HOUSTON -- An independent oil and gas company is reporting a big jump in liquid hydrocarbons production from Colorado's Niobrara Shale formation.

Houston-based Noble Energy Inc. said yesterday that production from its operations in the Denver-Julesburg Basin grew by around 12 percent during the first quarter of this year, over the average daily production rate recorded in the fourth quarter of 2011.

Output from that field has hit a record 74,000 barrels of oil equivalent (BOE) per day, the company says. That's roughly 19 percent greater than what the company says the field averaged for all of 2011, around 62,000 BOE per day.

The growth is attributed to Noble's increased use of horizontal drilling and hydraulic fracturing to squeeze more oil out of Colorado's prolific fields. The company told a group of analysts yesterday that it estimates its oil production from horizontal wells in Colorado will double this year, to 32,000 BOE per day.

Noble's investments in Colorado shows that the company is increasingly bullish on the Niobrara formation, a shale zone the industry is just beginning to tap.

Company CEO Charles Davidson told attendees at the annual Howard Weil oil and gas investment conference in New Orleans yesterday that Noble recently acquired an additional 48,000 acres in northern Colorado overlying the formation on which it can develop new wells. Noble says it now controls around 230,000 acres in the state.

An additional 12 to 15 wells will be drilled there this year, Noble said in a release.

Noble also said that its costs for developing shale oil wells are dropping. Lower finance and development costs and strong crude oil prices are seeing drilling programs pay for themselves in as little as seven months, the firm estimates.

Though it's less fully understood than other shale oil plays, companies see Niobrara as having strong potential, and the state's governor expects a coming boom in new onshore crude oil production from the area that stretches just outside Denver north into Wyoming.

In November, Anadarko Petroleum Corp. told investors and analysts at a conference in Miami that it believes up to 1.5 billion barrels of crude oil could be gotten from acreage it controls in a zone of the Niobrara called the Wattenberg Field, the same area where Noble is drilling horizontal wells. That firm also announced plans to expand the transportation and processing infrastructure in northeastern Colorado to prepare for an expected rush of new supplies of crude oil and natural gas liquids (Greenwire, Nov. 15, 2011).

Local media report that the oil and gas industry is dispatching community relations officials and hosting meetings with the public in an attempt to head off a potential backlash against expanded oil and gas production, such as the strong opposition seen in New York. Earlier this month, Colorado Gov. John Hickenlooper (D) told reporters in Houston that he intends to work closely with the industry to bring new oil and gas industry investment to Colorado while working to ensure that the environment and the public are protected (Greenwire, March 9).