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.
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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.
Uinta
Basin - Monument Butte Field Area - Gross oil production from the Monument Butte field area reached record
production of 19,900 BOPD in April 2010. This compares to year-end 2009 gross production of about 17,000 BOPD. With improved
well performance, a re-allocation of rigs within the field and an increase in the number of development wells planned for
2010, Newfield now expects that its Monument Butte production will grow more than 20% in 2010 (previous guidance, issued
in Feb. 2010, was for 15% growth). The Company has firm sales agreements in place on 100% of 2010's estimated oil volumes
and approximately 85% of 2011's estimated oil volumes.
The increased oil production guidance results from drilling
efficiencies and higher initial production rates from recent wells. Newfield drilling personnel continue to optimize performance
and recently set a drilling record (rig-release to rig-release) of 3.5 days. This compares to a 2009 average of 5.5 days and
an average of approximately 6.5 days when Newfield acquired the field in 2004. Our year-to-date performance is 4.5 days. Due
to these efficiency gains, the Company has increased its planned number of development wells in 2010 to more than 350 wells,
up from 275 at the beginning of the year. The increased number of planned development wells will have a significant impact
on 2011 oil volumes from Monument Butte. Field production is expected to exit 2010 at approximately 25,000 BOPD gross.
Newfield
added two operated rigs in the field in late 2009 and is today running five rigs. The Monument Butte field area covers approximately
180,000 net acres. Based on the continued strength in demand for Black Wax crude, Newfield may continue to add additional
rigs in the field.
Newfield has drilled more than 125 wells to date on the Ute Tribal acreage, an area covering 63,000
net acres north and adjacent to Monument Butte. The results continue to exceed expectations. Newfield has drilled significant
step out wells throughout the acreage and estimates that more than 1,000 development locations exist on the acreage at 40-acre
spacing. Newfield's working interest on the Ute Tribal acreage is approximately 70%.
In total, Newfield estimates that
approximately 4,700 development drilling locations remain in the Monument Butte field area. There are more than 1,350 producing
wells in the Monument Butte field where development drilling is currently underway on 20-acre spacing.
Samson Oil & Gas (SSN) - Jonah Field - Samson 21% Working Interest in 240 acres - The Jonah Field is located in the northern part of the Green River Basin and is one of
the largest discoveries in recent decades in continental USA and has produced in excess of 1.0 trillion cubic feet of gas
since production commenced in 1992. Development of this field has resulted from the application of advanced fracture stimulation
techniques. The field has undergone several iterations of development with some sections of the field currently being developed
on a 10 acre well spacing. The current well spacing is around 20 acres.
The field produces from a series of
stacked reservoirs within the Cretaceous Mesaverde and Lance Formations. The field is trapped between two faults forming a
wedge shaped field. Average production from the field during the quarter was at a gross rate of 2.51 Mmcfg/d. This was
slightly lower than the previous quarter because a new compressor was installed between March 9th and the 21st which
ceased production for 12 days. The new compressor will have a lower suction pressure that should deliver a higher stabilized
production rate
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
West Tavaputs - Current net production is approximately 67 MMcfe/d, consistent with the first quarter
average. The Company has drilled its 11-well 2010 program for the area. In order to best manage its contractual obligations
for CO2, completion of certain wells was deferred, and the Company expects to complete ten wells during the second and third
quarters of 2010.
The Company continues to work closely with the environmental community and the BLM with regards to
development of West Tavaputs. In addition to the programmatic agreement signed in January, the BLM recently sent the Preliminary
Final Environmental Impact Statement to agencies that cooperated in preparation of the analysis. This step is precedent to
issuance of a Record of Decision. The Company is anticipating a positive decision that will enable commencement of development
operations in 2010. The West Tavaputs program offers growth in the shallow Mesaverde and Wasatch zones as well as upside opportunity
through the Mancos shale and deep formations.
At March 31, 2010, the Company had an approximate 96% working interest
in production from 176 gross wells in its West Tavaputs shallow and deep programs.
Blacktail Ridge/Lake Canyon - Current
net production is approximately 1,200 barrels of oil equivalent per day ("Boe/d") from 14 wells, up significantly
from the first quarter average of 827 Boe/d. While production for the first quarter of 2010 was up 66% compared with the prior
year period, it was negatively affected by two wells that encountered mechanical issues during completion. The Company has
recently expanded its 2010 drilling program for the area to include six additional wells, increasing the program to participation
in up to 22 wells. The working interests in this area range from 19% to 100%.
A second project has also been pursued
in the Bar F exploration well. After completion of the initial testing program on the Mesaverde deep gas as described above,
we moved uphole in the same well to test multiple oil bearing intervals at depths from 8,200 feet to 9,500 feet in the Lower
Green River and Upper Wasatch formations. Operational activities during the three months ended March 31, 2010 included preparing
the well for the oil zone tests, hydraulic fracturing of six separate oil bearing intervals, and conducting flow testing of
the fractured intervals. Results of the testing have been positive and we believe the results indicate that we have made a
commercial oil discovery in the Lower Green River and Upper Wasatch formations. The well has been flowing naturally on extended
test since March 24, 2010, with initial rates of approximately 900 BOPD of 42 degree API oil. As of April 30, 2010, the well
had produced in excess of 18,000 gross barrels of oil since the commencement of the flow test, with the oil being sold in
the Salt Lake City, Utah market. Work is currently in progress to design and install permanent production facilities to enable
the well to be placed on permanent production during the second quarter of 2010.
