Natural gas operations in Piceance Basin slow; new technology helps eastern U.S. drilling grow
Tucked into northwest Colorado and bisected by Energy Alley, the Piceance Basin is one of the nation’s most significant reservoirs of natural gas, but one that long resisted exploration and production.
It underlies Grand Mesa and some of Colorado’s highest ski areas, and its rocky surface includes the Cathedral Bluffs to the northwest and West Elk Mountains on the southeast. The inherent difficulties of drawing gas from the Piceance Basin, though, have been conquered by advances in drilling and production techniques that allow energy companies to tap reservoirs of natural gas that were previously known, but considered unreachable.
Those advances made the Piceance’s estimated 41 trillion cubic feet of gas relatively easy pickings. But those same advances made it possible for energy companies to tap other gas-bearing formations across the nation, leaving the Piceance to wait for change in economic and, some say, regulatory conditions to reignite interest in the region’s significant gas resources.
The natural gas stores of the Piceance Basin are “obviously a significant factor” in the domestic energy picture, said Porter Bennett, president and chief executive officer of Bentek Energy in Denver. “The problem is that it’s diminishing in significance as other areas become more fully understood.”
In particular, the Marcellus Shale formation in the eastern United States has become more attractive as drillers have honed the art of punching multiple holes from single well pads, and service companies such as Halliburton, Schlumberger, CalFrac and others have learned to fracture formations several thousand feet down, freeing up gas that was otherwise unreachable, he said.
“The Marcellus is the elephant in the room at the moment,” Bennett said.
The Marcellus shale, though, is not the only source of natural gas that competes with the Piceance. There is gas in other shale formations, the Barnett of Texas, the Fayetteville in Arkansas and Haynesville in Louisiana.
“The Piceance is significant,” Bennett said. “There’s a lot of gas there, but there’s a lot of gas elsewhere that we’re finding. It ultimately depends on the economy, on market access and the regulatory climate that will dictate how it’s developed.”
The Piceance Basin, a kidney-shaped landform, is more than 100 miles long and 60 miles wide and covers about 7,100 square miles. The basin includes parts of Moffat, Rio Blanco, Garfield, Mesa, Pitkin, Delta, Gunnison, and Montrose counties.
The Piceance Basin contains five of the top 50 natural gas fields in the United States in proven reserves: Grand Junction, No. 16; Parachute, No. 24; Mamm Creek, No. 27; Rulison, No. 29; and Piceance Creek, No. 46, according to the Energy Information Administration.
With its estimated 41 trillion cubic feet of natural gas, the Piceance Basin is the smaller of the Uinta-Piceance Basin pair.
The adjacent Uinta Basin is estimated to contain 111 trillion cubic feet of natural gas, according to the Potential Gas Committee of the Colorado School of Mines.
It’s difficult, however, to estimate the volume of gas, as illustrated by ExxonMobil’s estimate that it is working to collect 45 trillion cubic feet of natural gas on its portion of the Piceance Basin alone.
Such a disparity isn’t surprising, Dr. John Curtis of the Potential Gas Committee said, given differences in drilling techniques, estimation methods and other factors.
Piceance Basin gas, as well as gas from other basins in the Rockies, such as the Uinta Basin to the northwest, has been hindered in the marketplace because it was impossible to get it to lucrative eastern markets. That forced down the price of all Rockies gas.
With the completion of the Rockies Express pipeline late this year, though, the differential disappeared, leaving Piceance Basin gas to compete with gas from other formations.
In all likelihood, Bennett said, large volumes of Rockies gas “are going to be sent back west.”
That means Piceance gas will be forced to markets through the Ruby Pipeline to the Pacific Northwest. That pipeline, however, isn’t scheduled to be complete until March 2011.
One factor that could favor Piceance Basin gas is that production from the eastern shales tends to start fast and drop off quickly, said Vince Matthews, Colorado state geologist.
The Piceance Basin is likely to have 12 to 15 more years of continued gas development from known, proven reservoirs, and production is expected to last for 40 to 50 years beyond that, said Carter Mathies, president of Clover Energy Services LLC in Grand Junction.