Producers drill deeper, hit gas jackpot in Piceance

Two energy companies are expressing excitement about results of early forays into natural gas development in deeper formations than the one usually drilled in the Piceance Basin.

Delta Petroleum and Encana Oil & Gas (USA) are reporting strong gas production from wells being drilled below the gas-rich Williams Fork sandstone formation where development in the Piceance has been focused up until recently.

Several companies have begun drilling deeper wells into the Mancos shale and Niobrara formations. Shale formations have been responsible for a drilling boom in other parts of the country, while companies have begun to have some success producing oil in the Niobrara in Colorado.

Encana’s drilling into the Niobrara, using horizontal drilling technology in which wells make a 90-degree turn into the target formation, has hit rich gas deposits. Trade journal Platts Commodity News recently quoted consultants Bentek Energy, which Platts owns, as saying that one local Encana well drilled in January 2010 yielded 7.2 million cubic feet a day of gas during its first 30 days, and a second initially produced 6.1 million cubic feet per day.

Each ended up producing about 1.4 billion cubic feet during its first year, and about 400 barrels of oil. By comparison, horizontal wells in the Haynesville shale formation, centered in Louisiana, typically produce 9 million cubic feet of gas initially and 1 billion over their first year, Bentek reported.

Delta Petroleum, which operates in Mesa County near Collbran, reported this week a well it drilled in the Corcoran and upper Mancos formations initially produced 3.3 million cubic feet per day, without yet having been hydraulically fractured in the Williams Fork formation. The initial production already is substantially better than what Delta Petroleum has seen from any of its Williams Fork wells.

“While still very early in the life of this well, it seems clear that Delta has a discovery in the upper shales,” Delta Petroleum President and Chief Executive Officer Carl Lakey said in a conference call Wednesday.

A second Delta well in the Mancos, Niobrara and Frontier formations produced 2 million cubic feet per day with only 10 percent of its fracking work having been done.

The drilling results provided high hopes for financially struggling Delta Petroleum, which previously decided to sell numerous other assets in order to concentrate on developing its Collbran-area holdings.

“The focus on our core asset is being validated in the numbers,” Lakey said.

Encana spokesman Doug Hock said while his company’s deeper-formation drilling is still in its early stages, the results are promising.

“We see this as the next evolution in our operations and production in the Piceance Basin. This is kind of the next chapter, if you will,” he said.


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