The DJ/Niobrara Basin| December 2020
Field Overview
Located mainly in the Northeast of Colorado, the Denver-Julesburg Basin consists of five main oil-producing formations: Niobrara sections A-C, Codell, and Greenhorn. These five plays produce over 90% of Colorado’s oil/gas.
State Drilling Statistics (End of December)
Active Drilling Rigs in Basin- 5
Total Rigs in Colorado- 6
Total Rigs in United States- 351
Total U.S. Rigs down 56% YTD
State Top Producers
Top Gas Producer- Kerr McGee Oil & Gas Onshore LP
Top Oil Producer- Kerr McGee Oil & Gas Onshore LP
Basin Highlights
Liberty Acquires Schlumberger Fracking Fleet
Liberty has come out of a deal with Schlumberger leaving them responsible for the Schlumberger “OneStim” hydraulic fracturing business. The deal was finalized on December 31st of 2020. This fleet of high pressure pumping units existed across North America and covered operations from pump down perforating to frac sand supply. While Liberty now has OneStim, Schlumberger has earned 37% equity interest in Liberty and placed two representatives on the board. In the past, Schlumberger has been accused of frivolous spending, so this could be a way for the company to recover some cash. For Liberty this deal means more than doubling their frac fleet, and establishes the groundwork for potential to incorporate their environmentally conscious “ESG frac” process into operations across Colorado. This includes practices such as replacing diesel fuel with natural gas when possible and generating 50% of the fleet’s horsepower through low emission means.
Boulder Continues to Suppress Activity
As oil and gas activity has decreased amidst the demand destructing of COVID, it was a great time for many agencies to reevaluate their policies. While you would definitely expect organizations like the COGCC to be responsible for changes like this, Boulder County has been making sweeping changes to their own regulations as well. As of mid-December there has been a disagreement over the 2,000-2,500 ft regulations that were introduced at the start of the month, along with additional regulations that would allow multiple opportunities for any public entity to provide their input. One of the three Boulder County Commissioners said that these rules, “are the strongest rules in the state and will be a model for others.” On top of this, a moratorium will continue through the end of the year in order to ensure, “any new applications to drill can be reviewed under the most protective, updated regulations that are ultimately adopted.” Colorado Oil & Gas Association CEO Dan Haley expressed his concerns at communities attempting to outright ban any activity through regulations that eventually become too convoluted, uneconomic, and time consuming. As he puts it, “This latest setback is based more on politics than science. The data shows a 500-foot setback is protective of public health. The measurements and toxicological analysis that we saw during the Mission Change rulemaking made that clear.” If things continue to progress like this, it is likely that Boulder will be able to ban any activity within their jurisdiction.
Colorado Revamps Permit Process
New permitting rules to be implemented in January were announced in December of 2020, and over 200 people called into the COGCC Zoom meeting to see which of their 5,000 permits would survive the regulatory changes. 4,300 of those are for new wells, and 740 for the location of well sites. Any that don’t meet the new regulations will have to be redone appropriately before stepping back into the end of the queue. Some of these applications are a result of panic from prop 112, and have not been addressed since the ballot measure was voted down. Either way, the process has certainly gotten slower since. In 2019, over 2,000 well permits were approved. In 2020, there were barely 1400. Many people have attempted to be proactive in planning for these potential changes, but it still remains a tough task for operators statewide.
Top Gas Producers (2020 cum)
| Rank | Company | Production (Mscf ) |
| 1 | Kerr McGee | 269,169,127 |
| 2 | Kinder Morgan | 256,449,906 |
| 3 | PDC | 189,956,474 |
| 4 | TEP | 171,283,543 |
| 5 | Caerus Piceance | 160,405,245 |
Top Oil Producers (2020 cum)
| Rank | Company | Production (Bbl) |
| 1 | Kerr McGee | 29,893,992 |
| 2 | Noble Energy | 22,994,418 |
| 3 | PDC Energy | 21,554,561 |
| 4 | Extraction Oil and Gas | 16,581,645 |
| 5 | Great Western | 9,301,337 |
Refining
Colorado Production
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