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High prices prompting oil ‘rush’ in Tennessee State has areas that still haven’t been drilled, and there has been some recent successful exploration Matt Gouras Associated Press Writer
Prospectors have been drilling in Tennessee since the Civil War, searching for oil. While the industry has never amounted to much, this year, some big strikes and healthy prices have got the state back on wildcatters’ maps.
As crude oil prices hover above $43 a barrel, new wells are being drilled in Tennessee and other unlikely states.
The number of U.S. oil rigs has increased from 750 in 2002 to more than 1,200 this summer, according to oilfield services company Baker Hughes. The industry publication World Oil said nearly every oil state is seeing more activity.
“There are fewer temporary abandoned wells than there have been in the past few years,” said Larry Bengal, supervisor of the Illinois Oil and Gas Division. “Some marginal wells are now active that weren’t a few years ago.”
Tennessee is particularly attractive to wildcatters because there are still areas that haven’t been drilled — and it didn’t hurt that news of a couple of big hits earlier this year is starting to circulate through the industry.
Young Oil Corp. said a well in north-central Tennessee flowed 150 barrels a day in June, following up on another big hit earlier in the year. The average well in the state produces only about one barrel a day.
Old hands are reminded of the early 1980s oil boom.
“I tell you, it’s hard to even lay down and sleep at night. It’s a very, very exciting time,” said Anthony Young, CEO of Young Oil. “We’re getting calls from all over the United States, Canada — everywhere. I just got a call from India.” Most wells are small Most wells in the United States outside Alaska and the Gulf of Mexico are small, so new domestic wells aren’t likely to boost overall production that much or affect prices, industry experts said. But they certainly give small operators a chance to make big money.
“(Tennessee has) had a lot of wells drilled in it, but it’s still got thousands of acres of undrilled territory. And that’s hard to find in the states,” Young said.
The activity — coupled with higher prices — has helped the economy. North Dakota, for example, took in twice what it expected for oil-tax revenues in March, collecting $3.4 million. And the number of people employed in exploration and production in the country increased to 363,900 last year from 322,400 in 1999.
Not everyone welcomes the new drilling activity. A few years ago, a well in north central Tennessee exploded and began spilling an estimated 200 to 500 barrels per hour into Clear Creek and its tributary White Creek, both of which are located inside the Obed Wild and Scenic River area.
Environmentalists were hoping for tighter restrictions in new regulations due out soon, including a buffer zone between streams and wells.
“We’re not very happy about that. We’re all writing comments into the state to tell them to get their act together,” said Axel Ringe, with the Sierra Club’s Knoxville chapter. Big companies focus offshore or in Alaska Bill Goodwin, president of the Tennessee Oil and Gas Association, said his phone rings constantly with people seeking advice on where to drill in the state.
He said the big oil companies are focusing on richer areas offshore or in Alaska, leaving places like Tennessee to entrepreneurs poking around on farm land for a new strike. The number of permits issued in Tennessee last year for new wells roughly doubled over the previous year, from 140 to 281. Production increased 14 percent to 359,924 barrels for the year, according to the Tennessee Division of Geology.
Production had been declining since a 1982 peak of more than 1 million barrels of oil. Tennessee is still a minor player and will likely remain that way. Alaska, for instance, can produce hundreds of millions of barrels a year. Fewer than one in every 8,000 U.S. barrels of oil comes from Tennessee.
The upside is that Tennessee is still a place where individuals can try their hands at the risky business of drilling for oil.
“Tennessee is still a place where you can knock on a door and get a lease for $1 (an acre a year plus royalties), and they’ll offer you a cup of coffee, too,” Goodwin said.
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