Random Notes On The "Overlooked Formation," The Piceance, Green River Basin, Colorado -- September 23, 2015

This is why I love to blog. Had I not started the blog to help me better understand the Bakken, I never would have heard of the Piceance. I can even spell it correctly without looking it up now. The Piceance, as well as the other formations and basins, is/are important -- they give me something to compare the Bakken to and help me better understand the oil and gas industry.

I am also amazed -- as somewhat wrote -- how much the Piceance is "overlooked." I assume that's because it's in Colorado which has a different regulatory culture and a different environmental stance than either Texas or North Dakota.

I vaguely recall writing about the record number of natural gas wells being put on one pad. A reader made reference to that and this was the best source I could come up with; the reader says there is a photo of this record-setting pad on the net somewhere. Here's one source with a diagram, as reported by Energy and Capital.

I wrote about the Octopus a few weeks ago. But I think you should know that the American oil and gas boom is about to undergo another tectonic shift that will firmly plant it as the number one source of energy in the world.

Before I go into that, let me tell you about a little town in northwestern Colorado called Parachute...

Parachute is tiny, only 1.2 square miles in size, but it's a giant in the oil and gas industry thanks to recent drilling achievements.

You see, Parachute sits on top of the Piceance Shale Formation. The Piceance is part of the lower Green River Basin. It's one of the richest oil and gas shale deposits on the planet, with an estimated 1.5 trillion barrels of in-place oil shale resource.
We've known about this oil resource for many years, just as the Bakken has been known about for decades.

But in April 2009, the U.S. Geological Survey updated its assessment of in-place oil shale resources in the Piceance Basin. This new assessment came in about 50% larger than the 1989 assessment of about one trillion barrels.

The Octopus is a 51-well Encana natural gas pad in the Piceance.

Recently, energy company Encana completed a mind-blowing 51 wells on one pad site to drill gas from an entire canyon in Parachute, Colorado.

Think about this... Encana's pad site is 4.6 acres in size above surface. However, using its multi-well pad drilling technology, it was able to access a full square mile of underground resource.

That's 640 acres underground from a 4.6-acre above-ground pad site.

A photo form the ground of the 51-well pad.

The Oil & Gas Journal said Encana "owned" the Piceance:

At its current pace, Encana has a 35-year inventory of drilling locations in the Williams Fork formation alone.

The company has built its Piceance net production to 440 MMcfd of gas in 2010 from 325 MMcfd in 2005, increasing flow every year except 2009, when pipeline capacity was insufficient to take all of its gas. Output grew at a compound rate of more than 30%/year from 2002 to 2008.

Using what the company calls a "gas factory" approach, Encana has drilled as many as 52 wells from a single pad in the Piceance basin.

"I am proud to say that in just a few short years, the Piceance gas factory has progressed from the conceptual stage to full implementation…. Since 2005, Encana has reduced its drilling cycle times by as much as 65% in some areas of the Piceance basin."

Encana is not alone. WPX is also drilling similar pads:

“You’ve heard us talk about drilling 18 to 22 wells per pad in the Piceance,” says Bryan Guderian, WPX’s senior vice president of operations.

“We’re stretching the envelope on that. We’re drilling a 36-well pad as we speak, a new record for WPX.”

The development is in an area called Flat Iron Mesa, which is located in the South Rulison field. The rig deployed here – a Nabors Super Sundowner – is a dual-fuel rig that runs partially on natural gas.

These double-digit well pads are drilling natural gas; it will be interesting to see the maximum number of wells they drill in one section of the Bakken. The NDIC dockets suggest it could be as many as 48 wells in one or two drilling units. I forget the exact number; I might look it up some time. I've blogged about; won't be hard to find.

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Costs

As a rough rule-of-thumb, it appears that it costs about $1 million / mile for a highway in North Dakota; about $1 million / mile for a high voltage transmission line in Texas; and, about $1 million / mile for a crude oil pipeline in North Dakota.

A reader pointed out that a new busway in Connecticut about 9 miles long cost about $567 million, or about $65 million / mile ... again, for an asphalt/cement highway on which standard buses will run.

The California bullet train, about 800 miles when / if completed, is slated to cost about $70 billion, or about $90 million / mile.

The proposed Los Angeles-Las Vegas "bullet train" to be built by a Chinese company does not yet have a price tag. The google distance between the two cities is about 270 miles. Based on Connecticut's busway and Jerry Brown's bullet train, the LA-LV bullet train should come in at about $12 billion. I'm using $45 million / mile because a) it's being spearheaded by a "prudent" North Dakotan; b) it's a straight shot between LA and LV with no stops (or at least shouldn't be); c) it's being built by cheap Chinese labor (LOL, just joking); and, d) the number "12" has a nice ring to it.