The Cave Gulch Story, Wind River Basin, Wyoming

Lawrence McPeek, March, 2005

This major 1959 gas discovery was not confirmed by a second commercial well until 1994. Now there are more than 100 wells and drilling continues.

Chevron did do additional drilling for Lance objectives in 1959. Figure 2 shows that they drilled a Lance test to the north-northwest and one to the south. Both of these wells were structurally low and were noncommercial. Their locations were probably based on seismic data shot before1959 that were not very reliable, especially under the vertical beds in the overlying thrust plate (Fig. 3). They might have recognized that there was inherent unreliability in their seismic interpretation in this setting and should have relied instead on the dipmeter in the key well, which plainly said that they should drill to the northeast. They didn’t recognize that opportunity, and for 35 years this obvious prospect went undrilled. Chevron did drill further south on the Waltman structure and found gas production in stratigraphic traps in lenticular sandstones of the shallower Tertiary Fort Union formation (Fig. 2).

 

My first involvement with the area was in 1970 when I recognized the prospect and tried, unsuccessfully, to get it drilled. Before I tell the rest of the story I need to thank a lot of people. First are my associates Ray Thomasson and George Newman of Thomasson Partner Associates. Ray nagged me into coming up with a gas play in 1993 that he could promote, and his contacts were critical to securing the key leases. George did the engineering work on the project. Barrett Resources took the project from us and did an outstanding job of drilling, completing and operating the wells at Cave Gulch before the Company was sold to The Williams Companies in 2000. The same people formed the Bill Barrett Corporation and bought the field back from Williams in 2002 and are once again doing an outstanding job. I don’t believe there is a better group of people or a better operator in the world. More than these people and companies though, I want to thank all of the companies that had an opportunity to develop this field between 1959 and 1994, and didn’t do it. There is a long list. It was a fairly obvious prospect and part of the story is about why it wasn’t developed sooner.

 

The index map (Fig. 1) shows that the Cave Gulch area is in the Wind River Basin of Central Wyoming at the north end of the Waltman anticlinal structure where it extends under the South Owl Creek Mountains thrust fault.

 

In 1970 when I became exploration manager for the Rocky Mountain Region for Koch Exploration I had never worked the Wind River Basin. Koch had assembled about 80,000 acres of leases in the basin and caused some wells to be drilled there, without notable success. One of my first tasks was to evaluate those leases and see what else might be done with them. In the process, I came across a dipmeter in the Chevron #1 Waltman well (the Key Well) which showed me that a well drilled to the northeast should encounter productive Lance sandstones at a higher structural position. Other well control indicated the probability of a closed anticlinal structure up dip to the key well. I recommended the prospect to Koch. They rejected my recommendation for the following reasons:

 

1)      The structure appeared to be pretty small and in the seventies the conventional wisdom was that gas wells were generally drilled on 640 acre spacing (one well per square mile) in order to drain all the gas in the reservoir. Figure 2 shows that only one or two more productive locations on 640 acre spacing might be expected.

2)      The leases were held by Chevron and a difficult deal would have been required to earn an interest in them.

3)      Koch had devoted a lot of time and money to unsuccessful Wind River Basin exploration and was discouraged and ready to move on to another area.

4)      Natural gas was not much in demand. Wellhead gas prices were in the neighborhood of 25 cents per MCF (thousand cubic feet). Such a small prospect then, particularly one in which Chevron would retain an interest, was not attractive economically. Deeper objectives, though interesting, might or might not produce, would be expensive to drill, and such drilling should be logically be deferred till the structure was better defined by drilling at the shallower Lance level.

 

By 1973 the key well had produced about 4 BCF (billion cubic feet of natural gas) and several thousand barrels of oil from four Lance sandstones. These four sandstones had 78 feet of pay (productive interval) and electric-log analysis indicated that there might be another 132 feet of pay in eleven other sandstones. What a terrific well to drill up dip from!  I  was a consulting geologist on retainer to a consulting firm. I made them aware of the “North Waltman” (Cave Gulch) opportunity. At that time, the key leases were about to be offered on a U. S. Geological Survey sealed bid sale. Together we located a gas company, which agreed to try and buy the key leases at that sale. We thought we could see enough shallow reserves to justify a significant bid, and that if a Lance test was successful the income from it would support drilling for deeper objectives. The gas company bid about half of what I recommended and of course they did not get any leases. Their exploration manager told me after the sale that he “felt really good about the sale because if he had bid what I recommended he would have left a lot of money on the table” (i.e. he would have bid much more than the winner had bid). I could only shake my head in amazement.

