Wyo. oil spill hints at Niobrara Shale's potential

AP News
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Posted: Oct 20, 2010 7:43 PM
Wyo. oil spill hints at Niobrara Shale's potential

Word is out that a well in southeast Wyoming has tapped oil from the Niobrara Shale _ not from a company news release or government records, but from 15 acres of ranch land blackened by an oil spill.

The spill made a mess, but it might not be all bad news.

The accident shows the ground holds quantities of oil under pressure, said Mark Northam, director of the School of Energy Resources at the University of Wyoming.

"It's bad news in that it caused a problem. But it's good news in that it means that the conditions are right for it to flow," Northam said Wednesday.

People in the industry have been waiting to see if wells in southeast Wyoming can replicate the success of a well drilled in northern Colorado last year.

The pioneering EOG Resources Inc. well in Colorado touched off a rush. All this year, companies have been lining up to drill _ and in some cases started drilling _ into the Niobrara Shale beneath southeast Wyoming, northern Colorado and western Nebraska.

Additional successful wells would bode well for a big play, maybe even as big as the booming Bakken Shale in western North Dakota.

But information about Wyoming's new wells has been hard to come by. The state oil and gas agency, the Wyoming Oil and Gas Conservation Commission, allows companies to keep production figures and other information about the first wells they drill in a formation confidential for up to six months.

Companies are exercising that option.

Among them is Denver-based SM Energy Co., owner of the well 12 miles east of Cheyenne where the spill occurred Friday. Even Bruce Hinchey, president of the Petroleum Association of Wyoming, said he didn't know that the well had been completed for months and evidently has been producing oil.

"That's the first thing I've heard. That means this play could be pretty hot, then. We'll just have to wait and see," Hinchey said.

SM Energy spokesman Brent Collins declined to say how much oil the well produced before it was shut in following the spill.

The spill happened when an abrupt surge of oil from underground overwhelmed equipment at the site, said Joe Hunter, emergency response coordinator for the Wyoming Department of Environmental Quality.

"This was such a big slug of this stuff, it kind of overtook the whole system," Hunter said.

Oil spilled at the well pad and sprayed from a flare stack onto the surrounding ranch land, he said.

He said SM Energy faces a state fine for not reporting the spill to the Department of Environmental Quality until Monday.

Collins said the company has been cleaning up the oil.