Monday, April 9, 2012

The Next Oil Boom: Kansas

Kansas has quite a long history of oil production that actually precedes the start point on this chart:

-via the University of Kansas

Here's the latest, from CNBC:
Kansas Prepares for Gold-Rush Style Oil Boom 
Between the buttes and rolling terrain of the Gypsum Hills in south-central Kansas, a massive drilling rig grinds deep into the earth, seeking to reach the oil-rich Mississippian Lime formation buried some 5,000 feet deep. Just beyond the rig, Robert Murdock intently watches its progress and waxes confidently about the wealth under his feet.

"It will enrich the area in a way it never has before economically," the independent oilman says loudly, nearly shouting to be heard above the cacophony of clanging pipes and heavy equipment.
Prospectors like Murdock are punching holes across south-central Kansas, a gold rush-style hunt for oil and gas that players say could yield big returns not just for oil producers but also for the state's economy. The boom is occurring even as natural gas exploration begins to slow nationally. 

In county courthouses across much of Kansas, scores of researchers comb through dusty land records stacked atop folding tables set up in hallways for them, toiling for producers and speculators alike who are scrambling to snap up millions of acres of mineral rights. Leases which just three years ago went for $30 an acre are now fetching $3,000 an acre in drilling hotspots. Awe-struck real estate agents watch incredulously as mineral rights fetch higher prices than the land itself. 

Drilling has only just begun. Barber and Harper counties are "ground zero" of an oil boom anticipated to spread north across a wide swath of the central Kansas prairie. 

"It is going to change things forever in this part of the world," Murdock said. 

Look hard and you can see the first hints of change wafting through once sleepy rural hamlets. It's already tough to find a hotel room for the night or a rental property to live in. There's talk of possibly setting up "man camps" outside towns to house the anticipated influx of oilfield workers. Restaurants now seem busier than usual. And the local traffic sure feels like it has picked up on those old rural roads. 

Murdock, president of Hutchinson-based Osage Resources, is among a handful of producers behind an emerging oil boom sparked by modern technologies using horizontal drilling and a technique known as hydraulic fracturing, or "fracking," to coax out oil and gas.

Companies have already reaped fortunes off the Mississippian Lime Play in Oklahoma and are now following the rock formation northward into Kansas, where millions of acres of mineral rights have been leased in the past two or three years....MORE 
HT: Prof. Perry's Carpe Diem