Utah: The Future of American Energy

Utah’s long history of oil and gas exploration dates back 1891, when natural gas was discovered in Farmington Bay during the drilling of a water well. Of course, it wasn’t until more recently – 1948 – that the first large commercial well was drilled. Since then, Utah has been recognized as a major oil and gas powerhouse. By 1960, Utah was the 10th largest oil-producing state in the country.2 In 2013, USA Today listed Utah as the eighth most oil-rich state.3

Utah's Oil and Gas Production 2015

From production reports submitted and processed as of September 17, 2015.


 

Based on increasing number of drilling permits, oil and gas E&P activity in Utah shows steady growth.

Utah Region Highlights
  • As of 2011, Utah reported proven oil reserves of 504 million barrels.1
  • Utah is the eighth most oil-rich state.
  • Utah is home to four productive oil plays. The Central Utah Thrust Belt is the most recently discovered of the four.
  • The Sevier and Beaver Oil Prospects are located in the Central Utah Thrust Belt.
  • Millions in upgrades to roads, refineries, and other Utah infrastructure are planned to assist with expected increases in oil and gas production.


 

Four Oil and Gas Producing Areas in Utah

Four major areas host Utah’s oil plays: Utah/Wyoming Thrust Belt, Central Utah Thrust Belt, Uinta Basin, and Paradox Basin.5

Until recently, most of the activity in Utah centered around the Utah/Wyoming Thrust Belt, Uinta Basin, and Paradox Basin. However, since the exciting new Utah Central Thrust Belt area was tapped by Wolverine Oil in 2004, the fourth major Utah play has garnered more attention.

Thrust Belt In Utah

The thrust belt in Utah is part of a larger belt structure that runs from Northern Alaska to Central America, called the Cordilleran Orogenic Belt. In southern Canada, the structure has been a well-known oil and gas producer for several decades.

There are two productive areas of the thrust belt in Utah. The first was tapped in northeastern Utah with the discovery of Pineview along the Utah/Wyoming Thrust Belt in 1975.25 Three decades later, the discovery of Covenant Field opened up a second area: the Central Utah Thrust Belt.


There are four major oil and gas plays in Utah. The newest is the central Utah Thrust Belt.

Timeline: The Thrust Belt in Utah

  • 1975

    "The discovery of oil in the Jurassic Nugget Sandstone at Pineview is the first significant discovery in the Cordilleran hinge belt."
    – Rocky Mountain Association of Geologists, 1975 Symposium6

  • 1982

    "The portion of the overthrust belt located in northeastern Utah, western Wyoming and southeastern Idaho is considered by the oil and gas industry to be the hottest new oil and gas province in the continental United States."
    – The Geological Survey of Wyoming7

  • 2005

    "Stunning Utah oil, gas discovery focuses spotlight on hingeline: A recent new field discovery and first offset operated by Wolverine Gas & Oil Co…appears to have exceeded 200,000 bbl of oil since May 2004."
    – Oil and Gas Journal8

  • 2010

    "The Middle Jurassic Twin Creek Limestone in the Utah/Wyoming thrust belt has produced over 15 million BO and 93 BCFG."
    – Utah.gov9

The Sevier and Beaver Oil Prospects are located in the Central Utah Thrust Belt, 18 miles from the Covenant Field discovery.

 

Transportation and Utah’s Oil and Gas Production

In order to ensure that Utah oil and gas production reaches its potential, Utah policymakers and business leaders are taking steps to ensure that oil and gas exploration, drilling, and processing companies have access to transportation.

There are currently three major oil and gas transportation options in the state:

Road

One of Utah’s main transportation arteries is US-40, a 2,285-mile10 highway that runs from Atlantic City, New Jersey to Park City, Utah.11 The majority of Utah’s oil and gas processing facilities are located along US-40, so as oil and gas production steps up in all areas of the state, it will be important to ensure that this highway can handle an increase in traffic.

In April of 2012, the Utah Transportation Commission announced plans for a $5 million highway improvement project intended to prevent traffic and congestion due to increased oil and gas exploration/production.12

In addition, the Utah Department of Transportation (UDOT) is planning another $10 million in upgrades to US-40, which will take place over the next several years. Upgrades will include the addition of passing lanes, as well as general improvements that will enable the road to handle increased traffic and heavier vehicles13 associated with oil and gas transportation.

