Sharon Dunn
Windsor Now!

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September 24, 2012
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New life to the Wattenberg could come with old formation

While oil and gas exploration companies in the past two years have literally unleashed their resources to tap the Niobrara Shale formation 7,000 feet subsurface in Weld County, it may be just the beginning.

The technology — horizontal drilling — that made it easier to tap the long-drilled Niobrara shale formation could likely be just as lucrative in other formations that continually give the Wattenberg Field new life since its discovery in 1970.

“There is tremendous talk,” said Ed Holloway, CEO of Platteville-based Synergy Resources, an oil and gas exploration company.

This year, while companies dump millions into their horizontal drilling programs of the Niobrara, they are slowly rolling out plans to horizontally drill the Codell formation, a sandstone slab about 8 to 14 feet thick about 150-200 feet below the Niobrara.

The formations are stacked on top of each other as far deep as 8,000 feet.

“All the Wattenberg players are saying that the Codell is as strong as the Niobrara and what we believe will be way more consistent than the Niobrara,” Holloway said. “Vertically, it’s a better producing zone than the Niobrara, so horizontally, it makes sense that it has better potential going forward.”

These aren’t new producers. Both formations have been drilled for 20-30 years in Weld County.

The difference is the way companies are drilling. Traditional vertical drilling tapped the easier sources of liquids below the surface; but fracturing in the last several years has made it easier for driller to extract the minerals from harder formations.

A horizontal well is drilled vertically, then cuts off at a 90-degree angle into the particular formation being drilled. It is “fractured” in several spots along the formation, extracting more liquids.

Thom Kerr, permitting manager with the Colorado Oil and Gas Conservation Commission, said he’s not yet seen a ramp-up in horizontal drilling permits for the Codell formation, which already is one of the most active vertical plays in Colorado.

Indeed, horizontal drilling is gaining ground, with horizontal permits now comprising 28 percent of all permits sought this year — most within the Niobrara.

But some companies are testing the horizontal waters with the Codell.

PDC Energy, formerly Petroleum Development Corp., drilled its first horizontal Codell well this year. Anadarko Petroleum Corp., too, tried their luck with the Codell.

“From what we’ve seen from the Codell, it’s performing as much as Niobrara,” said John Christiansen, spokesman for Anadarko. “The Wattenberg horizontal in general, we put a number somewhere in between 500 million and 1.5 billion barrels. We’re starting to see it creep more toward the higher end of that range with results we’re getting from the Codell.”

Bonanza Creek Energy Inc. in the second quarter of this year increased its horizontal drilling program to $48 million in the Wattenberg.

Officials there are paying close attention to results from some Codell wells. Of the half dozen or so wells that have been drilled within the field, producers are seeing very similar results to the Niobrara, said Pat Graham, vice president of corporate development for Bonanza Creek.

Bonanza Creek this year had planned on 92 vertical wells in the Codell and Niobrara. But early results from horizontally drilling the Codell convinced higher-ups to shift their money, Graham said.

“The original plan was to drill 24 horizontal wells in the Niobrara,” Graham said. “Part-way through the year with some of these results we’re hearing from the Codell, we actually stopped our vertical well program at 72 wells. We took that capital planned for the extra 20 and moved that to drilling more horizontal wells. Included in that augmented plan we have in place is the drilling of a Codell horizontal.”

Company brass continue to look at the Codell as preliminary, almost like they did a few years ago with the Niobrara and its early wells. It has since exploded.

“Most likely we’ll watch this well for the remainder of the year and within the 2013 budget have X number of Codell horizontals,” Graham said.

Kerr said the exploratory nature will keep things slow for now.

“It’s still relatively exploratory,” Kerr said. “They need to figure out if they’re using the right technology to make sure that it’s good. … They know the Codell produces, but the question is, does it benefit from that technology as the Niobrara does?”

Results will have to be at or better than the Niobrara on a consistent level, though. Companies have put millions into their Niobrara horizontal programs, as they cost upward of $5 million per well, about five times more expensive than vertical drilling.

But the learning curve with the Codell won’t be as steep as the Niobrara, Graham said. The Niobrara is vast, and it took a while for producers to find the high-producing spots with horizontal drilling.

The Codell formation is much more defined, Graham said.

“We’ve got a good idea where it is, and there are enough well penetrations into it, that we have a good picture of it already,” Graham said.

If anything, the Codell just extends this recent success of the Wattenberg, producers said.

It may also have to wait its turn.

There are three distinct benches within the Niobrara, and the performance has mostly been in the “B” bench.

Synergy and Bonanza Creek said there are some plans to move into the “C” bench, as well.

The Codell is about 200 feet below the C bench. But there are other formations even deeper that have produced vertically for years. They could give the Wattenberg yet another life in years to come.

“There’s one thing about the Wattenberg, it just keeps reinventing itself,” Graham said.

Since the 1970s discoveries of the Sussex of J-Sand formations, to the Codell and Niobrara discoveries in the ‘80s and ‘90s, to re-fracking existing wells in the late ‘90s to today’s horizontal drilling technologies, the field is ever-changing.

“With the B bench, we’re pretty comfortable with what we have now,” Graham said. “The C bench is right behind it and the Codell is right behind that. Every bit we produce into the system, definitely helps that final goal” of America’s energy independence.


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My Windsor Now Updated Dec 26, 2012 02:00PM Published Dec 26, 2012 02:00PM Copyright 2012 My Windsor Now. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.