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.
Anadarko Petroleum APC - Anadarko Petroleum (APC) is an active driller in the
Green River Basin - Greater Natural Buttes: Sales volumes for the quarter increased by 16% over the 2nd quarter of 2010 and
by 12% over the 1st quarter of 2011. During the quarter, Anadarko achieved a single-day record of 507 MMcf/d of gross production.
Anadarko operated seven rigs and drilled 67 wells during the quarter. The deepening of new wells to the Blackhawk interval continues to enhance the economics of the field with incremental
development costs of about $0.45 per thousand cubic feet equivalent (Mcfe). During the quarter, 11 wells were deepened and
completed in the Blackhawk interval. The company initiated construction on a major plant expansion designed to increase
Anadarko’s cryogenic processing capacity to 500 MMcf/d from its current capacity of 250 MMcf/d. A large-scale
water gathering system has been put in place that is expected to reduce lease operating expenses by about $4 million annually
and reduce truck traffic by more than 73,000 miles per year. The U.S. Department of the Interior recently recognized
Anadarko for working cooperatively with BLM and EPA leadership during the process of drafting an environmental impact statement.
This was a significant step forward in the infill development of this area, which offers tremendous resource potential with
more than 6,000 identified drill sites and sustained economic growth for the region.
GREATER GREEN RIVER BASIN - The company has participated in 185
wells in the Pinedale field during 2011, with 10 non-operated rigs currently running.
Map of Green River Formation - Oil Shale
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 100 million cubic feet equivalent per day (“MMcfe/d”).
The Company continues to successfully execute its development program in the area and is on track for its approximate 100-well
program for 2011. Due to increased drilling efficiencies and better than expected well performance at certain wells, production
increased faster than anticipated, and the Company is currently installing a loop line and additional compression capacity.
New capacity will be in place in the first quarter of 2012 that will support future production. West Tavaputs is one of the
Company’s largest development assets based on its current reserve base of 345 Bcfe proved and 1.3 Tcfe proved, probable
and possible reserves (see “Reserve Disclosure” below), providing a multi-year, high growth program for the Company.
At September 30, 2011, the Company had an approximate 97% working interest in production
from 235 gross wells in its West Tavaputs shallow and deep programs. The West Tavaputs development program primarily targets
the shallow Mesaverde and Wasatch zones. Upside potential is also recognized in the shallow
Green River oil zones and deeper formations including the Mancos.
Uinta Oil Program (Blacktail Ridge, Lake Canyon and East Bluebell) – Current net production
is approximately 4,400 Boe/d. The Company added a third rig to the area in early October 2011.
This area offers upside potential through horizontal drilling, increased density and field extension.
During the third
quarter of 2011, the Company continued horizontal drilling into the Uteland Butte formation (working interest 55.8% for first
four wells). The third well was completed in the Uteland Butte at approximately 5,850’ with a 3,400’ lateral and
15 fracture stimulation stages and flowed and pumped an average 707 Boe/d over the first 30 days of production with a peak
24-hour IP rate of 1,330 Boe/d. The fourth well was completed to approximately 5,900’ with a 3,200’ lateral and
15 fracture stimulation stages and had a peak IP rate of 863 Boe/d during the 21 days it has been on production. The Company
intends to drill a total of seven horizontal wells targeting the Uteland Butte formation by year-end. The Company expects
to sizably increase its well inventory at the Uinta Oil Program with continued success in both its vertical and horizontal
drilling plans.
The Company also completed a vertical test well into the Mahogany formation to 5,500’ with 245’
of core. Core tests in the Mahogany formation were positive and the well is recovering oil. The Company is currently permitting
for two additional vertical test wells it expects to drill in mid-2012.
At September 30, 2011,
the Company had an approximate 68% working interest in production from 105 gross wells in the combined area. The working interests
in this area range from 19% to 100%.
Berry Petroleum (BRY) - Berry Petroleum (BRY) Uinta Basin - Green River Formation - Uinta Basin Update - In Utah, we have a total of four Uteland Butte horizontal wells. The average initial
production rates of these wells are in line with our expectations. We will add five more Uteland horizontals in the fourth
quarter including our first operated well which recently came online. The Company also completed six Wasatch vertical wells
in the quarter with initial production averaging 100 BOE/D. We will add 12 additional Wasatch wells in the fourth quarter
including two delineation wells which will improve our understanding of the productivity and the extent of the Wasatch potential
on our approximate 200,000 gross acre position."
Samson Oil & Gas (SSN) - Lookout Wash Field - Samson 18.2% Working Interest - The Lookout
Wash Field is currently producing from 20 wells and is located in the Washakie Basin, which is also part of the Greater Green
River Basin. This field produces principally from a stratigraphic trap of the Cretaceous Almond Bar sandstone. Geologic mapping
has suggested that this unit can be developed further as a thick porous reservoir extends to the north of the existing well
development. Eight new probable well locations have been determined as a result of this new mapping; however only four are
carried on the Ryder Scott reserves report. Average production during this quarter was down slightly from last quarter
at a gross rate of 3.6 MMcf/D.