 

In 1993 I took another look at the area. The key well by then had produced more than 12 BCF and 189 MBO (thousand barrels of oil) and still, 34 years after it had been drilled, no one had drilled up dip to the northeast. The structure still looked small and the only significant drilling since 1959 had been three deep tests drilled by the companies that bought leases at the sealed bid sale in the 1970’s. All three of the deep tests penetrated the Upper Cretaceous Frontier formation and the lower Cretaceous Muddy and Lakota formations at depths of 18,000 to 20,000 feet. All were noncommercial gas wells and all were drilled to the south of the Cave Gulch structural high and several hundred feet structurally low to the crest of the structure. These wells, based on newer seismic data acquired in the 1970’s, demonstrated once again the difficulty of obtaining an accurate structural picture beneath the overthrust sheet.

 

In 1993, however, I did experience an important perceptual change.  It finally dawned on me that Lance sandstones, having been deposited in a fluvial (stream) environment, would probably each cover only a limited area and that one well was quite unlikely to drain 640 acres. I started searching the literature for articles on fluvial sandstones and found a splendid one by Flores and Keighin, 1993, which described the size, shape and nature of fluvial Ft. Union sandstones on the outcrop around the edge of the Wind River basin. The sandstones that they described were indeed of limited and variable dimension. I then started to look at other fields that produced from fluvial sandstones. The most useful example was Pavillion field in the western part of the Wind River basin. Pavillion produces from lenticular fluvial Fort Union sandstones and was found by Shell Oil in 1959. In 1969, a Shell geologist, Erv Single, one of my current associates at Thomasson Partner Associates, published an article on the field. He noted that the reservoir sandstones in the field consisted of  “a series of individual accumulations of limited areal extent”. At the time the field was developed on 640 acre spacing and was expected to produce an average of 5.4 BCF per well. In 1978 another Shell geologist, Bjorkland, published an article on the field. By then development had progressed to approximately one well on 320 acres and each well was expected to make 5.3 BCF. In 1989 Clark Mueller published a map at Pavillion that showed further development on approximately 160 acre spacing, and a quick reserve estimate indicated that the average well would still produce more than 5BCF. Some of the sandstones in the new wells showed evidence of depletion (i.e. drainage by earlier wells) and some did not.

 

This was an illuminating trend. If a field could be drilled first on 640’s, then 320’s then 160’s and make about 5 BCF per well, could it then be drilled on 80’s or 40’s or less with the same result? Of course I did not know the answer to that question but at least it appeared that the Cave Gulch structure could be developed on much closer spacing than 640’s and that it might have much larger reserves than I had previously thought. It was an exciting concept. At the time I showed the prospect to Barrett and other companies, I thought development would be on 160’s and that it might require even closer spacing. I remember stating in my presentations that the reserves might be 200 BCF. Most people looked at me like I was crazy. Peter Dea, then with Barrett and now President and CEO of Western Gas Resources, Inc., told me three years after the Cave Gulch discovery that he thought before the first well was drilled that they would have been happy to find 50 BCF.

 

Production from the Cave Gulch area to date exceeds 339 BCF plus 1412 MBO and could ultimately reach as much as 1000 BCF. The Bill Barrett Corporation is currently developing the area on 20 acre spacing and has plans to go to 10’s (64 wells per square mile) (Fig. 4). Production has also been established in the Frontier, Muddy and Lakota formations at depths of 17,000 to 19,000 feet and much development work remains to be done in these deeper formations.

 

As a sidelight, the production numbers published by Petroleum Information for the key well in1993 were misleading. The December ’93 production report shows that it had produced only 3.8 BCF and 26 MBO. I knew those numbers were wrong because I had worked the area in the early 70’s and knew it had already made that much back then. It seems that the reported number dates from only the mid-1980’s. Prior to that time production from the key well was lumped with other wells and reported on a unit basis at a different place in the report. To get the actual production numbers one needed further research to find out how much of the unit production came from the key well.

 

When I began my new look at the area in 1993 I thought I was probably wasting my time and that we would never be able to acquire any of the key leases. As it turned out we were able to make use of the worlds greatest exploration tool, the expiring lease.  A major company owned the key leases on top of the structure. They bought them in the sealed bid sale back in the 70’s and perpetuated them by drilling and the use of Federal units. They were set to expire on August 14, 1994, unless production was established before then. Since the major company had only participated in drilling the three off structure noncommercial deep tests alluded to earlier it seemed likely that they were mainly interested in the deep objectives (Frontier, Muddy, Lakota) and might not be aware of the significant potential reserves that I thought were present in the shallower Fort Union and Lance. Ray Thomasson had an executive contact within that company and arranged a telephone conversation between the appropriate company land person and myself. I proposed that if they would sell us their shallow rights, above 10,000 feet, that we would do our best to get a shallow well drilled and thereby perpetuate their deep rights. They agreed and we were able to purchase 560 acres on the top of the structure for $25 per acre. As of the end of 2004, 49 wells on those leases have produced 135 BCF of gas and 504 MBO. 

