“Gusher” Oil Field Discovered In Weld County, CO Is Surprisingly Sweet
Yesterday, reports of a high quality crude oil well in discovered in northern Colorado contained two remarkable facts.
1. During its initial 24-hour test, the production well yielded 1,770 barrels of oil. According to denverpost.com, the average well in the region produces 100-150 barrels a day.
2. The oil is light sweet crude, the most useful and therefore most valuable crude grade in the world that is increasingly rare.
Light sweet crude is the highest crude grade due to its lightness (flow quality) and sweetness (purity). Defined as crude with little or no sulfur (under 0.5%), sweet crude is easiest to pump and requires significantly less processing than sour (sulfur-heavy) crude grades. Also, light crude yields more gasoline and other distillates per barrel because of its higher hydrocarbon content. The value of light sweet crude grows as global supply declines: according to OPEC via the Energy Bulletin, the global peak in light sweet oil production was reached in 2005.
The discovery of high quality liquid crude oil comes in an area known to contain great quantities of oil shale, a waxy substance trapped inside rock that must be heated before it can be extracted and processed into crude oil. In nature, formation of oil shale takes place through geologic processes over millions of years. As the global supply of conventional (liquid) oil depletes, unconventional oil from sources like oil shale becomes more attractive, but comes at twice the cost of conventional oil production, according to Department of the Interior.
The newly discovered field is located in northern Weld County underneath a sheet of shale rock called the Niobrara Formation. Oil companies have known the value of this region for years, but only recently acquired the legal rights and the necessary technology to reach the oil, which requires a drill maneuvered by a horizontal pipe thousands of feet long and 50 feet underground.
The well, named Jake 2-01H, is run by EOG Resources Inc, an independent oil and gas exploration company based in Houston that has been cagey about its projects in the area. According to the Houston Business Journal, company spokespersons Elizabeth Ivers and CEO Mark Papa have released just one shared statement: “EOG doesn’t discuss areas where we are still leasing acreage.”
Ed Holloway, CEO of Synergy Resource Corp, one of the oil companies trying to get a share of the region’s lease, called the well a “gusher” and said, “There’s some really significant things that are going to go on in Weld County. . . It’s just going to spark off one heck of a drilling activity.”
Weld County Commissioner Doug Rademacher agreed, stating that the field was “very high quality” and “high producing,” and that it could be “fairly large.”
Said energy analyst Ward Polzin of Tudor, Pickering Holt & Co.; “If I’d pick any recent activity in the state of Colorado that has people excited in the oil and gas industry, this is it.”
A large domestic oil find could ease crude oil prices downward due to supply increases. If this field’s early reports hold up then we are bound to see a corresponding heating oil price drop in the future.