Rob Sabo

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February 25, 2013
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How do you find oil in the desert? Drill 2 miles deep


Noble Energy plans to drill exploration holes more than two miles deep, or about eight times the height of the Empire State Building, in its quest to find oil in the Nevada desert.

The Houston company plans to begin exploration drilling this year as part of $130 million it has budgeted for oil and gas exploration on 350,000 acres of federal and private land it has leased in Nevada. Three to five test wells will be drilled on average between 10,000 and 12,000 feet deep, says Jeff Schwarz, Rockies business unit manager for Noble Energy.

The company has predicted slightly better than a coin-flip's chance of success 55 percent but that's actually a favorable number, Schwarz says.

"For an exploration project, that is probably a high chance of success; typically you will see 25 to 50 percent chance of success in exploration."

Noble spent three months in the second half of 2012 working with seismology companies to complete three-dimensional seismic surveys of 120 square miles of land running north and south from Elko to Wells. The surveys provide Noble's geoscientists with a roadmap for target drilling through detailed pictures of underground rock formations and natural fault lines. Additionally, scientists study surface rock outcroppings, historical data from old wells, and oil fields in other areas of the world with similar characteristics.

Each test well could cost as much as $8 million, Schwarz says. The rigs used to drill deep oil and gas wells are among the largest heavy equipment in the drilling industry; consequently, the company may have to use expert drillers in the oil and gas industry for initial drilling work and employ Nevada-based companies for production drilling that could follow by mid 2014.

"There may be some room to use rigs found in the mining industry and use local expertise, but unfortunately Nevada is not an oil and gas state, so we expect for the exploration phase that we will have to bring in expertise from out of state," Schwarz says.

Additional development wells would be drilled in mid-2014 based on the results of successful test drilling.

"We have got to find something first we could be out here for the first eight to 12 wells and still be in the exploration phase," Schwarz says.

Oil production potentially could start as early as late 2014. Production could be as high as 50,000 barrels a day by 2020, which would significantly increase Noble's oil production. Currently the company produces about 300,000 barrels a day in five core areas around the world.

Nevada currently produces a paltry 1,000 barrels a day from a handful of wells scattered around the Railroad Valley in Nye County.

If successful, though, Noble's efforts could launch an oil rush in the state similar to what happened in the Railroad Valley after Shell Oil Co. began producing oil from its Eagle Springs well, the first commercial oil well in the state. By 1968, the company had 14 wells producing an average of 20,000 barrels per well per year, the University of Nevada, Reno, Bureau of Mines and Geology says. Nevada also has the distinction of having the most prolific oil well in the continental U.S. The Grant Canyon well produced up to 4,300 barrels per day in the mid 1980s.

Technological advances such as hydraulic stimulation fracturing have led to new oil-rich regions across the United States, but Nevada has never really been known as a shale play. Noble seeks to change that.

"We are looking for something that will produce enough oil and gas that would be economically successful and provide a great return," Schwarz says. "Our team of geoscientists are looking for new large areas for Noble to explore and produce oil and gas around the world. Some had the idea to look in basins that had been drilled 20 to 30 years ago in Nevada and had some oil and gas shows.

"With modern techniques we can turn this into a successful unconventional resource play," Schwarz adds.

Nevada is an "unconventional" shale play due to the need for hydraulic fracturing, or "fracking" in industry terms. In conventional oil wells, oil and gas flow easily from entrapment in rock formations. In an unconventional play, the shales are packed extremely tight and oil and gas won't flow out without the shale being fractured through the injection of high-pressure fracturing fluid.

Noble predicts that initial employment could run as high as 50 men per drill rig, both direct and indirect employment. The company also expects to boost regional employment through construction of roads and pads for its drill rigs.

Noble estimates that the region could produce anywhere from 190 million to 1.4 billion barrels of oil and natural gas.

SIDEBAR

Noble to present plans at community forum

Noble Energy will present an outline for its plans to drill for oil in northeastern Nevada on March 14 during a communications forum hosted by the Bureau of Land Management at the Red Lion Hotel & Casino in Elko.

The forum begins at 6 p.m. BLM specialists also will present regulatory information on oil and gas exploration. After topic presentations, the public can make comments about the project. Speakers need to register either at the event or prior to the event by email at elfowebmail@blm.gov. Speaking requests should include requestor's name, address and phone number and topic of their comment.


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Northern Nevada Business Weekly Updated Feb 25, 2013 12:00AM Published Feb 25, 2013 12:00AM Copyright 2013 Northern Nevada Business Weekly. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.