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Niobrara: the next big shale play

Potential of between 500 million and 1.5 billion barrels of oil equivalent unconventionals

The liquids-rich Niobrara Shale may prove as prolific as the Bakken and Eagle Ford, if Anadarko’s estimates for its Wattenberg field’s unconventional potential are proved up.

The US independent said earlier this week that initial results from its Horizontal Niobrara and Codell drilling programme at Wattenberg – a conventional gasfield in Colorado’s Denver-Julesberg basin, which sits over part of the Niobrara Shale – indicate the field could hold between 500 million and 1.5 billion barrels of oil equivalent (boe) in unconventional resources.

So far, Anadarko has drilled 11 horizontal wells into the Niobrara at Wattenberg, with each showing strong initial flow rates and liquids yields of around 70%. Anadarko holds interests in more than 350,000 net acres at Wattenberg and operates more than 5,200 wells.

“Our activity, which has primarily targeted the Niobrara formation within the Wattenberg field boundaries, has achieved high liquids yields and excellent well performance with average initial production rates of about 800 boe/d,” said Chuck Meloy, senior vice-president for worldwide operations. Ultimate recovery for each well is estimated at between 300,000 and 600,000 boe.

Significant cash-flow generator

Anadarko plans to drill between 1,200 and 2,700 horizontal wells across Wattenberg. This year, it will drill 40 wells, with 160 planned for 2012. Each well costs between $4 million and $5 million, but Meloy said the field will “quickly become a self-funding, significant cash-flow generator”.

Earlier, the firm said it expects its production from the region to increase at a compound annual rate of 20% between 2010 and 2012. It produced about 72,400 boe from Wattenberg in the last quarter. Anadarko also has holdings in the Wyoming sector of the shale play, taking its total position in the Niobrara to about 1.2 million acres.

Earlier this month, Anadarko chief executive James Hackett said he believed recent breakthroughs in unconventional technology could see North American oil output double over the next 25 years. "The resource is there and the technology is there," he said, but warned that growing anti-drilling sentiment could stymie expansion.

The use of hydraulic fracturing, in particular, has prompted concerns about pollution and groundwater contamination. The federal government and several states are studying whether new regulations on water usage and air emissions are needed.

Noble plans

Earlier this year, fellow independent Noble Energy also stepped up its activity in the Wattenberg sector of the Niobrara. In July, it announced plans to drill 85 horizontal wells across its 400,000 net acres. Noble’s mid-year estimates for its Niobrara resource base was 600 million boe, from which it was producing about 10,000 boe/d.

The Wattenberg field was discovered in 1970 and, according to US Energy Information Administration data, by 2007 it had produced about 4 trillion cubic feet of conventional gas. It is one of the US’ largest onshore gasfields.

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