Niobrara & Codell of the Denver-Julesburg Basin
By Benjamin C Burke, Transitional Energy, Aurora, Colorado, USA
Geologic Setting
The Cretaceous Niobrara Formation and Codell Member of the Carlile Formation are the top producing unconventional zones in the Denver-Julesburg Basin. The basin encompasses eastern and northeastern Colorado, southeastern Wyoming, southwestern Nebraska, and far western Kansas. The Codell member of the Carlile Formation is a tight sandstone 4 to 35 ft in thickness across the basin. It its unconformably above the very dark colored Fairport Chalk member of the Carlile. It is variously composed of three facies: a lower bioturbated zone, a middle laminated sand zone containing many small shale drapes and cross beds, and an upper bioturbated zone. It conformably grades into the lowest-most member of the Niobrara Formation, the Fort Hays Limestone. Above the Fort Hays, the cyclic sedimentation of the chalks and marls of the Smokey Hill member of the Niobrara are 250-350 ft thick. In most part of the basin, Niobrara reservoir targets are the chalks, named, the C, B, and A from bottom to top. The top of the Niobrara sits unconformably on the Sharon Springs member of the Pierre Shale (Higley and Cox, 2007). Across the basin, up to 100 feet of the upper Niobrara has been eroded.
Location of DJ Basin
Produced fluid type follows maturity in the DJ Basin. In southeastern Wyoming as well as the front range counties of Colorado, thermally mature Niobrara source rocks produce oil and gas (Higley and Cox, 2007). Further east in Colorado, as well as in southwestern Nebraska and far western Kansas, Niobrara production is limited to biogenic gas. In all three areas, zones deeper than the Cretaceous produce thermogenic oils and gases, but migration upwards into the Niobrara and Codell is very limited to non-existant.
Development History
For years in the early and mid twentieth century, shows and the occasional overpressure was noted in the Niobrara and Codell while producers drilled to deeper formations for oil and gas production. Several wells were drilled and completed in both zones through the 1970s and 1980s (Montgomery, 1983). Beginning in the mid 1990s, large-scale vertical development began with a switch to horizontal development around 2010, first with one-mile mile and then two-mile laterals and evolving completion fluid volumes and sand loads (Ladd, 2001; Birmingham et al, 2006; Milne and Cumella, 2014). DJ Basin production peaked in November 2019 and has since declined (World Oil, 2020).
2020 Production Update
Oil and gas production data from the Colorado Oil and Gas Conservation Commission (COGCC, 2021), Wyoming Oil and Gas Conservation Commission (WOGCC, 2021), Nebraska Oil and Gas Conservation Commission (NOGCC, 2021), and the Kansas Geological Survey (KGS, 2021) was aggregated to deliver a complete view of basin-wide production across the four states. The bulk of hydrocarbon production from the DJ Basin is from Colorado and defined by the production allocated to the two named zones. The three Wyoming counties queried for DJ Basin production are Laramie, Platte, and Goshen. The two Kansas counties that record DJ Basin production are Cheyenne and Sherman counties in the northwestern corner of the state. The hydrocarbon production from the four states was collected and aggregated using R or manual methods (R Core Team, 2020) and visualized with ggplot2 (Wickham, 2016). Total oil and gas produciton broken out by zone and state are shown in Figures 2 and 3.
Basinwide Gas Production
The market effects of the COVID-19 pandemic hit the DJ Basin hard resulting in in roughly a 25% cut in overall production in 2020 as compared to the previous year as companies focused on minimizing lease operating costs and maintianing profitability. Basin-wide, oil production decreased from the all-time peak in 2019 near 20 million barrels to near 15 million barrels driven by a decreases in Colorado Niobrara and Wyoming Codell oil production. Niobrara oil production increased over 2019 levels in Colorado, Wyoming, and Kansas, however those were small volumes. Gas production from across the basin followed a similar trend, shown in Figure 3, following the same steady multiple year-on-year increases. Niobrara gas from both Colorado and Codell gas from Wyoming led the basinwide increases. Wyoming and Nebraska Niobrara gas showed a slight increase of what is minimal production while Kansas Niobrara gas and Colorado Codell gas showed slight decreases.
2020 Rig Count in the DJ
Because of budget cuts that deepened as the impact of the pandemic took root in the second and third quarters of 2020, many drilling program were delayed or canceled. Compared to an average rig count of 26 during 2019, 2020 saw an average rig count of 9 throughout the year, four of which were focused on the Niobrara (Westwood Global Energy Group). Rigs ran mostly in Colorado, with a few in Wyoming at the beginning and end of the year. No rigs ran in Nebraska or Kansas in the Niobrara or Codell (Westwood Global Energy Group). Operators focused on optimizing production from existing wells through targeted workovers, chemical treatments, and cleanouts.
Regulatory & Business Framework
Two operators dominated the Niobrara and Codell in the DJ Basin in 2020: Occidental Petroleum with their legacy Anadarko Petroleum assets and Chevron, with their legacy Noble Energy assets. At the end of 2020, two major basin operators were set to become one, with Bonanza Creek Energy Energy acquiring HighPoint Resources. Other companies with major basin positions included EOG, Extraction Oil & Gas, Great Western, Whiting, Bayswater, and Samson Exploration. A number of small, private-equity backed companies operate in the Niobrara and Codell, including Confluence Resources, Mallard Exploration, Bison Oil & Gas II, Edge Energy, Boomtown, and Clear Creek Resource Partners. The regulatory framework applied to the DJ Basin varies considerably by state. Kansas and Wyoming are both considered to be petroleum friendly states and provinces for investment, while Colorado creates a robust regulatory environment for oil and gas. The Colorado Senate approved Senate Bill 19-181 (SB 181) in 2019, which brought significant changes to Colorado’s regulatory framework for oil and gas. In 2020, implementation of that new rule began, with the COGCC changing from a volunteer-driven entity to a professional one. By late 2020, the COGCC had announced new rules set to take effect in January 2021. Whereas much of Colorado is private land and regulated by the state, Wyoming’s DJ Basin is dominantly public land regulated by the US Bureau of Land Management in addition to the WOGCC. Across both Colorado and Wyoming, state and federal regulatory bodies added regulations around air quality, tank venting, and flaring.
References[edit]
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