Location: The Green River Basin
Oil Shale Field is located in Wyoming, Utah, and Colorado which extends on the Western side of the rocky Mountains. The main
part of the Green River Basin Formation though, is located in the southwest portion of Wyoming in the middle of cities
Evanston and Rock Springs. To the East, there is also a portion called the Washakie Basin Wyoming which is also part
of the Green River Oil Deposit.
The Utah portion of the Green River Basin Oil Shale Field is located in the Uinta
Basin which is between cities Price and Vernal.
Lastly, the Colorado portion of the Green River Basin Oil Formation
is located in the Piceance Creek Basin between cities Grand Junction and Rifle. These two cities run north of the Colorado
River.
Out of the Wyoming Oil Shale, Utah Oil Shale, and Colorado Oil Shale,
the Colorado Oil Shale is expected to hold the greatest amount of Oil from Shale. Specifically, the Piceance Creek Basin
is the hot spot for oil shale in the Green River Formation.
History & Facts: There
are many places around the world where you can find Oil Shale. The largest Oil Shale deposit though, is located right here in the United States of America. The Green River
Basin Formation is estimated to hold 1.30 - 2.0 Trillion Barrels of Oil from Oil Shale deposits. Not all of
this oil can be recovered. Estimates for recoverable Oil in the Green River Basin is around 750 Billion Barrels
of Oil from Oil Shale. Did you know that this is three times more then the total oil reserves of Saudi
Arabia? Another fact: The USA will use 20 million barrels of Oil in 2008 and that figure
will increase every year. Seventy percent of the USA's oil consumption comes from other countries and this number
will shoot to eighty-five percent by 2012. The problem; it may take 10 years for us to get production on a full commercial
scale.
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Eighty Percent of the locations that contain
oil shale in the Green River Basin are federally owned. Back in 1930 the government tagged this land as federal territory
knowing what was under the ground. They basically put this oil shale rich land away for a rainy day. Although
it is starting to drizzle with $130 oil, the real downpours, I think, will start in the next few years when Oil pushes
closer to $200 per barrel. The Bureau of Land Management ( BLM ) has been leasing out permits though.
Back in late 2006, the Bureau of Land Management in Colorado issued five oil shale leases for research projects. These
leases, which are still ongoing, grant rights to develop oil shale on 160 acre plots for ten years. These leases can
also be extended. There is estimated to have been over 3,000 wells being drilled already. Shell oil
company is actually working on an experiment called the freeze wall which creates a barrier around the drilling area under ground so nothing would be contaminated. This freeze project
started in early 2007 and will end around 2010-2012. A system will also pump out the water from
the drilling area of the Shell Oil Freeze Wall. The freeze wall zone is about the size of a football field and is located
in Rio Blanco County, Colorado. However, Shell is not allowed to develop the property, it is only for testing purposes.
.
From the IDT CEO: The reason Shell is not being allowed to develop the property that is in production
already is because they are having a problems with the environment. Part of the problem with the environmentalists has to
do with the fact that there is an aquifer. It is half way down. When you get down to the Shale Oil there is water that provides drinking water in Western Colorado. Shell is working above the aquifer; what they do is pump
out the water from below from where they are working and they freeze, they create a freeze wall so that water
cannot get in. The water, if any oil drips down, the water is not polluted with it. Once they remove the heat from the rock
and extract the oil and things have cooled down, they unfreeze the water and it goes back and everything is clean. The environmentalists
are also well concerned that what if something happens to the freeze wall and what if it doesn’t work and the water
comes in, there will be oil drops afterwards, a million concerns which I don’t really think are legitimate. I think
Shell has all sorts of extra layers of protection to ensure that that won’t happen.
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Companies with Federal
Contracts: Four companies have federal contracts
to do expletory work on that land; Chevron, Shell, IDT and OSEC. OSEC is really in Utah and they really have a contract to
do above ground retorting, which is something that’s been done for long time in places like Estonia, which just received
a huge investment from Petrobras and Mitsui and we wish them well. The real heart of getting the oil out is something called
in-situ retorting; which means heating the ground, heating the rock, that has this thing called kerogen in it. The
kerogen is converted to oil and is stored in a heater of up to 700 degrees.
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Wildlife:
The Green River Basin Area is rich in history and wildlife. The Green River Valley is home to the largest Mule Deer
Herd on the United States. You can also find Sage Grouse here which are already running low. Some say if energy companies
come in at full force, you can kiss these animals goodbye. Heavy traffic, new roads, new drilling wells, air pollution,
and contaminated water are feared for these animals not to mention the good trout they are found in the water.
