The Mancos Shale has been quiet. But after a breakthrough government reserves estimate and attention from a global supermajor, the play straddling the Piceance and San Juan basins in the western U.S. could be roaring soon.

"Every basin has a story, and the producers tell the story," said David Ludlam, the executive director of the West Slope Colorado Oil & Gas Association. "Lately, it's been the Marcellus and Utica, and the Piceance Basin was marginalized as a forgotten formation. Take the traditional sandstone formation we've targeted and add on that we're the largest or second-largest [shale] formation in the country, and we've got a great story to tell."

On Aug. 7, BP plc announced that it had brought a new well online with natural gas production from the Mancos in San Juan County, N.M. The well, drilled with a 10,000-foot lateral, achieved an average 30-day initial production rate of 12.9 MMcf/d — the highest level recorded in this southern portion of the Mancos in 14 years.

"We are delighted with the initial production rate of this well," Dave Lawler, CEO of BP's Lower 48 onshore business, said in a statement. "This result supports our strategic view that significant resource potential exists in the San Juan Basin, and gives us confidence to pursue additional development of the Mancos Shale, which we believe could become one of the leading shale plays in the U.S."

Ludlam described the Mancos as a play that is affordable to producers at current gas prices. "All our companies in the Piceance [can drill when gas is] $2.50 an Mcf or $3 an Mcf," Ludlam said. "At $3.50 or $4, they can drill all day long."

The potential

The best-known portion of the Mancos Shale is in Colorado, in the Piceance Basin. The San Juan Basin, which covers an estimated 7,500 square miles, covers the southern border of the state and into New Mexico. San Juan County, N.M., borders Colorado at the Four Corners. With the federal analysis and the potential from the BP discovery, the Mancos could be a major factor in future U.S. gas production.

In a 2016 report, the U.S. Geological Survey gave a major upgrade to its estimates of hydrocarbons in the Mancos: 66 Tcf of natural gas, 74 million barrels of shale oil and 45 million barrels of NGLs. That was before BP's announcement, which indicated that the productive portion of the Mancos stretches farther south than had been assumed. By comparison, a 2011 U.S. Geological Survey of the Marcellus estimated 84 Tcf of gas and 3.4 billion barrels of liquids.

Yet the region is largely inactive. According to Baker Hughes Inc, there is one horizontal rig active in San Juan County, N.M., and no rigs active in bordering San Juan County, Colo. There are only two rigs active in northwest New Mexico and no rigs active in southwest Colorado at all. In western Colorado in the Piceance Basin, seven directional rigs are operational, a small number for a large play.

Like much of the Mancos, BP's new well in San Juan County is on federal land. In addition, approximately 60% of the 5,538 square miles of the county is home to much of the Navajo Nation, while on the Colorado side, the Rio Grande and San Juan National Forests take up thousands of acres.

Government's role

The U.S. Bureau of Land Management controls over 1.5 million surface acres in northwest New Mexico and 13.7 million acres of the Piceance Basin. That means any exploration and production activity comes under the oversight of the U.S. Department of the Interior and the BLM.

"Natural gas production on federal lands is down 15% since 2008, while it's up 66% on non-federal land [through mid-2016]," said Kathleen Sgamma, the president of the Western Energy Alliance. "Everyone's under the same market conditions. That just shows how the government is affecting natural gas development."

Sgamma said that during the Obama administration, there was frequent conflict with federal agencies about whether there was reason to drill into the Mancos Shale at all, despite estimates from other branches of the federal government showing prolific reserves. Those arguments, along with the permitting process set in place by federal agencies, helped to slow drilling activity to a snail's pace from west Colorado into New Mexico, she said.

"There's producers in the Piceance Basin that would love to start running rigs again," Sgamma said. "But the [Mancos] will lag behind other areas of the country because so much of it is on federal land."

The Trump administration, however, appears intent on encouraging development on federal land. In early July, Interior Secretary Ryan Zinke signed a secretarial order intended to cut down on permitting delays. Even with a statutory requirement that all permits must be reviewed within 30 days, the BLM averaged 257 days per review in fiscal 2016. The agency has a backlog of more than 2,800 permit applications, including 152 in northwest New Mexico.

"Oil and gas production on federal lands is an important source of revenue and job growth in rural America, but it is hard to envision increased investment on federal lands when a federal permit can take the better part of a year or more in some cases," Zinke said in July. "As is outlined in this order, we will look at ways to improve the process and make sure regulations serve their intended purpose rather than create a mountain of useless paperwork."