A couple of discoveries are lighting up activity in the Paradox Basin of southeastern Utah and southwestern Colorado. Denver-based independent Delta Petroleum Corp. is in the midst of an exploration program on 80,000 acres in five prospect areas and has met with excellent success so far.

In Utah's Grand County, the company's Greentown State #32-42 flowed at the rate of 2 million cubic feet of gas and 500 barrels of condensate per day during a production test. The gas was made from 897 feet of net pay distributed across 4,000 feet of Pennsylvanian clastics.

Seven miles north-northwest, Delta flowed gas at 4.5 million per day, along with 125 barrels of condensate, during a production test at its Greentown-State #36-11. This wildcat tested two of 16 potential pay zones and encountered 906 net feet of pay, also in Pennsylvanian clastics.

The two wells are approximately seven miles apart on a large structure. The company has permitted four additional locations and a twin to the #35-11 well. At press time, it was drilling Greentown #35-12, a one-mile offset to the northern well.

Next it will drill step-out wells between the two finds. "The reasons for drilling those locations are twofold: for the additional geologic testing and to earn additional leasehold that is currently owned by another company," Roger Parker, chairman and chief executive officer, said in a recent earnings conference call.

Delta owns 31,000 net acres at Greentown, and expects to develop this on 80-acre spacing. Future wells are projected to reach depths of 9,800 feet and cost $3 million apiece. During the next 12 months, Delta plans to drill an additional eight to 10 wells in the project.

Delta reported at year-end that the two Greentown wells together contained proved reserves of 8.5 billion cubic feet equivalent (Bcfe). That figure now appears conservative: at the time of the reserve assessment, only portions of the wells' productive intervals had been completed.

Since then, the company has been testing, perforating and fracture-stimulating additional intervals. It currently holds that each of the first two wells may potentially recover in excess of 10 Bcfe, and an average well could make more than 6 Bcfe going forward.

"We are of the expectation that the discovery is a very meaningful discovery, and we think the areal extent is very probably greater than the seven-mile distance between the first two wells," Parker reported. Given Delta's current acreage position, its reserve potential for the area is well in excess of a couple hundred Bcfe, and is very likely on the order of a couple trillion cubic feet equivalent, he added.

Delta plans to construct a 49-mile gas pipeline and gathering system to connect Greentown to sales. The $20- to $25-million pipeline project is in the permitting process, and could be in operation in about a year's time.

The company's good fortune has extended to another exploratory prospect in its Paradox portfolio. Approximately 16 miles east of Greentown, Delta completed its 8,912-foot Salt Valley-State #25-12 after encountering 654 feet of net sand in separate intervals. The discovery was assessed gross proven reserves of 200,000 barrels of oil at year-end 2006.

Delta owns 5,000 net acres in the project. Development wells will be drilled on 40-acre spacing to depths of 8,200 feet for costs of approximately $2.5 million each.

Although Salt Valley is certainly economic, it's not as attractive an opportunity as Greentown. Nonetheless, Salt Valley is oil-prone and does not require a gas pipeline to begin sales. This year, Delta figures on a couple of offsets.

Of the three remaining exploratory projects, the first to see the drillbit will be Gypsum Valley, a prospect on the southeastern side of the basin in San Miguel County, Colorado. Its geology is similar to Greentown, but Gypsum Valley has the advantage of ready access to a pipeline.

Delta has two locations staked, Gypsum Valley Federal #31-11 and #24-34, both south of Andys Mesa Field. Plans are to spud a well this summer; in the event of a discovery, Delta could immediately begin selling gas and drilling some development locations.

The final two prospects, Fisher Valley and Cocklebur Draw, are still in the land-acquisition phase.

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