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As you can see, there
are many sides to this story. Do we drill for oil in the Green River Formation area or do we try to find other ways
to get off our addiction to oil.
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Below is a list of companies that are currently exploring around the Green River Basin area. Like
I said before, not all of the Green River land is federally controlled.
- Devon Energy DVN - Devon Energy DVN is drilling in Washakie Basin in Wyoming - Moving
to the Rockies, in the Washakie Basin in Wyoming, we had four rigs running
for a good part of the quarter prior to the start of the wildlife stipulation season, and drilled a total of 34 wells during
quarter. In the second quarter we plan to drill our first horizontal well in the field. Given our track record with horizontal
drilling and the Barnett Shale in East Texas, we're eager to evaluate these results. Horizontal drilling could open up another leg of activity on Devon's
150,000 plus net acres at Washakie.
- Shell Oil Company RDS - Today, Shell is researching new technologies to remove petroleum from oil shale fields in western Colorado. The project
is known as the Mahogany Research Project. Workers drill holes into the shale, then stick electrical heaters down into
the holes. The heaters warm the rock gradually over a long period of time, causing the kerogen to be freed and rise to the
surface.
- IDT Corporation IDT - AMSO holds a Research, Development and Demonstration (RD&D) 10-year lease for 160 acres of federal government
land in North Western Colorado. AMSO’s lease is located in the heart of the oil shale rich section of the Green River
Formation. AMSO is currently the only independent lease holder in Colorado, and one of only three companies that were
awarded a lease, out of twenty applications submitted in the process. Upon a successful demonstration of
a commercially viable and environmentally sound shale oil extraction process, AMSO will have a preference right to an additional
4,960 acres of oil shale rich land, holding more than 10 billion barrels of oil. IDT is the majority shareholder in
AMSO.
- Cabot Oil & Gas COG - Cabot is soon going to test parts of the Green River Basin - Cabot also plans
to initiate in the Green River basin ,a test of Lewis shale potential and its lookout Wash field with a horizontal well to
be spud in October. If this horizontal test is successful, we will set up an additional horizontal exploitation on about 7000
acres in the field. Cabot will have a working interest of 45% to 80% or so in this 7000-acre area. Again, this is our first
horizontal effort in the Lewis shale in the Green River basin.
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Questar STR - Uinta Basin Natural Gas & Oil ( Green River Formation ) - We have now also suspended oil
directed drilling in the Uinta Basin a massive change since our last call when we told you we plan to drill at least 15 horizontal
Green River wells in the Uinta Basin in '09.
The Unita basin properties,
the big large contiguous block of 120,000 acres was originally developed back in the late 50s as an oil play. The Green River formation contains multiple stacked reservoirs that have been developed
over the years by Gulf and Chevron and then more recently by us. Over 600 million barrels of oil in place just in the Red
Wash field alone and less than 15% of that, in fact less than 12% of that has been recovered to date.
Newfield Exploration NFX - NFX is active in the Green River Formation as in the Uinta Basin in Utah where they are drilling for Oil. Our largest producing oil asset in the Rocky Mountains is Monument Butte, located in the Uinta Basin
of Utah.
Mid-Continent
Express to Improve Realized Gas Prices - Beginning late in the second quarter of 2009, Newfield's realized prices for
Mid-Continent properties are expected to improve to 80-85% of the Henry Hub Index as the Company begins to utilize firm transportation
agreements that provide guaranteed pipeline capacity at a fixed price to move this natural gas production to the Perryville,
Louisiana markets.
Monument Butte Update - Gross oil sales from Monument Butte, located in the Uinta Basin of Utah, are
currently averaging about 19,000 BOPD, up from approximately 17,000 BOPD at year-end 2008. The increased sales volumes reflect
improved demand for Black Wax crude. Differentials have narrowed recently to approximately $12 per barrel below WTI (including
transportation expense). Newfield continues to run a three-rig program in the Monument Butte field area, which covers approximately
180,000 gross acres. Substantially all of the acreage is held by production.
Anadarko Petroleum APC - Anadarko is an active driller in the Green River Basin - Pinedale - Anadarko continues to participate in an active
program with 27 rigs currently running in Pinedale area. Along with our partners, Anadarko spud 305 wells and competed 231
wells in 2008
The Bureau of Land Management issued a Record of Decision for the Pinedale Final Environmental Impact
Statement ( FEIS ) on Sept 12th, 2008 that provides for year round drilling and completion activity, which should result in
increased future activity.
