If you want to know why fracking is here to stay, consider what’s been going on in Weld County.
The Wattenberg gas and oil field, which sprawls across 1.9 million acres of Weld County, is a pin cushion of more than 20,000 wells, more than 12,000 of which are still producing.
It was discovered in 1970 and covers a swath of land from about 12 miles northwest of Greeley to the north side of Broomfield. It is the seventh largest gas field in the United States.
Through 2008, the field had produced the equivalent of more than 4.2 trillion cubic feet of natural gas. (More about why the word “equivalent” appears in the previous sentence in a moment.)
Until relatively recently, the oil industry regarded fields like Wattenberg as mature, meaning their production had peaked and that while there was still gas and oil to be wrung out of them, their annual output could be expected to decline year by year.
Then along came horizontal drilling and fracking.
Starting in about 2009, oil companies started buying acreage in the Wattenberg field, including parts that had been producing for decades. Several billion dollars were spent — and now its becoming clear why.
Although only a few dozen new horizontal wells had started producing, in the third quarter of 2011 the Wattenberg field set a record for quarterly sales volumes of 72,400 barrels of oil equivalent per day, a 22 percent increase from the same quarter in 2010. Not all of the new production came from horizontal wells; several hundred vertical wells were also drilled. But it is the horizontal wells and multi-stage fracking that are the game changers.
Last November, one of the companies with substantial acreage in the field reported what it’s finding, and it’s pretty jaw-dropping.
Anadarko petroleum, which holds 350,000 acres in the Wattenberg field, estimates its holdings contain 500 million to 1.5 billion barrels of oil equivalent.
When oil companies report the output of wells that produce both oil and gas, they often conflate the combined production as “barrels of oil equivalent” or “cubic feet of gas equivalent,” by which they mean their field is producing oil and gas with the energy equivalent of so many barrels of oil or so many cubic feet of gas.
(Roughly speaking, 5,800 cubic feet of natural gas contain the energy equivalent of a barrel of oil.)
Crude oil and natural gas aren’t the only hydrocarbons in the “equivalent” equation, however. Natural gas is often found in combination with a light liquid hydrocarbon called “condensate.” Condensate is sometimes called “natural gasoline.”
In the Wattenberg field, condensate makes up a big part of the “equivalent.” Gas, oil and condensate can be conflated in terms of the amount of energy they contain, but they differ spectacularly in value. Crude oil and condensate are currently selling for about $100 a barrel.
Natural gas is currently selling for about $2.50 a thousand cubic feet; 5,800 cubic feet would cost under $15.
Anadarko said that it has identified 1,200 to 2,700 future horizontal well sites with estimated ultimate recoveries of 300,000 to 600,000 barrels of oil equivalent per well — with 70 percent of that liquids (condensate and crude).
In other words, the condensate and oil on Anadarko’s share of the Wattenberg alone could be worth more than $100 billion — a windfall that would be unobtainable without horizontal drilling and fracking.
Any technology that can conjure up $100 billion of new wealth from 18 percent of a 42-year-old, over-the-hill oil field and do it without breaking a sweat — and in a stagnant economy at that — is here to stay.
The Wattenberg field is locally interesting because it’s on Boulder’s doorstep — a bit of it actually extends into Boulder County — but it is just the tip of the iceberg. The Niobrara shale formation and the low-permeability Codell sandstone directly below it, which will be the source of most of the new production, underlies the entire Denver-Julesburg Basin, i.e, most of northeastern Colorado, and extends into parts of Kansas, Nebraska and Wyoming. Drilling is ramping up throughout the region. The Niobrara extends under the mountains into northwestern Colorado as well.
And the Niobrara shale is just one of more than a dozen shale formations in the U.S. that are delivering a petroleum bonanza; two of the better known in the West are the Bracken shale in North Dakota and Montana and the Eagle Ford Shale in Texas.
It doesn’t take a genius to see where this is headed.
Horizontal drilling and fracking are revolutionizing the oil industry, and maybe the balance of economic and political power in the world. The U.S. would be insane to forego it.
But what of the environment? Consider Weld County. The Wattenberg Field covers about three quarters of it, but after 20,000 oil wells and 40 years of drilling and oil production, it is the fourth richest agricultural county in the United States.
Subdivisions are a far greater threat to its agriculture and environment than oil wells.
This opinion column does not necessarily reflect the views of Boulder Weekly.