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 this quarter was at a gross rate of 2.1 MMcf/D. The rate is declining in line with the reserve
production forecast.
Newfield Exploration NFX - Newfield Exploration NFX is active in the Green River Formation, specifically in the Uinta Basin - Newfield has approximately
250,000 net acres in the Uinta Basin, where gross production recently reached a high of 24,500 BOPD.
The Company recently
completed several additional Wasatch wells in the Central Basin, an area located immediately north of its Monument Butte field.
Notable completions include the Lamb 1-19-3-1W, which had 24-hour gross initial production of 1,168 BOEPD and a 30-day gross
average of 617 BOEPD, the Padilla 1-18-3-2W, which had 24-hour gross initial production of 1,102 BOEPD and the Miles 15-8-3-2,
which had 24-hour gross initial production of approximately 850 BOEPD. A recent "best in class" deep Wasatch well
was drilled and cased in 13 days from spud to rig release. The Company plans to complete five additional Wasatch wells in
the fourth quarter.
Newfield has drilled seven horizontal wells in the Uteland Butte to date and four additional wells
are planned before year end. Initial gross 24-hour production rates from the first six wells averaged approximately 500 BOEPD.
The 14-14T well has averaged more than 200 BOEPD (gross) over its first four months of production.
With the ongoing
optimization of the drilling campaign, the Company expects to increase its operated rig count from an average historical five-rig
program to at least eight rigs in 2012. As a result, oil production growth from the region is expected to increase more than
25% in 2012 over 2011.
Quiksilver Resources KWK - Quicksilver has added approximately 145,000 gross (77,000 net) acres to its existing acreage holdings in the Greater Green
River Basin of northern Colorado and southern Wyoming. The company now has approximately 140,000 net acres in the basin, which
it believes to be prospective for both oil and natural gas in the Niobrara formation. The company anticipates drilling two
exploratory wells on this acreage in 2011.
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 Petroleum - During
the first quarter 2011, Ultra Petroleum participated in drilling 59 gross (32 net) Lance wells. To date, Ultra and its partners
have drilled 1,512 gross wells across the Anticline since 1999. There are more than 5,000 wells remaining to be drilled in
the field. The total number of rig-days Ultra-operated rigs were active in Pinedale during
the first quarter decreased to 695, compared to 749 during the same period in 2010. This metric is meaningful considering
the company drilled 11 percent more operated wells in the first quarter with 7 percent fewer rig-days.
For the first quarter
of 2011, Ultra and its partners brought on production 57 gross (35 net) wells. The average initial production rate for these
wells was 6.8 million cubic feet (MMcf) per day.
Ultra continues to improve upon previous records set in number of
days to drill. The number of days to drill an Ultra-operated well, measured by spud to total depth (TD), averaged less than
13 days during the first quarter. This record low for Ultra compares to an earlier milestone in the first quarter of 2010
of 16 days per well spud to TD, a 19 percent improvement. During the first quarter on a year-over-year basis, Ultra nearly
doubled the number of wells drilled in less than 15 days, spud to TD. Furthermore, 91 percent of all operated wells drilled
in the first quarter 2011 reached TD in 15 days or less. Total days per well, measured by rig-release to rig-release, decreased
16 percent to 16.5 days in the first quarter compared to 19.7 days during the prior-year period. Continued efficiencies are
important to offsetting cost increases due to increased demand from service companies. Due to these sustained efficiencies,
completed well costs for the first quarter 2011 averaged $4.8 million per well.
Gibson Gulch – Current
net production is approximately 130 MMcfe/d. The Company plans to operate two rigs in the area through 2011 with an approximate
100 well program. The Company continues to benefit from its election to process the majority of its Gibson Gulch natural gas
production, which exposes the Company to natural gas liquids pricing. The incremental benefit to production revenues related
to natural gas liquids increased to $1.23 per Mcfe to the Company-wide realized price in the
second quarter of 2011, up as a result of higher per gallon realized liquids pricing. Gibson Gulch operations 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.
At June 30, 2011, the Company had an approximate
98% working interest in production from 765 gross wells in its Gibson Gulch program.
Cottonwood Gulch
– The status of the Company’s Cottonwood Gulch acquisition remains unchanged. In June 2009,
the Company acquired a 90% working interest in 40,300 gross undeveloped acres in Cottonwood Gulch. The leases were challenged
in Federal District Court by environmental groups and resolution of the case is currently pending with a District Court judge.
Cottonwood
Gulch – In June 2009, the Company acquired a 90% working interest in 40,300 gross undeveloped
acres in Cottonwood Gulch. The leases were challenged in Federal District Court by environmental groups. Resolution of the
case is currently pending with a District Court judge. The Company is working with stakeholders to pursue this opportunity
pending resolution.
Encana ECA - We've had some excellent results so far this year in the Piceance Basin. Second quarter 2010 average production was 470
MMcfe/d, about 29% higher than at this time last year. Our capacity reduced production from 2009 came back online better than
expected, and many of the Piceance wells that we've recently completed are performing above expectations. As a result, we
have increased our 2010 average production guidance by 40 MMcfe/d.
