As prices approach two-year highs, interest is growing in finding new domestic supplies of oil. Some are optimistic new drilling techniques will provide access to previously out-of-reach supplies in the West.
The Niobrara Chalk Basin in Wyoming, Colorado and Nebraska shows particular promise. So much promise, that mineral rights in the panhandle of Nebraska are leasing at record highs. Harvest Public Media's Clay Masters explains.
This is vertical drilling… The typical method for bringing up oil from thousands of feet below the surface. But this area of the Niobrara chalk basin may soon see investment in a different type of drilling intended to tap into oil that's trapped closer to the surface.
It works like this:
Workers drill vertically until they reach the zone of interest
They then gradually drill to a 90 degree angle.
Cement casing is then installed.
Small fractures are created.
Sand and water are injected into the fractures.
This props open the fractures allowing oil or gas to flow into the wellbore.
This conventional, vertical oil rig sits on top of farmer and rancher Charles Anderson's land. He and his son farm in Nebraska and Wyoming. They have pumps on either side of the state line.
Charles Anderson, Banner County, Nebraska: "I got my call when I was on the combine from the guy – the one thing I appreciate is you talk with the owner of the company… you don't talk to the pee-ons. If you talk to the owner you find out generally what they're going to do."
But Anderson says besides the surface damage costs, he's not making much money off the drilling.
Anderson says one of the oil companies has told him it plans to do horizontal drilling underneath his land.
State owned mineral rights in Nebraska are auctioned off through leases every year and the most recent one was pretty noteworthy. It raised almost 2 million dollars.
The very last lease sale that was held in Nebraska, by virtue of the activity in Colorado and Wyoming, I believe our board of education land and funds had the largest pot of money raised for over 30 years.
Among these windy plains of central Banner county is its only town… Harrisburg.
The town didn't have too many visitors… until last year…
Lori Hostettler, Banner County, Nebraska: "And what you're interested in is the oil and gas?""
Banner County Clerk Lori Hostettler shows what attracted the spike in visitors.
Lori Hostettler, Banner County, Nebraska: "Just to give you an idea of the amount of recording that took place last year. Book 127 where we started off in page 380 in January 2010 and now we have book 135 which is close to being full."
Since November they had to bring in an extra table, another copy machine and computer just to accommodate an influx in oil company workers. They were researching mineral rights in the county.
But the promise in Nebraska's shale basin may not pan out.
Just 20 miles south of Harrisburg is Kimball Nebraska. Between the 1950s and 80s oil exploration and production made Kimball a boomtown… now there's only a couple oil companies headquartered in Kimball.
Evertson Companies is one of them. They have drilling rigs all over the world.
Bob Evertson, CEO, Evertson Companies: "I don't think it's here. The formation's definitely here. But since I was a kid we drilled through it 100s of 100s of times. In this particular area I never saw anything that looked productive in the Niobrara here."
Evertson says he's looking deeper in the panhandle, drilling vertical wells.
Bob Evertson, CEO, Evertson Companies: "Now you have a lot of people spending a lot of money in the panhandle of Nebraska thinking I'm wrong, so we're going to see who's right, but I'm hoping they're right because have leased a lot of minerals and paid a lot of money for ‘em."
Regardless of the presence – or absence – of black gold in the Niobrara shale… there's no idea if, or when horizontal drilling may get going in Nebraska. So the economic impact – like the oil exploration itself – is still speculation.
As far as being a Jed Clampett like I told you before, that's just not going to happen
For Market to Market, I'm Clay Masters.