Refineries

Utah is home to five refineries. Their capacity is 176,000 barrels a day. This means the state is a net importer to its refineries,14 and local refineries could therefore handle more production from local sources (versus the Canadian and out-of-state crude which accounts for a high percentage of the crude they are currently handling).

All of the state’s major oil and gas players – including HollyFrontier, Tesoro, and Chevron – have all announced plans to step up their processing capabilities in the state.16 In addition, Rock River Resources announced plans for the $230 million Green River Refinery project.15 Expansions or improvements to the state’s refineries will enable them to process three times the paraffinic-based crude as they could six years ago.17 This expanded capacity bodes well for producers in Utah, who will likely have little need to ship their oil to other states for processing.

Pipeline

Utah is home to more than 22,000 miles of oil and natural gas pipeline18 — and that number is expected to increase to keep up with demands from increased production in the state.

Current and future Utah pipeline expansions include:

  • Expansion of the Mid-America Pipeline (MAPL) system. The MAPL expansion, expected to be completed and operational in the second quarter of 2014,19 is a 95-mile natural gas pipeline in western Colorado/eastern Utah. The expansion would increase the MAPL system’s capacity by 15,000 BBLs per day.21
  • The Western Expansion Project III. Approved by the Bureau of Land Management (BLM) in July of 2013, the Western Expansion Project III is a 234-mile natural gas pipeline that will run from New Mexico to South Texas.22 Although it won’t be constructed in Utah, the new pipeline will be used to transport NGLS from the state’s processing plants.23
Rail

As domestic oil and natural gas production steadily increases in the Rocky Mountain region, oil and gas companies have turned to rail as a fast, reliable, and cost-effective way to transport crude oil and natural gas to other parts of the country.

The amount of crude oil transported by rail has increased steadily in the past several years: In 2009, about 10,000 train cars transported crude oil. By the end of 2012, that number had jumped up to just over 230,000 carloads.24

 


1   http://www.usatoday.com/story/money/business/2013/08/03/the-most-oil-rich-states/2613497
2  http://geology.utah.gov/online/pi/pi-71.pdf
3  http://www.usatoday.com/story/money/business/2013/08/03/the-most-oil-rich-states/2613497
5  http://geology.utah.gov/emp/pump/pdf/pumprpt16.pdf
6  http://archives.datapages.com/data/rmag/DeepDrill75/loucks.htm
7  http://www.wsgs.uwyo.edu/public-info/onlinepubs/docs/RI-21.pdf
8  http://www.piol.com/journal.pdf
9  http://geology.utah.gov/emp/pump/pdf/pump_aapg_2010_poster.pdf
10  http://en.wikipedia.org/wiki/U.S._Route_40
11  http://en.wikipedia.org/wiki/U.S._Route_40
12  http://www.sltrib.com/sltrib/mobile/54044681-68/utah-refinery-oil-crude.html.csp
13  http://www.sltrib.com/sltrib/mobile/54044681-68/utah-refinery-oil-crude.html.csp
14  http://www.usatoday.com/story/money/business/2013/08/03/the-most-oil-rich-states/2613497
15  http://www.rockriverresources.com
16  http://www.sltrib.com/sltrib/mobile/54044681-68/utah-refinery-oil-crude.html.csp
17  http://www.sltrib.com/sltrib/mobile/54044681-68/utah-refinery-oil-crude.html.csp
18  http://www.sltrib.com/sltrib/news/56323703-78/pipeline-utah-safety-state.html.csp
19  http://www.enterpriseproducts.com/operations/nglPipelines.shtm
21  http://www.gjsentinel.com/breaking/articles/95-mile-pipeline-project-okd-will-employ-hundreds
22  http://breakingenergy.com/2013/07/11/blm-approves-new-mexico-natural-gas-pipeline
23  http://breakingenergy.com/2013/07/11/blm-approves-new-mexico-natural-gas-pipeline
24  https://www.aar.org/keyissues/Documents/Background-Papers/Crude-oil-by-rail.pdf
25  http://www.idahogeology.org/PDF/Technical_Reports_(T)/TR-80-9.pdf