Star-Tribune Editorial Board |
Posted: Monday, March 22, 2010 12:00 am
The oil industry is once again excited about a potential oil boom in eastern Wyoming, which is great news for the entire state -- especially in the wake of gloomy prospects for the industry during the past year.
Several companies have had successful horizontal pilot wells in the Frontier and Niobrara formations recently. These include Oklahoma-based Chesapeake Energy, which reported impressive yields from its well near the North Platte River west of Douglas, and EOG Resources Inc., just south of the Wyoming-Colorado border near Cheyenne.
These formations have historically produced marginal results because they were technically unrecoverable, but local geologists explained new drilling and completion technologies may hold the key for the potential oil play. The technologies have unlocked huge shale gas reserves in several states, including Montana and North Dakota.
Another positive sign of the industry's interest in the region came earlier this month when Chesapeake Energy told the Wyoming Oil and Gas Conservation Commission that it intends to launch an intensive drilling program in 2010 that will likely include setting up a shop in Casper that would spend up to $10 million per month.
"Chesapeake was very upbeat about coming to Wyoming," WOGCC Supervisor Tom Doll told the Star-Tribune's energy reporter, Dustin Bleizeffer. "They said they were looking for real estate in the Casper area. That would mean their people would be living in Converse and Natrona counties, and we'd be seeing a long-term commitment."
Doll also said two of Wyoming's poorest counties, Goshen and Platte, could experience some significant drilling activity for the first time in decades.
The supervisor reported that Chesapeake, the most active driller in the nation with 120 operated rigs, has acquired about 600,000 lease acres in the Powder River Basin and expects to drill 16 new wells per year.
EOG Resources, meanwhile, has filed "notice of staking" at the Bureau of Land Management's Buffalo Field Office for about 33 potential oil wells in the southern part of the basin. The BLM Casper Field Office has a total of 16 pending applications for permits to drill from nine different companies.
The news couldn't come at a better time. The state's mining sector, including oil and gas, lost about 5,800 jobs between December 2008 and December 2009. Hopefully, some of these people will be put back to work in eastern Wyoming.
The interest shown by oil companies confirms the industry's confidence in what energy analysts have been saying recently: national oil prices are expected to average more than $80 a barrel through 2011, then average $85 per barrel in 2011. Such pricing consistency is necessary for energy companies to commit to large investments.
After decades of decline, Wyoming's oil production began to turn around in 2005 with the help of several carbon dioxide flooding projects. Lon Whitman of the University of Wyoming's Enhanced Oil Recovery Institute told Bleizeffer that "there continues to be very high interest in CO2 oil flooding in Wyoming, even more than before."
Another plus for Wyoming is the fact that much of the mineral leasing activity is targeting private mineral estate, so operators can avoid lengthy federal environmental permitting requirements.
Geologist Jimmy Goolsby credited the new drilling and completion technologies that have "changed the world." We're glad to see the indications that they have great potential to significantly change Wyoming's economy, too.
Source: http://www.trib.com/news/opinion/editorial/article_164bc245-0778-51f0-b3de-33d34d846c6e.html
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