Niobrara Shale Lease Prices Per Acre
The Niobrara shale play is heating up, especially in northern Colorado. The play is sometimes referred to as the Codell/Niobrara, since the Codell sandstone is adjacent and production from the two are often commingled. In Weld county, landmen are scouring over courthouse records in search of mineral rights owners, so that land can be leased for exploration. Weld county Colorado so far has over 65% of the total Niobrara shale drilling activity and production with Yuma county Colorado coming in second, at 15%. The Niobrara shale is expected to hold over 40 million barrels of oil and 32 million barrels of condensate in the Denver basin alone. This oil and gas bearing shale is found at depths of approximately 7,000 feet in northern Colorado and is the subject of a modern day “land rush”. Oil and gas companies are using a technology called “horizontal drilling” along with hydraulic fracturing, to recover large amounts of oil and gas from the Niobrara shale. See illustration of horizontal drilling process below. Hydraulic fracturing has been proven to be a safe and effective process for recovering domestic oil and gas from tight formations such as the Niobrara shale. The procedure of hydraulic fracturing in the Niobrara shale is highly regulated by the Colorado Oil and Gas Conservation Commission. A recent movie called “Gasland” alleged that it was hydraulic fracturing that caused contamination of water wells in Colorado. This movie, based on incomplete facts and emotion, prompted the agency to put out the following statement, “Gasland Errors”, to refute claims made in the movie of water contamination by hydraulic fracturing in Colorado.
The amount of money being paid per acre for leases in the Niobrara shale has not yet reached that of the stratospheric levels being paid in other shale plays such as the Eagle Ford shale, where some landowners have received over $6000 per acre for leases, along with 25% royalties. Niobrara shale oil lease price per acre amounts in the Denver and Julesberg basins have been reported to range anywhere from $100 an acre to over $500.
Being an informed property owner, and knowing what rates other landowners are getting in your area can help you make a better decision. You should always consult an oil and gas attorney before signing any lease offer.
The Niobrara shale play is still in its infancy, compared to the number of potential well locations. In this shale play there are “sweet spots”, which will offer higher production of oil and natural gas. In these sweet spots we can expect to see higher prices paid per acre for Niobrara shale leases.
If you have any knowledge of price per acre for Niobrara shale leases, please post it for the benefit of other landowners in the comments section below.
Update: New questions or concerns about the Niobrara Shale can be asked on the new forum group here: Niobrara Shale Group