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Noble Energy: Hundreds of new wells possible in West Drilling planned in shallow, biogenic gas plays of Colorado, Montana Ray Tyson Petroleum News Houston Correspondent
Noble Energy says it could end up drilling hundreds of new development wells in the U.S. Rockies over the next few years.
The Houston-based independent appears to be particularly bullish on the Niobrara trend of northeastern Colorado and the Bowdoin area of northern Montana. Both are shallow, biogenic gas plays located in producing fields.
However, initial drilling results from the deeper interval of the 27,000-acre Iron Horse gas play in Wyoming’s Wind River basin are less encouraging. Noble said it went into Iron Horse’s deep zone expecting “a basin-centered gas accumulation” similar to the prolific Jonah discovery.
Last year the company drilled a 15,600-foot exploration test well at Iron Horse, initially testing a prospective section between 7,600 and 15,600 feet.
“I can say rates have been disappointing. It’s tighter (sand) than we expected,” Ted Price, Noble’s U.S. onshore manager, said in a late May meeting with industry analysts. “We’ve been spending a lot of time on the deeper zones, trying to understand them.”
But he said there remains several thousand feet of untested section to be analyzed, although he said it was doubtful individual wells could produce 10 billion cubic feet of gas during their lifetime. Company still testing, looking at seismic “We have a lot of stuff still to test in this well, and there is a lot of potential on this block,” Price asserted. “This is still a block that could contain the potential for hundreds of wells.”
Price noted that since drilling the well, Noble has acquired 109 square miles of 3-D seismic covering Iron Horse and that information on both the deep and shallower zones is currently being evaluated.
Noble already has seen “interesting things” in the data as the company works its way up the test well, Price said. “We’re trying to hone it down to some drilling opportunities for later this year, he added.
Price also said drilling activity offsetting Noble’s block has been “very positive and we’re obviously interested in that.” Still, Noble is resisting “the urge to hurry up” drilling at Iron Horse, he said.
“We had a little stumble in that portion of the block in the deep, and that’s basically all we have tested in that entire prospect,” Price said. “It takes time to do it the right way.” Niobrara and Bowdoin also hold potential Like the Iron Horse in Wyoming, Colorado’s Niobrara trend and Montana’s Bowdoin area each hold the potential for hundreds of development wells, Noble said.
The company planned to drill 25 wells this year in the Niobrara, including two separate five-well pilot projects to determine whether it would be economic to drill wells on 40-acre spacing. The field, which already houses some 350 wells, was developed on 80-acre spacing.
Noble said it completed one of the infill pilot projects at Niobrara and plans to drill the second later this year. The field currently produces about 2,200 barrels of oil equivalent per day net to Noble.
“The early results we have seen are positive and, if that pans out, we’re looking in the neighborhood of 200-plus development locations that could be drilled as quickly as we choose to drill them,” Price said. Niobrara geologically complex Although a large production area, Niobrara is geologically complex requiring structural closure to establish production, he said.
“There currently is a lot of discussion on whether this can be economic on 40-acre type spacing,” he said. “I don’t want to get too excited because we don’t have all the data in. The fear when you infill is that you drill a well that is clearly depleted. And that pretty much lets the wind out of your sails for the upside.”
To improve performance at Niobrara, small pumping units are being installed on shallow gas wells primarily to lift water off the pay zone, which allows more gas to flow.
“This is not spectacular on a well-by-well basis but you multiply it by hundreds and it becomes very significant, very cost efficient,” Price said.
Price said production aided by a recently installed pumping unit was increased to 400,000 cubic feet per day from 80,000 cubic feet per day. “That’s the kind of success we’ve seen, so we’re accelerating the program there,” he added. Noble plans 25 development wells at Bowdoin Bowdoin, another shallow biogenic gas field, also has more than 200 locations for new development drilling to go along with some 800 already producing wells, all of which are operated by Noble with an average 66 percent working interest.
Noble planned to drill 25 development wells this year mainly on undrilled spacing units. “We do have a lot of undrilled locations in the field,” Price said.
The field currently produces about 9.6 million cubic feet of gas equivalent per day net to Noble. “We’re at the point where we are not only focused on it, but we’re accelerating it and we’re testing some new things as well,” Price said.
Noble has found that one effective way to enhance production is simply to replace older tubing with small diameter coil tubing, which allows the well to lift more water and create better gas flow.
“That has been extremely successful,” Price said. “We’ve done it on a couple hundred wells and we continue to do that. And we’ll accelerate our efforts.” $85 million to onshore U.S. Noble has allocated $85 million in 2004 capital expenditures to onshore United States, with two-thirds of the total going to the company’s Gulf Coast operations and the rest mainly to exploration opportunities in the Midcontinent and Rockies. The cash will be used to pay for 95 wells.
Noble’s proved onshore reserves at year-end 2003 stood at 67 million barrels of oil equivalent. Daily production during the 2004 first quarter averaged about 23,000 barrels of equivalent, or roughly a quarter of the company’s total production.
Eighty-four percent of Noble’s onshore proved reserves are classified as natural gas, while about 80 percent of the company’s production consists of gas.
A year ago 80 percent of Noble’s onshore capital budget went to exploration and only 20 percent to development and production. This year exploration accounts for only 60 percent of expenditures and development and production 40 percent.
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