Our Board of Directors has authorized
a five-well Lower Green River/Upper Wasatch delineation and development drilling program (Lower Green River/Upper Wasatch)
which is planned to take place beginning in the third quarter of 2010 at a capital cost of $13.5 million (net to Harvest).
This five-well program would further delineate and appraise the extent of the Lower Green River/Upper Wasatch discovery made
in the Bar F, and is also expected to establish additional production from the Lower Green River/Upper Wasatch reservoirs
in at least some of the five appraisal wells. The Lower Green River and Upper Wasatch formations are productive in the Altamont/Bluebell
oil field approximately six miles north of the Bar F well. During the three months ended March 31, 2010, we incurred $2.0
million in lease acquisition, drilling, completion and testing activities. We plan to develop an estimate of reserves accessed
by the Bar F well during second quarter of 2010, incorporating the results of the flow testing and initial phases of permanent
production operation of the well.
Monument Butte Extension Appraisal and Development Project
The Monument
Butte Extension Appraisal and Development Project (Monument Butte Extension) was initiated with an eight-well appraisal and
development drilling program to produce oil and natural gas from the Green River formation on the southern portion of our
Antelope land position. The Monument Butte Extension is non-operated and we hold a 43 percent working interest in the initial
eight wells. The parties participating in the wells formed a 320 acre AMI which contained the initial eight drilling locations.
Operational activities during the three months ended March 31, 2010 on the Monument Butte Extension focused on drilling and
completion activities on the original eight-well program. As of March 31, 2010, all eight wells have been drilled. As of April
30, 2010, seven of the eight wells are currently on production. The remaining well has been completed and production is pending
expansion of the fluid handling capacity in the surface production system to accommodate the unexpectedly high fluid production
volumes from the eight-well program. As of April 30, 2010, the seven producing wells have produced 52,000 barrels of oil (net
to Harvest). The seven wells combined are currently producing 400 BOPD (net to Harvest). During the three months ended March
31, 2010, we incurred $2.4 million in well costs. There is no remaining 2010 budget for the initial eight-well program.
Our
Board of Directors has authorized five additional Monument Butte Extension appraisal and development wells planned to be drilled
beginning in the third quarter of 2010. The estimated gross drilling and completion cost per well is $0.9 million, and Harvest
will have an approximate 32 percent working interest in the five wells. This five-well expansion program is a follow up to
the successful completion of the initial eight-well program that was drilled in late 2009 and early 2010. The expansion is
planned to occur on acreage immediately adjacent to the initial eight-well program. The 2010 budget for this five well program
is $4.5 million (gross).
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 - Wyoming - Operational Highlights - Ultra's Pinedale drilling campaign continues to be enhanced
through increased efficiency gains, evidenced in part by record drilling performance. In the first quarter, Ultra drilled
45 gross (20 net) wells. On an operated basis, Ultra set a new all-time record averaging 15.6 days per well spud to total
depth (TD), which compares to an average of 22.7 days in the first quarter of 2009 and is a 31 percent improvement over the
prior year period. Further, Ultra recently set a new Pinedale record in drilling time reaching 13,500 feet in 10.25 days as
compared to the previous record of 10.75 days. In addition, 92 percent of the wells drilled in the first quarter reached TD
in 20 days or less while 53 percent were drilled in less than 15 days. Total days per well, as measured by rig-release to
rig-release averaged 19.7 days for the first quarter, a decrease of 36 percent over the first quarter of 2009. Total rig days,
which sums the number of days Ultra-operated rigs were employed in Pinedale during the first quarter was 749, as compared
to 1,101 days over the same period a year ago. Remarkably, Ultra drilled 6 percent more wells in the first quarter 2010, while
the number of rig days decreased by 32 percent. These significant improvements in operating efficiencies translate into continued
cost reductions. Ultra's completed well costs averaged $4.8 million for the first quarter of 2010, as compared to $5.0 million
for the first quarter of 2009.
Gibson Gulch - Current net production is approximately 122 million cubic feet equivalent per
day (MMcfe/d), up from the first quarter average of 109 MMcfe/d. During the first quarter of 2010, production was negatively
affected by mechanical issues at third party gathering and processing facilities that required shutting in a portion of production.
These facilities are now operating at full capacity. First quarter results benefitted from the Company's processing election
for the majority of its Gibson Gulch natural gas production, which exposes the Company to NGL pricing. This added approximately
$0.59 per Mcf to the Company-wide realized price. The future profitability of this election will depend on future NGL pricing.
Given the benefits of continued drilling efficiencies and NGL price realizations, the Company now plans to drill between 130
to 140 wells in the area during 2010, with most of the permits already in place. The Company plans to retain three rigs through
August 2010 and to add 20 MMcf/d of compression capacity during the second quarter. Gibson Gulch operations exemplify our
Rocky Mountain expertise and offer strong margins due to low operating costs and the currently higher revenues related to
liquids. The program continues to be a key, lower risk development area for the Company and offers flexibility to adjust the
number of active rigs dependent upon the Company's capital strategy.
At March 31, 2010, the Company had an approximate
97% working interest in production from 574 gross wells in its Gibson Gulch program.
Cottonwood Gulch - In June 2009,
the Company acquired a 90% working interest in 40,300 undeveloped acres in Cottonwood Gulch. The Company continues to participate
in the mediation process concerning a lawsuit by environmental groups challenging the leases. The property has a signed Record
of Decision for an Environmental Impact Statement and Resource Management Plan in effect with the Bureau of Land Management.
