Companies gear up for summer oil exploration
April 22, 2011
Moffat County Commissioner Audrey Danner considers it the commission's job to pay attention to the future of energy development and the extraction industry in the county.
That's why Danner said she and the rest of the commission are keeping an eye on developing interest from oil companies in drilling a local portion of a geological layer known for its oil called the Niobrara formation.
"This opportunity of increased energy development and extraction is part of our economy," she said. "I want to support it as long as those companies are respectful of the rules and work within our community as good corporate citizens."
So far, four primary companies have stepped up and shown interest in the area's resources, Moffat County Natural Resources Director Jeff Comstock said.
Those companies include Shell, Quicksilver Resources, Gulfport Energy and Axia Energy, he said.
"Those (companies) certainly have dominated the lease buying market in this area over the last six months," he said.
There has been eight applications filed with the state to drill in the Niobrara formation, Comstock said, noting the applications would likely be for exploratory wells.
Shell has two of those pending permits and Quicksilver has one pending and three approved permits, he said.
"It is very consistent with what we would have expected when it comes to test wells," Comstock said. "There are various depths and locations that the permits show they will be testing."
Two other permits have also been issued in Routt County in the Niobrara, one of which is located close to the Moffat County border, Comstock said.
Rick Buterbaugh, vice president of investor relations for Quicksilver, said the company has leased more than 150,000 acres of minerals and is still looking to expand.
"We think that acreage is prospective for both oil and gas resources out of the Niobrara formation, primarily," he said. "We expect to begin our initial exploratory tests on the oil side of that later this year."
Buterbaugh said his company plans to drill six vertical exploratory wells in Moffat and Routt counties, the first of which would begin at the end of May.
"With success on that, with the large acreage position that we have, we think this could be a significant opportunity for Quicksilver," he said. "We have already established an initial preliminary office in the area, which could be expanded with ongoing success there."
Buterbaugh said even though the company is starting the exploratory phase of drilling, officials are "very encouraged by the geology we've seen to date."
"Obviously, we think the prospectivity of it certainly warrants those tests," he said.
Carolyn Tucker, Shell community relations representative, said the company plans to drill between seven and 12 exploratory wells starting this summer. The company, she said, is in the process of prioritizing its well orientations and locations, although plans are still "in flux."
Those wells could be a combination of vertical and horizontal wells "depending on what the subsurface dictates," she said.
"We're looking for the best access case so it really depends on what that geology says," Tucker said.
Tucker said Shell has a good understanding of the area's resources due to its acquisition of East Resources, an established oil company that operated in the county for several years.
"(They) did have success producing oil in that area, plus there has been energy development in Moffat County for over 50 years," she said. "So, there's been success in the county, so what we're trying to do is assess what we call the potential reservoir by exploring and drilling wells so we get a snapshot."
However, Tucker said the future of large-scale oil production in the area depends on what the company finds in its test wells.
"It's not a given," she said. "It's something we are really deliberate and cautious about doing our homework on to make sure that this is something that is a viable, long-term play and we don't know that until we do the exploration activity and a lot of analysis at the other side."
However, Shell is compiling a list of local and regional contractors to accommodate production if it is warranted, she said.
Tucker is also hoping to schedule some informational meetings with residents and organizations as Shell's plans become more concrete, she said.
"We'll start with hopefully some (Craig) Chamber (of Commerce) presentations and then roll up into a community open house once we have got a little bit more of those plans finalized," she said. "I've been having some other conversations with some local folks and it's looking pretty good."
Commissioner Tom Gray said he has heard several residents and business owners ask about the status of exploratory drilling, but said most have a "wait and see" attitude.
"I haven't heard anything new that it will be more than just the exploratory phase to see what we've got," he said. "But, you've got to believe there are really good prospects."
Gray said he is ready for the summer to come, as are many residents who are "pinning hopes on that and seeing some light in the distance that we can wait and see what it is when it gets closer."