Colorado's Wattenberg field produced more than 1 Tcf of gas in the past 30 years, and operators are out to prove there's plenty more where that came from as they use innovative analysis and techniques to turn brownfield development into green cash.
Part of the secret to continued production improvements from Wattenberg field in northeastern Colorado, United States, relates directly to natural gas prices that appear to have found a permanent home above US $5/MMBtu and at least temporary living space above $7/MMBtu. More money makes a lot of projects highly profitable that an operator couldn't touch at $2/MMBtu.
Better technology and tailored techniques provide more incentive to make the field a continuing phenomenon. Finally, analysis of production to date offers operators a chance to drill more wells per permit area without seriously damaging present production.
The prize
Wattenberg field in the Denver-Julesburg Basin takes up an area approximately 50 miles (80 km) square from townships 2s to 7n, ranges 61w to 69w. Most production from the field has come from the J-Sand, a 1.3-Tcf reservoir with some 30 million bbl of condensate in reserves. That formation covers some 600,000 acres at depths from 7,600 ft to 8,400 ft (2,318 m to 2,562 m). The tight sand has porosity between 8% and 12% with permeability between .05 mD and .005 mD, but it will produce gas almost anywhere in the field.
The Codell-Niobrara combination lies about 400 ft (122 m) shallower. The Codell is a tight sand and the Niobrara a chalk. Typically, operators have produced the two formations together using bridge plugs to separate fracture treatments.
Because payout often was questionable from these zones, they got a late start. Amoco already was in full production from the J-Sand before the Codell-Niobrara gained popularity.
Patina Oil & Gas, later purchased by Noble Energy, was a spin-off of a larger company's Codell-Niobrara assets. During the 1990s, all its projects were required by its investment-group owners to return more than 15% on their investment. At the time, with gas selling in the $2/MMBtu range, recompletions met that target, but new wells did not.
That concept carried through to the project concept used in the Wattenberg area today. Noble Energy has two blocks of Wattenberg properties, the old Patina properties and a more recent purchase from USX. It will spend some $230 million this year at Wattenberg to produce 210 MMcf/d of gas equivalent from estimated proved and potential reserves of 465 Bcfe.
That program involves 202 new wells along with 715 refracs, tri-fracs and recompletions on the former Patina properties. Each of those operations is called a project. The program will add 100 wells and 140 refracs and recompletions on the USX properties.
The company has 3,760 gross wells and keeps four drilling rigs and 22 workover and service rigs running full time in a factory-type operation on the legacy (Patina) properties. It will add another drilling rig in October and five more workover rigs by the end of the year to give it the capacity to perform up to 24 frac jobs a week.
Meanwhile, it has two rigs running on the USX properties, acquired in March, and it will add another rig this year and still another in 2007.
The risk is minimal and the reward is straightforward. In a typical Codell-Niobrara new-well project, the company completes the well for approximately 325 Mcfe/d of gas from reserves of 300 MMcfe at a cost of $582,000. The initial flush production drops quickly to about 100 Mcfe/d within a year and flattens out to less than half that number in 4 years. It maintains a shallow decline for years. At that 4-year point, Noble refractures both formations at a cost of $270,000 to add another 240 Mcfe/d in reserves. At the eighth year, it fractures the Codell again for $155,000 and adds still another 100 MMcfe in reserves.
At the end of 12 years, the well still produces at about 50 Mcfe/d, and the company has 640 MMcfe in reserves at a cost of $1.57/Mcfe. Some 70% of completions are in that Codell-Niobrara combination.
In the other 30% of wells, the initial completion is in J-Sand. In that situation, Noble drills the well for $480,000 to find J-Sand reserves of 300 MMcfe. At the 3-year mark, it recompletes the well in the Codell-Niobrara for $270,000 to gain another 300 MMcfe in reserves. At 4 years, it commingles production from the zones at a cost of $20,000. At year 7, it refracs the Codell-Niobrara for $270,000 and gets 240 MMcfe in additional reserves. Finally, at the 11-year mark it fractures the Codell again for $155,000 and another 100 MMcfe.
In that case, the company gets 940 MMcfe in reserves at a cost of $1.27/Mcfe.
Overall, the company has 2,300 projects in the Codell drilling program with potential reserves of 375 Bcfe, another 3,500 projects in the Codell refrac and tri-frac program for 290 Bcfe, 4,500 projects in the Niobrara for 375 Bcfe, and 3,500
projects on the former USX properties for another 225 Bcfe.
Noble owns approximately a 94%
interest in all but the USX properties, where it has approximately an 80% working interest.
Kerr-McGee
Noble is a big player in the Wattenberg field, but it's not the biggest. That position belongs to Kerr-McGee Corp. until its shareholders approve the sale of the company to Anadarko Petroleum Corp.
In announcing the planned purchase of Kerr-McGee, Anadarko specifically pointed out the Wattenberg properties as a key asset. Of course, Anadarko gets a bonus because its purchase of Union Pacific Resources gave it ownership of every other section in a checkerboard pattern up through the middle of the Denver-Julesburg Basin. That's royalty-free property.
Kerr-McGee operates more than 3,400 wells in the field with an average working interest of more than 95%. It has an inventory of more than 9,000 projects in addition to the 2,000 fifth-spot sites in the works.
Kerr-McGee's fifth-spot program is a key ingredient in its increased profits at Wattenberg. Before the fifth spot came along, operators drilled four wells in each quarter section, or 160 acres. In 1998, the Colorado Oil & Gas Conservation Commission approved five wells per quarter section.
"Drilling a fifth well per quarter section allows Kerr-McGee to optimize its infill program and recover a greater percentage of the original gas in place," said David Howell, manager of the company's Wattenberg field operations in the company's Endeavors magazine.
"Thus far, we have drilled more than 100 fifth-spot wells, and our success has been very encouraging. The thing we have to concentrate on in the Wattenberg field is execution rather than risk, because we know that virtually every time we drill we will find gas. Such a fixed, predictable natural gas field is a rare thing."
The fifth-spot program, however, only works well if it taps new reserves rather than stealing gas from existing wells. The company drilled six fifth-spot wells and used diagnostic fracture injection testing techniques to measure borehole pressure and permeability.
"Of the six wells, two had virgin pressure (new drilling had no impact on
the pressure of existing wells) while
four showed some depletion. It turned out that five of the six met our minimum standard of commerciality," said Wally O'Connell, exploitation manager of
the field.
"Then we moved to another area of the Wattenberg field - away from the heart of the field - where we drilled again and got even better results," he added.
Through the middle of 2005, the Wattenberg team discovered that 40% of the fifth-spot wells found virgin pressure, or gas that would not have been produced from existing wells. Another 35% of the new wells showed slightly lower pressure than existing wells, but they still were economic to produce.
The original fifth spot program contemplated one well in each quarter-
quarter section with the fifth well in the middle. The company decided it also could drill fifth-spot wells on the quarter-section lines to equally space the wells throughout the field. In a 20-well test program, it found no prior drainage in most locations. The company is evaluating even tighter densities in the tight-sand field.

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