Whiting Petroleum is moving into high gear on a resource-rich discovery in Colorado’s Niobrara shale play that’s said to contain more than twice the in-place oil per drilling spacing unit as North Dakota’s prolific Bakken petroleum system.
Whiting chief executive James Volker, in an April 7 keynote address to a meeting of the Independent Petroleum Association of America, IPAA, in New York, repeatedly touted the company’s Redtail prospect, even opening the luncheon presentation with a new video illustrating the technology that led to its discovery in Weld County northeast of Denver.
“Ladies and gentlemen, that was a true 3-D picture of the matrix of the Niobrara B formation,” Volker said, referring to it as “the so-called sweet spot out here in the Niobrara.”
“So, in the next five years, we’re really going to get after it,” he vowed.
Within the initial 2014-18 development timeframe, Volker added, Whiting plans to drill over 1,000 production wells, or roughly a third of some 3,300 drilling locations thus far identified on Whiting’s 120,000-acre Niobrara leasehold, situated in the Denver Julesburg Basin, in an area known as the Colorado Mineral Zone.
“We’ll be adding a fourth rig in August of this year and, with those four rigs, we will be at a rate of approximately 120 wells drilled per year,” he added.
Volker noted that based on a 960-acre drilling spacing unit, the Niobrara A, B and C zones are estimated to hold a combined 70 million barrels of in-place oil per unit, or 19 million barrels in the A zone, 40 million barrels in the B zone and 11 million barrels in the C zone.
He said that compares to about 30 million barrels per 1,280-acre spacing unit for the Bakken petroleum system, which includes the Middle Bakken formation and various benches of the underlying Three Forks formation.
“(That’s) over twice that of the Bakken, to give you an idea of how rich it is,” Volker said of Redtail.
Whiting launching two pilots
He said to determine the proper well density per unit, Whiting is launching two pilots: a 16 well spacing pattern, with six wells in the A zone and 10 wells in the B zone; and a 32 well spacing pattern, with eight wells in the A zone, 16 wells in the B zone and eight wells in the C zone.
“We’re executing both, so we can assess whether to develop here on a 16 well spacing pattern, or on a 32 well pattern,” Volker said.
John Kelso, Whiting’s director of investor relations, told Petroleum News in an email that Volker was not suggesting in his IPAA presentation that the company’s Redtail discovery is more prolific than the Bakken, just because Redtail contains much more in-place oil per spacing unit.
For one, the average estimated ultimate recover, EUR, over the life of a Bakken well is 500,000-600,000 barrels of oil equivalent, compared to 400,000-500,000 boe for the Niobrara. Moreover, the initial production rate for a Bakken well averages about 1,000 boe per day, versus 400 boe per day for a Niobrara well.
However, Redtail itself is so far producing “some of the best results ever seen in the Niobrara,” Volker disclosed.
Projected recovery rates
At Whiting’s projected recovery rate of 15-20 percent of nearly a half-billion barrels of oil in place, Redtail’s EUR estimate ranges higher than the Niobrara average, from 440,000-560,000 boe, to a high of about 750,000 boe, depending on the well spacing and zone targets.
Whiting production from the Niobrara, through currently modest, increased a whopping 58 percent to 5,100 boe per day as of Feb. 1, 2014, from an average 3,230 boe per day during the fourth quarter of 2013. The company has not announced future daily production targets for the Niobrara.
Redtail has several other pluses. The production decline rate of a Niobrara well “appears to be shallower,” or slower than that of a Bakken well, Kelso said, adding that because of shallower formations and shorter well laterals, it also costs just $5.5 million for a Niobrara well, compared to an average $8 million for a Bakken well. That helps make the economics of the two areas “comparable,” he said.
And because of its proximity to interstate pipelines, refineries in Denver and Wyoming, and other critical infrastructure, “we couldn’t have picked a greater place for an oil field than Redtail,” Volker said.
Gas plant coming on stream
He noted that Whiting’s own Redtail Gas Plant is complete and scheduled to come on line in April, with an initial takeaway capacity of 15 million cubic feet of gas per day, eventually ramping up to 120 mmcf or more per day with additional trains.
Other planned Redtail investments include 141 miles of gas-gathering lines, 111 miles of oil gathering lines and 16 miles of frack water supply lines.
“So, we’re planning for that and thinking ultimately about a $300 million capital investment here in order to produce this natural gas unflared, get it to market and capture all the value,” Volker said.
“The population out here is only a couple of people per square mile. And this part of Weld County really does want future oil and gas development.”
Whiting has positioned itself to accelerate growth in the Bakken, as well as in the Niobrara, with around 90 percent of this year’s $2.4 billion exploration and development budget being invested in the two areas.
Big plans for the Bakken
The Bakken represents nearly three-quarters of Whiting’s U.S. production of 101,000 boe per day, and promises to be the company’s main producer for years to come. Its roughly 73,000 boe per day makes the company a major player in the region, where it also has big plans for its project areas in 2014.
For one, Whiting has said it intends to fully deploy a new well completion design in the Williston Basin, where early results from the use of cement liners and plug-and-perf technology on selected leasehold in 2013 indicated huge productivity gains could be achieved across the region in 2014 and beyond.
At its Missouri Breaks, Pronghorn and Hidden Bench fields, the new completion method delivered 50-75 percent productivity increases in 30, 60 and 90-day well production rates, the company disclosed during its 2013 fourth-quarter conference call.
Drilling for maximum efficiency
“We’re concentrating on completion techniques that give us three times as many entry points in the formation, about 120 entry points as opposed to 40,” Volker told IPAA. “And we’re concentrating our fracks within all directions about 300 feet away from the well bore. Consequently, as we drill our wells about 600 feet apart, we’re getting maximum efficiency in production of the oil and gas reserves in that rock.”
The company saw its Williston Basin production alone rocket 17 percent in the 2013 fourth quarter compared to the same quarter in 2012, while year-over-year output jumped 13 percent. And Whiting now has “over a dozen years” of drilling inventory in the Bakken and about 16 years of drilling to do in the Niobrara, Volker said.
“I will simply say that Whiting has been a company on the move, not only in the last decade since we went public in 2003; but in particular 2013, we took all these moves to accelerate our production and reserve growth,” he added.
