Colorado is set to emerge as a major oil producer, thanks to developing interest from oil companies in the Niobrara shale, a new report by market intelligence experts GlobalData has found.

The new report shows that the US state has accounted for most of the shale play's production in previous years, and a high number of approved well permits distributed to major drilling companies during 2011 implies that the Niobrara shale is due to see impressive levels of production in the future.

The Niobrara shale has emerged as one of the most promising oil-producing shales in the US, and is currently witnessing substantial growth in oil production, especially in the DJ Basin and Powder Basin, where major drilling activites are taking place.

This can be primarily attributed to the Colorado Niobrara shale formation, which in 2011 accounted for nearly 87% of the total production from the entire shale play.

The Niobrara shale is beginning to witness a significant increase in drilling activity, with many oil and gas companies exploring the shale with an aim to expand their production base.

During 2011, Colorado issued over 1,120 approved well permits for the shale, while the Wyoming Oil and Gas Commission issued only 426 horizontal well permits during the same year. Colorado witnessed a further sharp increase in drilling activities in mid-January 2012, with 43 well permits approved in the Niobrara shale play, implying that the dramatic growth seen in recent years will continue in this play.

EOG Resources, Noble Energy, and Carrizo Oil and Gas represent some of the major drilling companies directly involved in Niobrara shale production, applying innovative drilling techniques to extract large amounts of oil and gas. During 2011, EOG Resources gained the most approved drilling permits in Colorado, obtaining 271 permits to operate and drill in the play.

Niobrara shale gross production from Colorado accounted for nearly 87% of the total gross production from the Niobrara Shale Play in 2011, significantly outpacing the gross production from the adjoining state of Wyoming during the same year.

In Colorado, production from the Niobrara play increased substantially, going from 8.34 MMboe to 8.85 MMboe during 2007-2011. Oil production from the Colorado Niobrara shale formation increased from 0.34 MMboe in 2007 to 2.67 MMboe in 2011 at a CAGR of approximately 67.1%.