Could the Hovenweep and Gothic Shales of The Paradox Basin be the next hot plays?
After five years the book is still out. Despite some successful completions by Bill Barrett Corporation, none of the wells produced for more than a few years’ time.
Currently, none of the wells are producing. Permitting and leasing activity has still only reached a fraction of the levels seen in other shale plays throughout the United States.
Looking Back
Operators in the Paradox Basin have had success over the past 50 years. The region has produced over 500,000 bbls of oil and over a TCF of gas. The source rocks for the Basin include the Chimney Rock, Hovenweep and Cane Creek Shales, with the Gothic Shale being the most dominant throughout the region. Most of the acreage is located on Federal or Tribal lands.
How the Gothic Shale Play Began
The leasing activity picked up in 2008 and quickly declined by the end of 2009, although some activity resumed again in 2012. Permitting activity followed similar trends.
As of 2013, very few of the traditional “shale players” had entered the region. To put the play into perspective, Cabot permitted one well in 2008 and Encana permitted one well in 2009. Over the past year, Encana permitted 371 wells in the Colorado portion of the Niobrara Shale Play alone.
Bill Barrett Corp., the play’s most active participant, has only permitted 12 wells over the past two years.
Bill Barrett Permitting Activity
Anadarko has been the only new entrant into the region over the past year, permitting 5 wells in San Juan County, Utah during the summer of 2013.
Anadarko’s Gothic Shale Permits – Summer of 2013
In Colorado, only Bill Barrett Corporation has permitted the shale in the past 3 years. The two largest leaseholders in the region are Bill Barrett Corporation and Williams Companies. They possess an estimated 352,000 and 112,000 acres respectively and are currently awaiting the results of a seismic shoot in the region to determine future drilling operations.
So, Maybe Later?
The Paradox Basin covers over 8 million acres. As of 2013, it appears that less than a million acres have been leased or are HBP. Therefore, there is a lot of acreage still available for lease. The viability of the play from an economic standpoint is still contingent upon drilling activity. Operators are going to need to “crack the code” in the future to make the play economical. From an industry perspective, we are all hoping for the best.
Your Turn
What do you think? What else could be holding these operators back? What would convince you to hop into the Gothic? Leave a comment below.
Len Tesoro
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