 

It took three of four months to accomplish the purchase, partly because they lost our correspondence and partly because they had to have a development geologist review the area before they would complete the sale. I don’t know this geologist but I think I can describe him. He was in Houston handling much of the onshore United States by himself, overworked, had higher priorities, not much experience in Wyoming, a management that didn’t want to be bothered with Wyoming and he didn’t know that production reporting procedures had changed. He probably looked at the 3.8 BCF reported for the key well and thought if that is all it has made in 35 years it is not much of a well and has probably drained most of whatever reservoir is there. This is one of the consequences of large companies getting rid of their experienced geologic staff over the last several years and consolidating in Houston. It has been a blessing for those of us who have continued to prospect here in the Rockies because it has opened up a lot of opportunities for us.

 

Barrett Resources took the prospect from us and did a masterful job of putting together additional leases, including eventually the deep rights. Their first well, a rediscovery well if you please, was drilled about ¾ of a mile northeast of the key well. It bottomed above 7000 feet. It had to stop there because it had to be certified as a producer by August 14, 1994, or the lease would be lost. Barrett got it certified on August 12, completed in a Lance sandstone at 6500 feet for 2.5 MMCFD (million cubic feet per day). Later it was completed in several other sandstones for a combined total of 13 MMCFD plus 75 BOPD (barrels of oil per day). Offsets to this well that approach 10,000 feet in depth have encountered as much as 1200 feet of pay in numerous productive lenticular sandstones in the lowermost Tertiary Fort Union and in the Upper Cretaceous Lance and Meeteetse formations.

 

The use of modern 3-D seismic combined with the shallow drilling has helped to define the deeper structure and seven wells have been completed in the deep Cretaceous Frontier, Muddy and Lakota formations. One of the deep tests nearly got out of control at the top of the Muddy sandstone and produced about 7 BCF through drill pipe at 35 to 45 MMCFD before its casing parted downhole. Then it did get out of control and gas was flared for about five months until a relief well was completed in the same hole for 15 MMCFD. Estimated flow rates while the relief well was being drilled ranged up to a billion cubic feet of gas per day for a brief period and the flare was spectacular.

 

Total cumulative production for the Cave Gulch area, as of the end of 2004 is approximately 339 BCF and 1412 MBO. Of that, 46 BCF came from seven wells in the Frontier, Muddy and Lakota. Much drilling remains to be done for these deeper objectives. For the shallower targets, the Fort Union, Lance and Meeteetse, many additional wells will be drilled on 20 and 10 acre spacing.

 

The Cave Gulch story shows us that occasionally things turn out better than any of us might imagine. Figure 5 shows two things that I have been lucky at, the Barrett #1 Cave Gulch well, and Kay, the woman I married in 1959, back when this story began. She is looking thoughtful and I expect she is wondering just why the devil this thing took 35 years.

 

 

References:

Bjorkland, T. K., 1978, Pavillion gas field: Wyoming Geological Association Guidebook, Wind River Basin, p. 255-261.

 

Flores, R. M., and Keighin, C. W., 1993, Reservoir anisotropy and facies stratigraphic framework in the Paleocene Fort Union formation, western Wind River basin, Wyoming: Wyoming Geological Association Special Symposium -  Oil Gas and Other Resources of the Wind River Basin, p. 121-141.

 

Mueller, Clark, 1989, Pavillion: Wyoming Geological Association Symposium - Wyoming Oil and Gas Fields, Big Horn and Wind River Basins. p 356-358.

 

Natali, Steve, Roux, Roy, Dea, Peter, and Barrett, Fred, 2000, Cave Gulch 3-D survey, Wind River basin, Wyoming: The Mountain Geologist, v 37, p. 3-13.

 

Single, E. L., 1969, Pavillion field, Fremont County, Wyoming: Wyoming Geological Association Symposium on Tertiary Rocks of Wyoming, p. 101 –104.

 

 

Copyright:

"The Cave Gulch Story, Wind River Basin, Wyoming" by Lawrence McPeek is in press in "Tales of Earth Science" (2006) published by GeoPlanet Resources Co. All rights reserved. The story may be republished only with the written permission of the author and the publisher, and with bibliographic credit given to them.