A revolution in drilling technology is transforming Wyoming's Powder River Basin, turning what was once an economically challenging oil play into a more promising frontier, according to energy insiders and locals watching it unfold.
The revolution centers on horizontal drilling. Although an old technique — it’s been around for more than a century — advances in technology and equipment continue to dramatically change how companies use horizontal drilling to extract more oil from underground formations.
Conventional oil wells drill straight down into the earth, like a straw going into the ground. But in formations like those found in the Powder River Basin (PRB), the oil and gas often sit in thin, horizontal layers of rock. A vertical well might only intersect a few feet of that productive layer.
Horizontal drilling — also called lateral drilling — offers oil producers a way to essentially bend the straw.
"We drill straight down, but then we turn 90 degrees and drill horizontally right against the lateral," Converse County Commissioner Robert Short told Cowboy State Daily.
Short has watched the technology evolve over his time in the industry and while in elected office.
The length of these laterals has grown dramatically, he said, and that's where the real efficiency gains come from.
"When the play first started, drilling companies could do 1-mile laterals," Short said. "Now, there are 3-mile laterals happening in some areas.
“I don't know that we're up to 3-mile laterals here, but we are definitely doing 2-mile laterals here.”
Extra Mile
The era of the 3-mile lateral in the Powder River Basin has begun. Anschutz Exploration Corp., one of Wyoming’s top oil producers, is pushing that envelope.
According to the industry newsite Hart Energy, the Denver-based company is drilling its first 3-mile laterals on a pad in Johnson County.
Anschutz produces around 60,000 barrels of oil equivalent per day and adds about 65 new wells a year, Hart Energy reports. The company has been focusing on the basin's “stacked pay zones,” which refers to multiple productive geological layers within the basin.
This month, Continental Resources CEO Doug Lawler said at an industry conference in Fort Worth, Texas, that the Powder River Basin is one of Continental's core assets, which together add up to "several billion barrels of resources to be mobilized."
When asked about the future of U.S. oil production and whether it might peak soon, Lawler offered an encouraging perspective for the basin's long-term prospects.
“I really see it kind of plateauing for a while,” he said. “Because what we will see technology [wise], we will see efficiency improvements that will continue to enable additional investment.”
Continental has been drilling wells in the 2-mile range but is now evaluating 3-mile laterals with test wells, potentially exceeding that distance as technology continues to advance.
Leading Development
In early June, bullish news broke about the Converse County Oil and Gas Project, with the BLM announcing it was doing its best to move the project forward.
This should allow recent technological advances to be put to the test on this 5,000-well development spanning 2,344 square miles — roughly the size of Delaware — across 1.5 million acres in the PRB.
The BLM projects the development could generate between $18 billion and $28 billion in federal revenues while creating about 8,000 jobs over its 10-year timeline.
Because horizontal drilling makes it possible to access 3 miles of underground reserves, Short said it will be possible to produce more oil with fewer rigs in the PRB.
“We peaked at 25 rigs in the county in 2015. Now the same kind of development is being done with eight rigs,” he said.
USGS Findings
The industry optimism gained scientific backing this month from the latest U.S. Geological Survey assessment of federal lands.
For the Powder River Basin specifically, the USGS estimates 82.9 million barrels of oil that are technically recoverable resources underlying federal lands.
While the PRB might be getting recognition as the scene of advanced horizontal drilling techniques, it represents just a portion of Wyoming's total estimated federal resources, according to the USGS.
The full estimate shows Wyoming’s federal lands could produce nearly 1 billion barrels of oil.
The USGS findings place Wyoming fourth nationally for estimated federal oil resources behind Alaska, New Mexico and Nevada, while ranking fourth for natural gas resources behind Alaska, New Mexico and Colorado.
David Madison can be reached at david@cowboystatedaily.com.
