But potential for Mowry shale drilling is cautiously real

No, you won’t see oilfield servicing trucks jamming motel parking lots anytime soon.

Or even more to the point, the Oilfield Motel sign won’t hang this summer.

The buzz that had a large integrated energy services company buying a local motel spread like wildfire in the community in the last week.  It turns out the story had more legs than traction.

Talk had it that the Super 8 Motel had been purchased — or at least a large bloc of rooms had been leased for the summer — to house employees of the oil and gas servicing company. Melody Robertson, manager of the Super 8, says there is no truth to the story, and there has been no contact for large scale room rental.

The nearby Americas Best Value Inn also was the object of rumored “oilfield takeover.”

Not so, says John Feller, district manager.

Ditto for the Lamplighter Inn, though Rick Norberg, owner of the Lamplighter, chuckles at the depth of the rumor making the rounds.

“We even had the police stop by to check on what they had heard ... to see if they should be getting prepared for what a boom might bring,” Norberg said.

All three motels have in-and-out customers from the oil patch, but no grander commitments, they said.

Drilling activity picks up

At the same time, there has been a pickup in drilling activity in the last nine months, and the eastern flank of the Big Horn Basin may be on the threshold of a bigger, but measured, play.

The bulk of the Park County permits — 31 in all — have been issued to Fidelity Exploration and Production Co., a wholly-owned subsidiary of MDU Resources Group. Most of the ongoing Fidelity drilling, from last summer into early 2012, has been on sites in the Silver Tip unit in southwest Elk Basin.

At least three drilling permits for the Mowry have been issued in Washakie County west of Worland. The Mowry shale formation is said to extend from the Worland area north into Big Horn County, west of Basin and Greybull, and on into east Park County and northwest Big Horn County.

Mowry shale

The unconventional Mowry shale does not lend itself to a “feeding frenzy” of development.

Drilling of the Mowry shale will require “a very methodical and thoughtful” approach, says Tom Fitzsimmons, business unit leader for Legacy Reserves of Cody, a disciplined oil and gas developer. From his observations, Fitzsimmons says there is a lot more geo-science involved in determining the best areas to drill the Mowry.

“It is not a regional development,” he says. “In an area, you really need to understand where the sweet spots are before you drill. It’s a far more scientific approach than what the other Basins have seen.”

As a result, investment will likely be higher to drill and complete, and the recovery per well will probably not match the Bakken in the Williston Basin of North Dakota nor the Niobrara formation in southeast Wyoming, he estimated.

Natural fracturing is important to recovery from the Mowry shale.

When the natural cracks in the rock connect with each other over a vast area, that’s where the oil is stored. Hydraulic fracturing is used to connect the wellbore to areas of fairly high occurrence of natural cracks.

“Another very important characteristic of the Mowry, as opposed to the Bakken and the Niobrara, is that fewer parties are involved in leasing. There are a smaller number of companies involved, and in many respects, that’s a good thing,” Fitzsimmons said.

“You don’t feel like you’re going to be drained by competitive drilling,” he added. “You’re not hurried. You don’t feel you have to rush to drill for fear the natural cracks which are the source of the oil are going to be drained. Fewer companies operating on larger blocks of acreage are less sensitive to offset wells.”

Bottom line: a lot of science has to happen before the Mowry wells are drilled.

‘Bottoms Up’ well

on East Willwood

The Cirque Resources well on the East Willwood, dubbed “Bottoms Up” by the company, was drilled to a vertical depth of 10,620 feet with a pilot hole to target the Mowry, then plugged and drilled horizontally to the northwest at a depth of about 9,250 feet. The lateral drilling covered a distance of about 3,150 feet.

The Bottoms Up 36-16H well was hydraulically fractured in 11 stages starting in mid-November.

“A few other operators are also currently working to evaluate Mowry shale oil potential in the Big Horn Basin,” said Cirque Senior Geologist Rob Sterling.

In joint September 2011 comments to the Bureau of Land Management, a coalition of oil and gas companies and groups — including the Petroleum Association of Wyoming, Marathon Oil Company, Cirque Resources and Legacy Reserves, among others — wrote of the Mowry’s potential.

“Substantial exploratory work in the Mowry Shale and other areas of the (Big Horn) Basin is currently under way by a variety of operators,” wrote Public Lands Advocacy Executive Director Claire Moseley, adding that hydrocarbons had been discovered there.

“Additional exploration and refinement of drilling and production techniques in the Mowry Shale Fairway and other regions of the Basin could potentially lead to large scale economic production opportunities now that the presence of the resource has been confirmed,” Moseley wrote.

Cirque Resources has a second Mowry shale well under way in the area, the Federal 1-26H. It was temporarily abandoned due to seasonal drilling restrictions that apply to a federal lease at the site, but Cirque intends to move a rig back on location later this year to finish drilling and completing the well.

Cirque Resources (a cirque is a deep, steep-walled mountain basin) has named the East Willwood exploratory prospect area the “Sure Shot Field.” Cirque Resources often names exploratory prospects after real cirques in either the Alps or the Rocky Mountains. The Sure Shot prospect was named after a small cirque lake in the Tobacco Root Mountains in southwestern Montana.