The Crow Tribe in mid-May signed an oil and gas exploration lease agreement with Golden Arrow Exploration LLC, a Gillette, WY-based independent oil and gas company. The lease covers a 7,680-acre site near the town of Crow Agency, Montana. Plans call for the first of as many as five exploratory wells to be drilled there after final permits can be obtained—perhaps as soon as this summer.
Should the wells prove successful and fulfill the prospect's postulated oil potential, the discovery could hold as much as 6.4 million barrels of crude oil reserves.
The prospect this drilling targets was first identified in 1998 by Dr. David Lopez, of the Montana Bureau of Mines and Geology, working under a DOE research project. Lopez conducted extensive geologic studies of the entire 4,000-square-mile Crow Reservation in south-central Montana, and soil-gas geochemical exploration and analysis on a portion of the tribal lands.
The tribe's lands lie in the Powder River Basin, one of the Nation's most prolific producing oil and gas provinces. However, the reservation long has been underexplored, resulting in only modest amounts of oil and gas production over the years.
The Crow Tribe also holds mineral rights to an area north of the reservation called the Ceded Area, which was removed from the reservation in 1904 for homesteading. It was here that Lopez concentrated his research with the help of DOE funding under the Native American Initiative program, administered by DOE's National Energy Technology Laboratory.
The goal of the Native American Initiative program is to generate information and technology to promote development of petroleum resources and increase revenues on tribal lands. Project funding also paid for Crow and Northern Cheyenne student interns from nearby tribal colleges to help with the field research.
The geologic studies of the reservation lands determined there was strong potential for commercial volumes of oil and gas at greater depths than many previous wells on the reservation had penetrated. The geologic relationships and trends in the surrounding area indicated that oil and gas accumulations should be present on the reservation, but drilling had been insufficient for their discovery, according to Lopez. So the main purpose of the project was to identify exploration leads that the Crow Tribe could present to potential industry partners and stimulate exploration on tribal lands.
The geologic studies evaluated a Lower Cretaceous-age formation known as the Greybull Sandstone. This 100-million-year-old reservoir, named after a prominent 19th century Crow chief, is well known for its petroleum productivity in the surrounding area. The studies found five major subsurface "channels" crossing the reservation.
By integrating well logs, surface geology work, and subsurface data, the project was able to identify three exploration leads. Those leads were subsequently evaluated with soil-gas geochemistry, a low-cost exploration approach that looks for trace amounts of light hydrocarbons migrating from the subsurface reservoir to the surface in a process called "microseepage."
Of the samples taken from the three identified exploration leads, a dramatic soil-gas anomaly was found over the Crow Agency prospect. Those findings were strong enough for the Crow Tribe to contract a 2-D seismic survey to further define the Crow Agency prospect; the survey was undertaken in October 2004.
Armed with a good geologic story to tell, Crow Tribe officials attended oil and gas prospect expositions in Houston and Denver to market their land's petroleum potential to prospective industry partners, which led to the lease agreement with Golden Arrow.
The next step is to acquire the necessary permits for the first well, a likelihood that "looks good so far," Lopez said. Lopez expects the Bureau of Indian Affairs to approve the surface location permit for the first well in time for drilling to get under way this summer. The Crow Tribe is counting on the exploratory drilling program to employ tribal members once drilling begins.
If drilling is successful, more than just the Crow Tribe could benefit in terms of oil royalty revenues and jobs. Lopez also sees similar petroleum potential and drillable leads in the Northern Cheyenne reservation right next door.
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