Investors and royalty owners itching to see initial production results from exploratory Niobrara oil wells may see a logjam of information released after the first of the year.
Wyoming Oil and Gas Conservation Commission supervisor Tom Doll explained that several wells have exceeded the agency’s 6-month confidentiality period but information about those wells remains out of the public’s hands. Commission staff members must sift through a large stack of APDs (applications for permit to drill) to research dates and notify operators that production and other information about the wells will be posted on the commission’s web site.
“The dilemma is we’ve got to have someone who goes back and reviews that information and kick out those (APDs) that shouldn’t be held confidential anymore,” said Doll.
Doll said he first wants to clarify for the industry just what activities and information will be considered confidential, then his staff will begin identifying wells that no longer qualify and make those files public on the commission’s web site.
Doll said his predecessor, Don Likwartz, had a very loose policy regarding how much new well information the commission held as confidential, and for how long.
“I’m going to be very skeptical about continuing to allow confidentiality on those wells,” said Doll, adding that extensions beyond the six-month period won’t come easily.
The work to review and pull Niobrara APDs out of the confidentiality file was put off to implement the agency’s new reporting rules regarding drilling, completion and hydraulic fracturing activities. The rules went into effect September 15. Doll said he’s already approved about a dozen requests to withhold certain chemical compounds and fracking fluid recipes as industry trade secrets under the Wyoming Public Records Act.
At least a couple of those approvals were made for Halliburton, one of the largest providers of hydraulic fracturing services in the oil and natural gas industry.
But the trade secret issue regarding hydraulic fracturing fluids is different than granting confidentiality to wildcat wells.
Doll explained that the agency’s original intent of withholding drilling and production information from the public was to allow competitive exploration, or wildcatting. Wandering off the beaten path to search for a new pocket of oil or gas – and experimenting with new tools, techniques and recipes to unlock it – is an entrepreneurial endeavor.
The agency’s rationale was to grant confidentiality for the first six months of drilling and completion activities on a well in the spirit of wildcatting – a high-risk, high-reward venture. Confidentiality is vital because, typically, mineral parcels around the wildcat well are still un-leased, and company stock can change drastically based on initial results of the well.
After the well goes into production, the curtain is pulled back and the commission resumes collecting and posting all relevant information required under applicable rules and laws. Wyoming’s policy on these matters is in line federal laws guiding such business practices.
But the problem in the Niobrara exploration play is that some companies are asking for confidentiality status on multiple wells. Doll said one company was granted confidentiality for about 41 wells simply because the company, and the commission, doesn’t know which one will be drilled first.
“I don’t feel comfortable keeping all 41 wells under confidentiality,” said Doll. “We expect to address this in a policy statement to define and clarify what the commission is going to allow as a confidential well bore.”
With all the hoopla made over this year’s lease rush on the Niobrara, it’s easy to understand why investors and royalty owners are eager to read initial production results. People speculate it could be America’s next Bakken, drastically boosting Wyoming oil production and injecting billions of dollars into the state’s economy.
But speculation cuts both ways when information is held confidential for too long – as is the case for a handful of Niobrara wells, according to Doll. Some of those Niobrara wells spudded 6-8 months ago still haven’t been completed. If a company spends more than $3 million to drill a well then decides not to finish the job, it could mean results are less than favorable, or the company doesn’t have the financial wherewithal to compete in this expensive play.
Contact Dustin Bleizeffer at 307-577-6069 or [email protected].com.