Thursday, January 26, 2012

Oil and gas panel starts to drill down

Posted By on Thu, Jan 26, 2012 at 1:28 PM

Ward Polzin holds a piece of shale in which oil and gas deposits are locked underground during the citys Oil and Gas Committee meeting. Council members Val Snider, left, and Angela Dougan, right, are members of the committee.
  • Pam Zubeck
  • Ward Polzin holds a piece of shale in which oil and gas deposits are locked underground during the city's Oil and Gas Committee meeting. Council members Val Snider, left, and Angela Dougan, right, are members of the committee.

The Niobrara Shale presents a golden opportunity for oil and gas drillers, but it barely dips into the north and eastern parts of El Paso County, according to an expert who spoke to the city's Oil and Gas Committee Thursday morning.

Ward Polzin, with Tudor Pickering Holt & Co. energy investment banker from Denver, told the newly formed committee that the formation covers portions of Colorado, Wyoming and Nebraska, but the farthest well on the southern edge of the shale is in Arapahoe County.

Because some geologists think the formation peters out as it reaches into El Paso County, "On the extreme south side, we would call that very exploratory. Geology-wise, they're stepping out [taking a risk]," Polzin said.

Nevertheless, Ultra Resources of Houston, the subject of our cover story this week, has applied for two permits to drill on the 18,000 acres on the city's east side that it purchased last year out of a developer's bankruptcy. Those intentions, as well as Ultra's desire to drill on land outside the city limits, has triggered local officials to scurry to write regulations that would guide oil and gas development.

El Paso County commissioners are slated to discuss the county's regulations on Tuesday, though the draft is likely to change. The meeting begins at 9 a.m. at the Pikes Peak Regional Building Department meeting room, 2880 International Circle.

But on Thursday, the committee learned about shale, drilling and the Niobrara.

"We're in the very early stage of development in the Niobrara compared to other shales in the United States," Polzin said.

Polzin outlined various aspects of the oil and gas business, such as the use of horizontal drilling, which allows drillers to break open (fracture) the shale to turn loose of more fossil fuel. Some drillers bore 9,500 feet horizontally, he said. Fracturing, also called fracking, has been shown to increase production, and some wells are fracked three times to get the most oil or gas from them.

Oil and gas wells can be expected to be in production for 20 to 30 years, he said. Oil wells cause more surface impacts, Polzin said, because they bring tanks for storage, and trucks to haul the product away. Gas wells bring compressor stations and underground pipelines.

After a vertical exploratory well is drilled, an oil company will conduct seismic testing to determine the thickness of the shale and size of deposits, he said. It could take up to two years to make a clear determination of how much oil or gas is available in a given area.

The group will meet at 8:30 a.m. next Thursday at City Hall. The expected speaker is someone with Anadarko Oil, the biggest operator in the Niobrara Shale.

Here is a list of board members. Materials supporting the committee are to be available at the city's website, springsgov.com.

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