Rocky Mountain High? - Is the Niobrara Really the Next Big Thing?

Crude oil production in the Rockies’ Niobrara region is up by more than 50% since the beginning of last year, spurred on by higher oil prices, ample oil pipeline takeaway capacity, and other positive factors. Natural gas and NGL production in the Niobrara — which includes both the Denver-Julesburg (D-J) Basin and the Powder River Basin (PRB) — has been rising too, to the point that there’s a scramble on to develop new gathering systems, gas processing plants as well as gas and NGL pipeline capacity. A number of exploration and production companies are upbeat about the region’s prospects; so are some midstreamers. But there’s a dark cloud on the horizon — at least in Colorado, where voters will decide in a few weeks whether to significantly restrict where new wells can be drilled. Is the Niobrara poised for continued growth or not? Today, we kick off a new series on Rockies production, infrastructure and prospects.

If your knowledge of the U.S. Rockies is limited to Coors beer, good skiing spots and Denver’s sports teams, the Niobrara’s D-J Basin and PRB offer what are currently believed to be the region’s most productive and promising hydrocarbon reserves. Now if we could only get folks to agree on exactly what is meant by the term “Niobrara.” After all, it can mean (1) a geological formation that underlies much of the Great Plains of the U.S. and Canada, (2) a shale producing basin in Northeast Colorado, Northwest Kansas, Southwest Nebraska and Southeast Wyoming, and (3) a geographic area that includes the D-J and the PRB. For our purposes here, Figure 1 shows how RBN models the extent of the Niobrara surface geography, with the D-J Basin including most of northeastern Colorado (brown area) and four counties in southeastern Wyoming (dark pink area). The PRB, in turn, includes six counties in northeastern Wyoming and two in southern Montana (green area). That’s our definition and we’re sticking to it.

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