Production Characteristics and Economics of the Denver Julesburg Basin Codell/Niobrara Play
Authors: Wright J.D. , Fields R.A. 
Published: December 2007

Active development of the Upper Cretaceous Niobrara and Codell reservoirs in the Denver-Julesburg basin has resulted in about 2,000 completions since 1981. A detailed evaluation of the producing characteristics and economics of wells in this 800,000-acre [323 760-ha] play show that high-GOR wells and wells in the top one-third percentile play show that high-GOR wells and wells in the top one-third percentile will yield a positive discounted net cash flow with today's costs and prices. Reservoir heterogeneity and varying completion techniques used to prices. Reservoir heterogeneity and varying completion techniques used to date will make it difficult to predict with a high degree of certainty the location of future top one-third wells. Ultimate reserves for an average Codell or Codell/Niobrara well are estimated to be 13,000 STB [2067 stock-tank m3] oil and 110 MMscf [3.1 × 10(6) std m3] gas. With drilling and completion costs of $185,000, oil and gas prices will have to rise some 40% above current levels to yield acceptable rates of return. A sensitivity analysis is presented to show how changes in well costs, production profiles, and the other variables will affect net present value production profiles, and the other variables will affect net present value (NPV).

Introduction

The Upper Cretaceous Codell sandstone and Niobrara limestone is the source of a major oil and gas play in the west central portion of the Denver-Julesburg basin. The play is developing in an 800,000-acre [323 760-ha] area north of Denver, CO. Even though the first discovery of producible hydrocarbons in the Codell was made in 1955, few wells in the study area were completed in the Codell and Niobrara before 1981. About 1,900 wells were completed between 1981 and Dec. 1987 in the Codell, either singly or multiply with other formations. Development on 40-acre [16-ha] spacing over the entire 800,000 acres [323 760 ha] could result in 20,000 wells being drilled or recompleted into the Codell.

Publicly available production and completion data from both Dwight's Energy Data Inc. and Petroleum Information Corp. were used to develop typical production profiles for Codell and Codell/Niobrara wells. These production profiles are characterized by very rapid initial declines followed by a gradual flattening. which is typical of low-permeability formations. Cumulative GOR and productivity maps were developed to delineate better-than-average productivity maps were developed to delineate better-than-average producing areas. producing areas.

Economic analyses with both constant and escalated prices and costs are presented for five different production profiles. Sensitivities of NPV to oil and gas prices, drilling and completion costs, operating and maintenance costs, and various production profiles are analyzed and presented in a spider diagram.

Description of Play

Fig. 1 is a stratigraphic nomenclature chart of the Denver-Julesburg basin. The objectives of the current play are the Niobrara formation and the Codell sandstone member of the Carlile shale. Within the play area, the Terry and Hygiene sand above the Niobrara and the J sandstone member of the Dakota group, which is about 500 ft [152 m] below the base of the Codell, are productive in the Spindle and Wattenberg fields, respectively.

The Denver-Julesburg basin, which is shown in Fig. 2 along with a portion of the Powder River and Anadarko basins, is asymmetrical, with a gently dipping eastern limb and a steeply dipping western limb. The axis of the basin runs parallel to the Front Range along a line from Cheyenne, WY, through Denver. The play is located within the Type 2 Codell sandstone as mapped and described by Weimer and Sonnenberg. The area of study for this paper is Townships 8 South to 8 North, Ranges 58 West to 70 West.