FARMINGTON -Steve Dunn, drilling and production manager for Merrion Oil and Gas, told Farmington city councilors this week that the company is in the middle of negotiations to start drilling for oil in San Juan Basin shale, which could fuel the next extraction boom in the state.
“We would have some sort of results by next summer,” Dunn said. “Right now, there are a lot of companies kicking the tires. If results are positive, it will happen.”
Dunn did not name the company Merrion is negotiating with for the drilling project.
The issue is so important to city leaders, and potentially to city coffers, that when Dunn handed out a piece of shale at the meeting, city officials all took a moment to hold it and City Manager Rob Mayes gave the sample a little kiss.
Horizontal drilling and hydraulic fracturing have changed the type of rock that oil and gas companies can profitably drill. Because of these changes, huge amounts of oil once thought unreachable in San Juan Basin’s Mancos Shale deposits now are within reach.
“This is the source rock for oil and gas,” Dunn said. “The new techniques that make drilling in shale possible have changed everything, they are revolutionizing the business.”
With the new technologies, companies can start tapping shale formations for both natural gas and oil. That’s something already happening in places like Texas and South Dakota.
The San Juan Basin isn’t short on oil reserves. “I would estimate that the basin has about 30 billion barrels of oil in the Mancos formation,” Dunn said. “It’s hard to conceive. To give you an idea, in the last 90 years, the basin has produced 300 million barrels. We figure that about 1.5 billion barrels are recoverable.”
” … If things do go well, it could ramp up very quickly,” Dunn said. “One of the problems will be getting it out of the community. There is a lack of infrastructure.”