Rex Energy drilling 1st of potentially dozens of Niobrara Shale oil wells in Laramie Co.

Rex pioneers Niobrara Shale oil in Laramie County

CHEYENNE, Wyo. — The first of potentially dozens of new oil wells in Laramie County is being drilled by Rex Energy Corp.

State College, Pa.-based Rex began drilling the well 14 miles northeast of Cheyenne on July 22. The company expects to finish drilling in a couple weeks.

Excitement has become widespread that the right combination of drilling techniques could unlock large amounts of oil from the Niobrara Shale beneath eastern Wyoming, northern Colorado and western Nebraska.

The techniques include horizontal drilling. After drilling its well nearly 8,000 feet deep, Rex plans to drill about 4,000 feet sideways, company President and CEO Benjamin Hulburt said Wednesday.

“At this point we plan to drill at least two wells this year and potentially six, with the intent of moving into a full-scale drilling program in 2011,” he said.

So far this year, the Wyoming Oil and Gas Conservation Commission has approved 77 permits for several companies to drill oil wells in the state’s southeast corner. That far surpasses all previous activity in that area.

Other companies seeking to drill in southeast Wyoming include Anadarko Petroleum Corp. and EOG Resources Inc., both based in Houston.

Rex recently acquired leases to drill on 32,000 acres in Wyoming and another 8,000 acres just over the state line in Colorado. Next year’s plans include using one rig to drill as many as 24 wells in Laramie County, Hulburt said.

“We’re attracted to the Niobrara Shale because it has a higher oil content — less natural gas, more oil — and because it has some geological characteristics that make it somewhat similar to the Bakken Shale,” he said.

The Bakken has been the source of a boom over the past couple years that has made North Dakota one of the top oil-producing states.