With the constant clamor for land in the modern day rush of finding prolific oil plays, the next great discovery could be one test well away.
What makes today’s rush different is that companies are going back to previously tapped out conventional plays, or areas where they got some dry holes, and they’re finding new life.
“The idea is if you can apply a horizontal well and fracturing, maybe they can yield commercial production,” said Pete Stark, an oil and gas analyst with IHS in Englewood.
There’s lots of exploration, and some new sweet spots that some companies are trying out throughout the Midwest, such as Elko County, Nev., or the Utica Shale in Ohio. Also making the rounds, Stark said, are talk of discoveries in other areas of eastern Colorado and west Texas, as well as Prudhoe Bay, Alaska.
But some have stopped looking for now, said Sylvester Johnson, CEO and president of Carrizo Oil and Gas, in an earnings call with analysts in recent months:
“We have three to four people, geologists and engineers and business people, that are always looking for the next play. We also have some well-financed partners that want to invest more money in the U.S. and want some new plays. But we just haven’t found anything yet that fits the bill … and that will pay 90 percent to 100 percent of the upfront capital. We keep looking for those, but we just haven’t found anything in a year.”
The upside is that the latest “discovery,” now almost four years old, is a long way from being used up, and operators continue to unlock its mysteries.
The Niobrara Shale, which was by no means any huge discovery in this decade, has been drilled conventionally for years. The combination of hydraulic fracturing and horizontal drilling, and continued improvement in drilling and completion methods, have kept the Niobrara play “new” for some time, with expectations of lasting years if not decades.
“The Niobrara play has taken a long time,” Stark said. “It took three years for it to evolve, the learning curve to understand exactly how best to produce it, what all the potential reservoirs are, and it’s grown from still highly questionable in 2011 to now being a big-time play, with three to four possible reservoirs over much of the fairway in which the Niobrara produces.
“It’ll be much bigger than was thought to be the case, and the quality of wells is good, so the economics are excellent, it’s going to be a very big factor in Colorado.”
Lessons from the Niobrara have led companies to use similar techniques in a variety of formations surrounding it, all of which were once drilled conventionally, like the Niobrara. Companies will pay attention to getting the most bang for their buck, honing in on increasing recoveries from the tight reservoirs.
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