The DJ/Niobrara Basin | August 2023

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

Active Drilling Rigs in Basin- 14 (-)
Total Rigs in Colorado- 16 (+2)
Total Rigs in the United States- 630 (-2)
Total U.S. Rigs 17.5% YTD

State Permitting Data
Permits Approved (10/1/2022 to 4/30/2023) – 35

State Top Producers

Top Producer By BOE – Kerr McGee (Occidental)

Basin Highlights

Chevron acquires PDC Energy, creating the largest oil & gas business in Colorado

Chevron Corporation has acquired Denver-based PDC Energy, making it Colorado’s largest oil and gas company. This comes three years after Chevron purchased Noble Energy. Approximately half of the company’s 600,000 acres are in the Denver-Julseburg Basin, which is near Chevron’s current operations. It will be one of Chevron’s top five production producing plays worldwide, producing an average of 400,000 barrels of oil per day. “We have an inventory that’s permitted and we see possibilities here,” Chevron’s Regional Vice President, Kim McHugh told CBS News Colorado. There has been no news regarding possible layoffs of the PDC workforce.

95 oil and gas wells are in the way of economic development in Frederick

The town of Frederick, Colorado has been expanding at a rate of 6% to 8% per year, but the town’s more than 300 wells pose a constant challenge, especially to commercial, industrial, and mixed-use developments, which the mayor said are essential to maintaining reasonable local taxes. “We are trying to bring in commercial and industrial growth and we find developers say they are stuck and they cannot develop on land they own because of oil and gas wells,” Mayor Tracie Crites said. “It has led to developers not considering the Town of Frederick.” As part of the new requirement that businesses demonstrate they have the financial means to restore their sites, Frederick is asking the Energy and Carbon Management Commission, formerly the Colorado Oil and Gas Conservation Commission, to order KPK to plug and abandon the 95 low-producing wells. This is an unprecedented move.

Opinion: The need for balance in the regulation of the oil and natural gas industry

In terms of its dedication to the safe and responsible stewardship of the state’s oil and gas resources, Colorado is a national leader. Colorado has enacted precedent-setting regulations over the past few years, from baseline groundwater testing and monitoring to air regulations focusing on methane leak detection and repair. However, there is still a long way to go, and even though it’s a difficult road for the regulators, it’s important that we continue. Operators would prefer consistency, predictability, and time to acclimate to new regulations, but the pace is actually quickening. One stakeholder told us that in the previous five years, she had participated in 25 rule-making programs. Although the state has been active, has it been productive?

Top CO Permitting By Operator

Top Oil Producers

Rig Count

Colorado Production

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The information contained in this newsletter is provided by RARE
PETRO Engineering, PLLC via the following sources unless otherwise
noted:

www.eia.gov
www.drillinginfo.com
www.bhge.com
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