Massive Drilling Project Planned For Utah's Uinta Basin

Source: Deseret News

The vast oil and natural gas deposits of Utah's Uinta Basin are like a multilayered "cake of opportunity" waiting to be sliced into with horizontal drilling, which is why Scott Saxberg believes the area's worth another $50 million investment this year.

Saxberg, president and chief executive officer of Crescent Point Energy, joined Gov. Gary Herbert at a news conference Wednesday during the fifth annual Governor's Utah Energy Development Summit to detail plans for a potential 4,000-well oil and gas project in the basin.

"We're (starting) now, and by the time oil prices come back, we can pursue the project in a greater way," Saxberg said, describing rich layers of oil and gas deposits that have yet to be tapped in the region in any earnest way via horizontal drilling.

The new wells would be phased in over three decades in locations dependent on where the resources are, he added.

Saxberg said the region is a multilayered cake of opportunity, yet is home to only 300 horizontally drilled wells.

By comparison, the southern Saskatchewan region in Canada, home to the Bakken shale formation, has 20,000 horizontally drilled wells and comprises the bulk of the relatively young company's drilling activity.

"The basin has not yet been developed through horizontal means, which has been very successful in other states in opening up plays that people didn't realize were as good," he said.

Alberta-based Crescent Point Energy has committed to spending $50 million this year in the Uinta Basin in an exploratory phase on state, tribal and privately held lands, and so far it has invested $1.3 billion on the project.

During the news conference at the Salt Palace Convention Center, Herbert admitted that rural areas of Utah are continuing to struggle, particularly those subject to the undulating cycles of resource development.

The Uinta Basin suffers from an 8.7 percent unemployment rate, he said, compared with the statewide average of 3.7 percent.

The governor stressed that vulnerability should drive the state and others to help diversify those region's economies to make them more resistant to market changes. As an example, he pointed to the Seep Ridge Road — paved and widened to move oil from the basin to I-70 — which is now the focus of transportation upgrades to improve recreation and tourism access to the basin.

As Crescent Point's exploratory phase ramps up in the coming year, it's likely it will stimulate some job activity in the region.

In April, the Bureau of Land Management began its initial phase of planning for the project, which spans 155,000 acres in Duchesne and Uintah counties. The project anticipates that 1,500 of the new wells could be horizontally drilled, with a productive life of between 20 and 40 years.

It is anticipated that the environmental review and ultimate decision on any drilling to play out on federal land will take a minimum of three years.

The project contains some complex components because its boundaries encapsulate the little community of Randlett and brush up against Myton, Gusher and Ouray. In addition to the planned 3,925 new wells, Crescent Point would put in 863 miles of roads and 693 miles of pipelines that would be co-located with the roads.

In its first full year of operations in 2002, Crescent Point Energy increased its production from 275 barrels of oil per day to 1,974 barrels per day. In the first quarter of 2016, the company announced it had achieved record production levels of 178,241 barrels per day, up 16 percent over the first quarter in 2015.

In the Uinta Basin, three of the company's wells are outperforming expectations, and similar results are expected from three wells put in this year, according to a quarterly report.

About 75 percent of the company's production comes from the Saskatchewan province, but its growing portfolio of properties also include Alberta and Manitoba in Canada, and North Dakota, Montana, Colorado and Utah.