Grand Junction Boom and Bust

[jazzlover]

This presentation ( http://www.oil-gas.state.co.us/Libra...tion_Final.pdf ) would indicate to me that:

a) there are currently CBM wells in west-central Colorado, and
b) there is enough interest in additional CBM drilling that several Colorado state agencies are studying the hell out of CBM's potential development impacts.

Here is an article about upcoming CBM development in Carbon County, Wyoming--just over the line from Moffat County ( Casper Star-Tribune Online - Wyoming ). From what I have found, CBM potential has been studied in Moffat County, but--so far--there in fact is little production, primarily because gas quantities have not been high and water is a problem in the gas formations (this is frequently an issue with CBM, but appears pretty significant in the Moffat County CBM areas). From what I have gathered, most of the gas production in Rio Blanco County is mostly deep well production, but there is great interest in CBM there.

It is also important to remember that, for years, natural gas prices were pretty darned low, discouraging a lot of exploration; and that Rocky Mountain natural gas prices compared to the Henry Hub price have remained fairly low because of lack of pipeline capacity to get the gas to markets in the Midwest and East. That is changing now.

As for my neighbor, I'll let you come over and tell him that he's lying to me and he isn't going to work on a CBM rig every day. I think he knows what kind of rig he works on (he's a supervisor) and he's a lot bigger than me.

[multitrak]

This presentation ( http://www.oil-gas.state.co.us/Libra...tion_Final.pdf ) would indicate to me that:

a) there are currently CBM wells in west-central Colorado, and

ok, let's go through this point by point so you'll understand what i'm talking about and just to remind you what you originally said, which was:

The current boom in Grand Junction is being fueled by feverish gas well drilling--mostly coalbed methane drilling in the region surrounding Grand Junction (bold my emphasis).

alright, it's apparent that that statement is simply not true. according to the study you cited (p.12), only 79 cbm wells (< 1% of the total) were drilled in nw colorado in a nine year period (1998-2006), out of the thousands of tight gas sand wells drilled during the same time. also, the 79 total cbm wells are much less than the total of all cbm wells drilled and completed in the state (3909), mostly in the san juan and raton basins (3830). after looking at p.16 of your cited report, it appears that low cbm reserves, high water cuts, and i'm guessing that relatively low gas contract prices couldn't justify further exploration or development in the area. so my reply "nope, it's tight gas sand exploration and development, not coalbed methane" still rings true because that's what the data says counter to mostly speculative claims. and i'm definitely NOT ceding sw wyoming to gj's "economic sphere", whatever that means, since rock springs has ALWAYS played a big role in the development of oil and gas in the green river basin (take a gander at ALL the oil and gas and service companies located there). but i won't deny that gj has some impact in wyoming, but obviously not as much as rock springs. anyway, so much for the feverish cbm drilling in the state...may be in the future, but not right now and not last year.

b) there is enough interest in additional CBM drilling that several Colorado state agencies are studying the hell out of CBM's potential development impacts.

which is the point of the report you cited. you certainly don't want to contaminate what little of the surface water and fresh water aquifers exists in the region, especially since the wells could inadvertently vertically connect all three: surface, aquifer, and reservoir...tight sandstone or coal, it really doesn't matter which because naturally occurring and artificially created fractures affect both.

Here is an article about upcoming CBM development in Carbon County, Wyoming--just over the line from Moffat County ( Casper Star-Tribune Online - Wyoming ). From what I have found, CBM potential has been studied in Moffat County, but--so far--there in fact is little production, primarily because gas quantities have not been high and water is a problem in the gas formations (this is frequently an issue with CBM, but appears pretty significant in the Moffat County CBM areas).

there's something quite telling in your cited newspaper article, which said:

Unlike the Powder River Basin's markedly shallow, yet methane-rich coal beds, coal seams in southwest Wyoming run thousands of feet deeper, according to geologists.

deeper means more expensive to drill and complete which means that the gas reserves had better justify the increased costs. and it also means that the green river basin cbm play would be more sensitive to the natural gas price fluctuations. since the cbm play in sw wyoming is still in its infancy (exploration phase), i'm guessing that operators are taking a wait and see attitude to see where the sweet spot spills over into colorado from wyoming.

part of the problem with cbm is that the water has to be pumped out of the naturally occurring and artificially produced fractures so that the gas in the coal seam can flow to the wellbore. if the high water cut in the coal gets too high, then the pump at the surface can't remove enough of the water and the gas ceases to flow to the surface. so, yeah, both water production and its disposal can be an expensive proposition that kills the economics.

otoh, gas companies are currently looking at the further development of tight gas sandstones instead (where water isn't as much of a problem) as i had posited in my previous posts. take a look at this report prepared by williams company (tulsa, ok) for the COGCC to see what i'm talking about... http://www.oil-gas.state.co.us/Libra...0ALL%20PDF.pdf the infill drilling program is conducted within scattered fields in garfield county. the report illustrates the highly lenticular nature of the sandstone gas reservoirs, particularly the x-sections on pp. b-12 & 13.

From what I have gathered, most of the gas production in Rio Blanco County is mostly deep well production, but there is great interest in CBM there.

yep. as i had indicated in an earlier post. according the drilling permits, nearly ALL the wells are drilling for tight gas sandstones, even where they shallow out near the edge of the basin. but i couldn't find one well drilling for cbm in the past year on record for rio blanco county. if you examine the complex stratigraphic and facies relationships on the x-section on p.35 of your cited report, it shows how all this tight sand and coal stuff can be so confusing to the non-geologist. and more confusion is added when service company personnel talk about tight gas sandstones producing gas derived from coals.

It is also important to remember that, for years, natural gas prices were pretty darned low, discouraging a lot of exploration; and that Rocky Mountain natural gas prices compared to the Henry Hub price have remained fairly low because of lack of pipeline capacity to get the gas to markets in the Midwest and East. That is changing now.

i couldn't agree more. colorado has a bright and shining natural gas future when they are able to market it out of the state. hopefully cbm will be a large part of that future. but right out, i'm just not so sure because the coals in nw colorado are so thin and variable (lenticular) and high water cuts might be an expensive problem.

As for my neighbor, I'll let you come over and tell him that he's lying to me and he isn't going to work on a CBM rig every day. I think he knows what kind of rig he works on (he's a supervisor) and he's a lot bigger than me.

hey, i'm not saying that he's lying, but i'd like to know where he's drilling those wells (sw wyoming perhaps?). i've gone toe to toe and nose to nose with many company men in my career...i'm pretty damn big and intimidating myself. one fact of life in the oil patch is that toolpushers, company men and engineers generally hate or dislike geologists, something that i take great satisfaction in. if they get a bit surly, i remind em that it's MY prospects that pays their salary. usually, that shuts em up. if not, then i get em drunk at a local watering hole at the end of the day or for breakfast...works every time! God, how i love my job! i'm finished with this tangent...signing off...

[suzco]

Some more information about drilling in Colorado and the region:

More drilling, more rules - The Denver Post