Stacked-Pay Oil Prospect – DJ Basin, WY

Stacked-Pay Oil Prospect - DJ Basin, WY

Laris Oil & Gas, LLC’s Spring Creek Prospect is a shallow, seismically defined, stacked-pay prospect located approximately 12 miles due north of Horse Creek Field and 20 miles northwest of Silo Field in the DJ Basin, Laramie County, Wyoming. Horse Creek Field production from the Muddy (J-Sand) exceeds 8 million barrels from similar depths. Silo Field is a 14 million barrel naturally fractured Niobrara oil field that was originally developed via vertical drilling, albeit at deeper depths. After several successful vertical wells, Silo Field was the site of the first horizontal drilling in the Niobrara play. The Niobrara has been productive at similarly shallow depths in multiple wells approximately 60 miles to the south in Larimer County, Colorado.

A thrust fault uplifted this hanging-wall anticlinal prospect approximately 5,000’. This tectonic uplift limited the amount of compaction thereby preserving much of the original matrix porosity. The associated folding caused the brittle Niobrara Chalk benches (stratigraphic equivalent of the Austin Chalk) to fracture extensively.

Two 1970’s vintage dry holes targeting deeper objectives on Laris’ key lease logged the Niobrara formation. Log analysis confirms excellent reservoir quality (14% to 16% matrix porosity) and the presence of hydrocarbons (Sw = 30% to 45%). These two wells will be used to define the path of the first horizontal wellbore (see below).

To prevent damaging the excellent dual porosity system (matrix & fracture porosity), we plan to drill the 35’ thick pay zone underbalanced. The stratigraphic equivalent Austin Chalk formation in south Texas has been drilled extensively, but only became materially economic when underbalanced horizontal drilling techniques were employed.

To maintain underbalanced drilling condition, we plan to drill with a solids-free invert drilling fluid energized with nitrogen to lower the hydrostatic head of drilling fluid in the vertical portion of the wellbore. Nitrogen will be injected into the drilling fluid via a 1” jointed steel pipe “parasite string” cemented behind casing in the vertical portion of the well. Jointed steel pipe is being used for the parasite string to avoid crimping or crushing the string during casing operations, which is a common cause of failure when using flexible coiled tubing for the parasite string.

We expect IP rates of 500 bopd from horizontal wells. The pressure gradient in the underlying Muddy formation is 0.42 psi/ft and we have no data to suggest that the pressure gradient in the Niobrara will be less. In the unlikely event the Niobrara is under-pressured, the gravity drainage drive mechanism provided by the toe-up wellbore design should mitigate the effects of the lower pressure and result in a flatter decline curve than a hydraulically fracture stimulated well. A direct comparison between: (1) non-damaging underbalanced, and (2) damaging overbalanced drilling techniques in a central Colorado field documents up to an 18x increase in IP and Cumulative Production when underbalanced drilling and completion techniques are employed.

Laris estimates that a horizontal toe-up wellbore (as depicted above) should drain 160 acres with a 15% Recovery Factor. Accordingly, we calculate recoverable reserves of 525 MBO to 602 MBO per well, depending upon porosity. The dry hole cost is $1.36 million and the completed and fully equipped cost (including six new 400 barrel tanks) is $2.02 million per well. Laris has an inventory of 24 locations for 4,000’ laterals.

In addition to the Niobrara objective, there are three deeper objectives:

  1. Muddy (J-Sand) Formation: Annotations on the log footer indicate that the original operator of the 1970’s vintage wells used an Rw of 1.3 for the Muddy (J-Sand). Archie equation calculations using Rw = 1.3 result in a Sw of 100%. Calculating the Rw from the SP curve, however, suggest that the Rw should be 0.6, which results in a log show of oil with a Sw of 50% to 55%. Twelve miles to the south at Horse Creek Field, the Rw is 0.21. Given the limitations of the Archie equation in clay-rich sandstones, Laris believes the true Rw of the aptly named Muddy Sandstone is less than 0.6 and greater than 0.21, which should be productive.
  2. Codell Sandstone: Two of the wells drilled in the 1970’s on the key lease penetrated a 20’ thick Codell Sandstone with 11 ohm-m of resistivity and a maximum porosity of 15.5%, but were never tested.
  3. Sundance Sandstone: The deepest stratigraphic penetration in the area encountered a 12’ thick Jurassic age Sundance Sandstone (Canyon Springs Member) with 27% cross-plot porosity. This zone has not yet been penetrated on the crest of the structure.

Contact Information:     John M. Stafford         (303) 204-0429

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