EOG Resources EOG - EOG Resources is drilling in Colorado and the Uinta Basin Green River Basin - In the Colorado North Park Basin
area, due to seasonal drilling restrictions, we don't have additional results from the oil play at this time but our operations
in this area continue. Our other big resource play is the Vernal vertical Wasatch/Mesa development area in the Uinta Basin where we are running eight rigs and continue
to get excellent results. Like all Rockies producers, we are trying to assess the impact of the September Rex pipeline curtailment.
At this time we believe we can get our volumes moved but the basis differential will widen temporarily. Update: In the Uinta and Green River Basins we
expect to drill 109 wells this year ( 2009 ) versus 271 wells in 2008
AMSO Green River Formation Map
Green River Oil Shale Map
Colorado - Piceance Basin - Holds a large area of Natural
Gas. Pinedale Field:
- Delta Petroleum DPTR - Delta DPTR has been drilling for natural gas in Colorado. This definitely allows for the idea that our Piceance properties
hold well in excess of 2 trillion cubic feet equivalent of reserve potential with a corresponding opportunity to experience
substantial annual reserve growth through our increased drilling activities. I’ll also go ahead and address a
couple of comments that we saw this morning related to production growth at the Piceance Basin. The number that we have in
there today is 44 million cubic feet equivalent which is a net number for the Piceance Basin. The gross number related to
that interest is approximately 55 million cubic feet a day net.
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- Questar STR - Questar is drilling in the Rockies, at Pinedale - The third highlight from 2008 was the BLM's record of decision
in September of last year, which will allow us to optimize development of this world class asset over the next decade. There
is arguably no other E&P asset like Pinedale,
it maybe the most concentrated unconventional natural gas resource in the world stack pay across a 5,000 foot gross enabled
low risk with lower F&D cost than many other major resource play in the U.S. today.
Even at today's poor Rockies prices we earn returns on Pinedale development that are greater than our cost of capital. The Pinedale record of decision was five years in the making and it demonstrates what our industry can do; what
we can get done when we listen to public concerns and then tap the ingenuity and creativity of the people in this business
to find solutions to those concerns.
In 2009 we are shifting capital to our higher margin, higher return plays at Pinedale and the Haynesville shale. We plan to run nine rigs at Pinedale in '09,
that's unchanged from our October plan; with that level of activity we expect to drill and complete 93 to 95 wells at
Pinedale day in '09 as discussed in our last
call, Questar E&P has suspended all other gas directed drilling in the Rockies. STR also drilled a Pinedale
well in record time, 18 days for a Horizontal well.
Nobel Energy NBL - Nobel Energy ( NBL ) is active in the Rockies Piceance Basin - Piceance Basin— The Piceance
basin in western Colorado (approximately 96 percent operated working interest) is another rapidly growing area for Noble Energy.
During 2007, the Company added 10,500 net acres, increasing its position to nearly 19,000 net acres. Operational plans are
to drill over 100 wells during 2008, with an estimated exit rate for production of approximately 60 million cubic feet per
day, net. Efficiencies in drilling continue to evolve in the play, and the Company has begun utilizing ‘Fit For Purpose’
rigs in the basin that are capable of drilling up to 18 wells per pad, with simultaneous drilling and completion activities.
Update - Onshore in the US we have been careful in moving capital around. When you look at the Rockies, Wattenberg is
a solid asset and very low cost with a good balance of both liquids as well as natural gas, and we are also continuing to
get our costs down there. In the Piceance and Tri-State areas, we have pulled rigs down in response to the market. Our acreage
there is well positioned, was acquired at very low cost, and it isn't going anywhere. So we will be back in the market
looks more in our favor.
Ultra Petroleum UPL - Ultra's operated Pinedale wells averaged
8.5 million cubic feet per day while the non-operated wells averaged 6.8 million cubic feet per day. The high for the year
was from the Ultra operated Riverside 3B-13D, which flowed at 17.6 million cubic feet per day. At year end 2008, there were
14 Ultra operated rigs drilling in Pinedale and
a total of 11 non-operated rigs also active on Ultra interest lands. Delineation drilling remains important to our confirmation
of the true size of the Pinedale field with our
current estimates of original gas in place for Pinedale
now at 58.7 Tcf and the increase in the estimate of recoverable natural gas reserves and production net to Ultra increasing
each year. Thus far in 2009, we have completed six delineation wells with post drill results at 100% increase over pre-drill
estimates. We plan to complete a total of at least 16 delineation wells in Pinedale in 2009.
