Years in the making, the recent steady rise in drilling in the Powder River Basin of northeast Wyoming is generating excitement reminiscent of the early days of currently more-established US onshore oil plays.

The upturn in activity is resulting in double-digit production growth. Wells are bubbling over with oil, and operators are bubbling over with enthusiasm. This has been most evident in recent industry presentations, where decision makers from the basin’s exclusive club of operators have gushed over what is becoming a core asset in their portfolios.

Given the basin’s oil richness, multiple stacked horizons, and well performance and economics, “we think it’s comparable and competitive with the big-name basins—whether it’s the Permian, SCOOP, or STACK,” Joseph DeDominic, president and chief operating officer of Anschutz Exploration, said at a recent SPE Gulf Coast Section meeting on the basin.

“This is what really gets us excited—the fact that you have 5,000 ft of stacked pay which is very similar to what you see in the other basins,” generating a high-dollar amount per acre, said Aaron Ketter, vice president of Devon’s Rockies business unit, during the same event. Formations are “highly economical” at $50/bbl and under, he said, with the heart of the Turner zone sometimes breaking even in the high $30s/bbl.

Traditionally known for its prolific coal production, the Powder River Basin’s potential for oil became a stronger point of focus in the industry about a decade ago. Operators began moving in on the region, rigs in tow, collecting limited but valuable data on its formations. When the commodity price downturn struck the industry during 2014–2016, operators pulled back investment, resulting in the basin’s failure to launch.

In its current state as an oil play, the basin is still underdeveloped. While lots of vertical wells have been drilled there in the past, “the truth is, when you look at horizontal development, and even using modern completions, it’s really brand new. We’re just getting started,” said Joseph A. Mills, Samson Resources II president and chief executive officer. “Delineation is what’s happening today and that’s probably what’s going to go on for another couple of years.”

Companies that are now ahead of the curve arrived early in the basin, secured operatorships, began drilling years ago, held onto their acreage—and its accompanying data—through the downturn, and patiently waited for oil prices to rise and costs to fall.

“What’s unique about the Powder is just the areal extent of some of these zones aren’t the same magnitude as you see in the Permian or the Midcontinent. So zip code really matters,” said Ketter.

Current Lay of the Land

Devon, Anschutz, and EOG Resources have the largest positions in the Powder River at around 400,000 net acres each. Chesapeake Energy and Anadarko Petroleum each has around 300,000 net acres, with the latter firm having just spent some $100 million to expand its position.

This content is only available via PDF.
You can access this article if you purchase or spend a download.