USGS: Mancos Shale Right Up There with the Marcellus – 40-times more natural gas in the Piceance than previously thought

Piceance Basin map

Source: USGS

Western Colorado has 40-times more natural gas than previously thought, but increased drilling and completion activity in the state’s Piceance Basin is not expected in the near future.

The U.S. Geological Survey said the Mancos Shale formation in the Piceance basin holds roughly 66.3 trillion cubic feet of natural gas, up from 1.6 trillion estimated in 2003. USGS cited data from commercial drilling companies and new research for the revision, reports the Associated Press.

A trillion cubic feet of natural gas is enough to heat 15 million homes for a year, according to the U.S. Energy Department.

The new estimate makes Colorado’s Piceance the second-largest natural gas basin in the United States after the Marcellus Shale, which holds 84 trillion cubic feet of gas, according to USGS.

Prices and regulations remain concerns

David Ludlam, executive director of the West Slope Colorado Oil and Gas Association, said he doesn’t expect a rush to drill in western Colorado because current natural gas prices are too low to justify pursuing the Mancos shale. Companies have drilled shallower formations in the basin, but Ludlam believes prices would need to reach $3.50 per MMBtu before companies began pursuing the deeper deposits of natural gas. Natural gas was trading at $2.60 per MMBtu the time of this report.

Much of the Piceance is under federal land managed by the Bureau of Land Management, making the approval process more arduous, said Kathleen Sgamma of the Western Energy Alliance.

“I hope with this reassessment the government understands that indeed the Mancos Shale is an important formation that should be developed responsibly,” she said.

West Coast LNG export facilities are needed to make Colorado natural gas competitive

Ludlam said more LNG export facilities designed to serve Pacific nations would be needed to generate demand for Colorado’s natural gas and make it competitive. COGA’s director cited projects like Jordan Cove LNG at Coos Bay, Oregon, as one that might serve as a good destination for the reserves housed in the Piceance.

Colorado Governor John Hickenlooper has also called for the completion of the Jordan Cove project, saying “The project terminal is the only LNG facility on the west coast that would directly link Colorado to new energy markets via the Ruby Pipeline which originates in Colorado and carries natural gas from that region to states further west of Colorado.”

The project faces regulatory obstacles, however. In March, the Federal Energy Regulatory Commission released its decision on Pacific Connector Pipeline, saying it would not approve the 232-mile pipeline which would carry gas from the Rockies to Oregon.

Local petitions could also halt growth in Colorado

Colorado faces a number of ballot initiatives in November, including a constitutional amendment posed by initiative #78, which would set a 2,500 foot setback for oil and gas operations. If the measure passes and becomes part of the state constitution, a COGCC study found that it would exclude 90% of the state’s land surface from drilling and hydraulic fracturing.

The full list of initiatives and their texts can be found here.

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