport began exploratory operations in Moffat County last spring to determine whether the Niobrara could be the site of the next major domestic oil and natural gas boom.
Quicksilver Resources, a company based in Fort Worth, Texas, also staked its claim in the region, and on Tuesday Danny Mondragon, Colorado project manager for Quicksilver, laid out for the Moffat County Commission one of the most ambitious exploration plans to date.
“Quicksilver is the company to keep an eye on,” Moffat County Commissioner Tom Mathers said after the lunch meeting. “They’re more motivated and hungrier to grow their business.
“Unlike Shell, which seems to move at a snail’s pace because they’re so big.”
Mondragon relocated to Steamboat Springs a year ago to oversee Quicksilver’s operations in Colorado, which includes major plays in both Moffat and Routt counties.
To date, Quicksilver has drilled nine exploratory wells in Moffat County and one in Routt County.
Many of those wells are currently producing oil, Mondragon said, but not quite in the volume the company had hoped for.
“We know there’s flow down there because we’re seeing the product,” Mondragon said. “But, the pressure isn’t where we need it to be to determine whether the wells we have will produce in (commercial) volume.”
To help boost production and honor its commitment to the region, Mondragon told the commissioners Quicksilver is planning to drill anywhere from eight to 15 more exploratory wells this summer and has already acquired permits to drill as many as 40 in the region.
“Our plans could include a lot more wells in the future or a lot less,” Mondragon said. “It just depends on what we find, but we’re hoping to make a long-term, viable play here.”
Although Routt County encompasses approximately half of Quicksilver’s play for Niobrara shale oil, all of its activity for 2012 is slated to take place in Moffat County.
To be closer to the action, Mondragon said Quicksilver executives made an offer to purchase an office building in Craig.
Currently, Quicksilver’s Colorado office is located in Steamboat Springs.
“We should know in the next 30 days if the offer has been accepted,” Mondragon said. “The perception is going to be that we’re running from Routt County, but that’s not true. We have way too much money invested in Routt to just walk away.”
The reason for the potential move has nothing to do with the company favoring one county over the other, Mondragon said.
However the company has reported more difficulty acquiring a permit in Routt County than it has in Moffat County.
“It’s a tourist-based economy and I believe the citizens there have a legitimate concern, but this is also pretty new to them and they’re trying to write local regulations as they go,” Mondragon said. “It’s made the process really long and difficult, so from our perspective it just makes more sense to be closer to where we are operating.”
In addition to a bold exploration plan and an office move, Mondragon said Quicksilver is also considering an expansion to its central tank battery located in Lay Creek.
A central tank battery is a facility that separates oil, natural gas and water.
Land men are currently surveying Quicksilver’s parcels to examine whether a pipeline can be constructed to connect its well sites at Stoddard, Grandbouche and K-Diamond to the Lay Creek battery.
If the pipeline is determined to be a viable option, Mondragon said the likely next step would be to construct another pipeline from Lay Creek to the distribution hub in Maybell.
“From Maybell, the product gets pumped north (to Wyoming) where it is refined and prepared for public distribution,” Mondragon said. “If it looks like a go, we’re pretty sure other operators in the area will want to tie into the system as well.”
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