While the Niobrara shale, an emerging unconventional play in the Rocky Mountains, won't pack the punch of the Bakken, it could develop into a 350,000 b/d producer of crude by 2016, an industry expert said Friday.
And the projected 200% growth over five years from the play's current 112,000 b/d is likely to overwhelm projected pipeline capacity, leaving an eventual overhang of between 6,000 b/d and 46,000 b/d, depending on logistical arrangements, Adam Bedard, a senior director with Bentek Energy said at the Platts sixth annual Pipeline Development and Expansion conference in Houston. Bentek is a unit of Platts, a division of The McGraw-Hill Companies.
The play straddles the Colorado and Wyoming borders and lies within the Denver-Julesburg basin. Chesapeake, EOG, Noble, and Anadarko are the most active of the 14 operators in the region, which has 425 wells drilled to date.
The increased production from the play will add to bottleneck pressures in the PADD IV region in the Rockies, as that crude will vie for space on pipelines that are already loaded with Canadian and Bakken crude headed toward the Cushing storage hub and the US Midwest refining complex.
The immediate area's two refineries -- HollyFrontier's 52,000 b/d in Cheyenne, Wyoming, and Suncor's 93,000 b/d in Commerce City, Colorado -- are already operating with utilization rates in the low- to mid-90% range, with little room to process more.
Pipeline expansion projects should ease pressure, particularly Kinder Morgan's 710-mile, 210,000 b/d Pony Express line that will run from Guernsey, Wyoming, to Cushing starting in 2014.
Because of the pipeline constraints, either rail transport capacity will have to increase, or the flow of Bakken and Canadian in the Platte and Butte pipelines will have to lessen, he said.
The Niobara is a more technical play than the Bakken, with a wide discrepancy among individual well production. For example, 400 b/d wells sits next to a 6 b/d wells and because of that the field won't have the potential of the Bakken, he said.
Comparatively, the Bakken produced 423,000 b/d in July in the North Dakota portion alone.
