DENVER, Colorado – On January 1st, 2014, Colorado became the first place anywhere in the world to allow legal marijuana sales to anybody over 21 for any purpose. And as many would expect, these new relaxed laws have created a burgeoning legal marijuana growing, distribution, and retail industry that generates record revenues for the State of Colorado, allowing the Centennial State to turn a surplus through the first quarter of 2014.

But with this new growth comes problems, and one of the most recent has found a solution within the state’s oil industry.

Gov. John Hickenlooper

I must say, I didn’t see this one coming. It turns out that there is so much marijuana and marijuana-based products being legally manufactured in Colorado that we are running out of places to store the stuff.

We are currently running a “Please buy and smoke more weed” marketing campaign at universities and colleges across the state. Farmers are allowing us to use empty grain bins, but we just can’t keep up. – Gov. John Hickenlooper, P.Geo. (we did not make up that name)

According to a report from the Denver Times, Hickenlooper’s state is having an especially hard time keeping up with moving state-locked hash oil volumes through the system.

Upon hearing this news, Jed I. Nite, President and CEO of Dunphy Oil Corp., decided to approach the state to see if it was interested in storing the hash oil in its fully depleted Adena oil reservoirs throughout the state’s Rio Blanco county.

The Adena field in SW Colorado

Understanding the immaterial margins being realized by his company’s depleted reservoirs, Mr. Smith figured that his company could allow the state to store its surplus hash oil in the reservoirs.  He was able to secure board of directors’ approval to generate a decent revenue stream by charging the state a fee for both storing and producing the hash oil. But as it turns out, the State of Colorado negotiated a royalty that more than offset the fees that the company was charging.

The reservoir engineer in charge of the project feels that the plan is not only possible, but a very good idea.

Daniel Calcul
Daniel Calcul

I was looking at the injectivity of some of our old vertical wells through our abandoned Adena field, and we should be able to get at least 1200 barrels of hash oil per day into the Parachute Creek formation. The reservoir is water-wet, so I have little concern that the hash oil will stick to the pore surfaces, however, I do expect there to be a non-zero residual has oil saturation. – Danny Calcul, reservoir engineer


Gringo Loco Energy, based out of neighboring Farmington, New Mexico, has already announced plans to edge-drill Dunphy Oil’s Adena field once the hash oil storage plan is fully operational. Gringo Loco claims that the fence-line drilling program along the Colorado-New Mexico border has nothing to do with the plentiful hash oil that is going to be stored there.




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