Recent drilling results and infrastructure expansion drive unexpected players to the waxy Beehive State.
While the Uinta Basin has historically been developed primarily with vertical gas wells, there has been a shift in the past decade to horizontal drilling into formations much heavier in oil. Test wells were drilled between 2015-2017 producing better than expected results, leading to a surge in horizontal drilling from 2018 as neighbors took notice of the high yield. There has also been a shift in completion design with an increase in lateral length, with some wells reaching 3-mile laterals, along with doubling previous proppant amounts. According to TGS Well Performance Data, horizontal output has increased from 9 Mbbl/d to 125 Mbbl/d (Fig.2) from 2014 to 2024. Year-to-date in 2024, there have been 261 horizontal permits approved in Utah, compared to 15 vertical and 79 directional permits (Fig. 3). This could be a sign that Uinta could be close to joining the conversation with the Williston and Delaware basins as the top oil producers, which were noted in a recent analysis of performance from all U.S. basins.
Figure 1. Wells in the Uinta Basin colored by slant. (Source: TGS Well Data Analytics)
Figure 2. Uinta production from 2005 to present grouped by slant, showing a steep increase in directional and horizontal well output. (Source: TGS Well Data Analytics)
Figure 3. Permits filed from January to October 2024 showing most new wells are planned to be horizontal. (Source: TGS Well Data Analytics)
Historically, there has been a challenge in transporting the waxy crude found in the area, as it needs to be heated and transported in insulated trucks. This cost is offset by much lower water production and a high oil content compared to the Permian Basin due to higher pressure formations. In recent years, there has been an increase in railway capacity coinciding with a downturn in coal production. These new infrastructure enhancements have lowered shipping costs, making these wells much more profitable and attracting notable acquisitions from Texas-based players such as SM Energy and Northern Oil & Gas jointly picking up XCL’s assets and 80% of Altamont Energy’s Uinta assets, a deal valued at $2.1 billion. Another notable transaction that perhaps initiated the onset of interest in the basin is Scout Energy Partners obtaining properties from Ovintiv for $250 million, with Ovintiv looking to sell its remaining assets valued at $2 billion.
The U.S. Supreme Court is also considering reviving approval for the planned 88-mile Uinta Basin Railway that was previously approved in late 2021 but overturned in 2023 by a federal appeals court. While the plans have been controversial with local groups and the appeals court noting that there have been inadequate analyses regarding environmental impact, this railway would connect the basin to the national railway network accessing much larger markets including refineries along the Gulf of Mexico to complement the current Salt Lake City processing hub. This will also reduce the need for the insulated trucks currently required to move oil out of the region, reducing both roadway congestion and emissions. Final approval and construction of this railway would likely boost already increasing production and the local economy, drawing in even more players.
With growing infrastructure improvements and increased interest from major energy companies, the Uinta Basin is poised to become a key player in the U.S. oil industry, with the potential to rival established oil producers like the Williston and Delaware basins.
For more information about TGS Well Data Analytics or to schedule a demo, contact us at WDPSales@tgs.com.