Big oil beneath our soil?

Theytoilforoil

Theytoilforoil

With the start of preliminary surveying last week, Marion County is moving one step closer to being a small but potentially beneficial player in a nationwide movement to capture oil reserves previously thought to be unprofitable to recover.

Chaz Doffing, an oil and gas land-leasing agent contracted through Wichita-based J. Fred Hambright Inc., said the goal is to begin drilling this summer.

He said the project in Marion County is targeted to be 10,000 to 20,000 acres involving between 50 and 70 leases.

?While it?s not a large project?I?ve seen projects that were 100,000 acres with big Texas and Oklahoma oil companies?these people have every intention of drilling in this area,? Doffing said.

Though he was not at liberty to release a map of lease locations for publication, he described the target area as a ?very specific area of contiguous ground? roughly between Lehigh and Marion Reservoir.

?It does go near the reservoir and does include Marion and Hillsboro,? Doffing said. ?It?s not a large area, but we do have enough to go forward. So that?s why we?ve begun talking to landowners about survey?ing.?

 

He said the surveying has nothing to do with locating oil.

?The survey that is being done right now is just to figure out where boundaries are and make sure that everything on file with the Marion County register of deeds is pretty accurate,? he added.

?Before (the drillers) hire a title attorney to look at things, they want to make sure people own what they said they own. It?s to determine where they can put the wells so they can follow all the state laws.

Added Doffing: ?Anybody who is not going through those steps is running a lot of risk, and they?re not looking to be in the game long-term. That?s the due process.?

A combination of factors

Driving the oil-drilling effort in Marion County and other areas of the country is the convergence of three factors: new technologies, higher oil prices and better laws.

Significant improvements in a drilling technique called hydraulic fracturing, or ?fracking,? has transformed the nature of the oil industry in this country.

The technique begins with drilling a vertical well of about 3,000 to 4,000 feet deep. Then, by manipulating the drill bit, the wellbore curves until it runs horizontally, and then continues drilling in that direction for up to a mile.

The next step is shoot a mix of high-pressure water and sand in an effort to ?frack? (fracture) rock and allow the oil that might be trapped in those areas to be collected.

?They are able to send water into very specific areas,? Doffing said. ?They used to kind of flood the area with more water. Now they?ve found ways to release that energy to much more-focused areas and get a lot more bang for their buck.?

Because of current oil prices, there is money to be made, even though the initial investment is up to $1 million per well.

?Anytime it?s between $75 and $120 a barrel, that?s profitable for the oil company and obviously we?re right in that range,? Doffing said.

The payoff can be significantly higher, too.

?In other parts of the country it?s proven to be very profitable, so that?s what?s kind of pushed it toward this area,? he said.

Meanwhile, new laws do a better job of protecting the environment and simplifying oil and gas leases.

?The Kansas state laws are pretty good?they have improved a lot in recent years,? he said. ?A lot of our leases have gotten much shorter because the laws for the area, particularly the Midwest, have improved.

?A lot of (the improvements) were needed,? he added. ?I think it was the landowners crying out to their representatives, ?this is what I?m dealing with.? The legislators have done a good job there.?

Prospects for success

With the groundwork laid, Doffing said the prospect for finding oil in the targeted area is good?for several reasons.

?This is an old oil field,? he said. ?Whenever you have things like the reservoir, you have capped wells.

?We also know the time in which this area was drilled (1950s and 1960s), the extraction methods were pretty crude. They were pumping off the top?a lot of things weren?t as good. Technol?ogy has made a big difference.

?We also know that in some of those older wells, they left 70 percent of those pools still intact,? Doffing said. ?This project (drills) a little deeper than the pools. They?re looking not only to drain those pools, but everything that?s down in those cracks?and open up some new areas that are too deep to find with seismic technology.?

Doffing said the drilling company he represents is not interested in working with seismic.

?They are truly interested in putting all their money into the drilling of shale oil,? he said.

Because of the competitive nature of the oil business these days, Doffing asked that the name of the drilling company not be identified until the project moves ahead.

?I have discussed (the name) with people off the record, people who will be affected by it,? he said. ?(Oil companies) usually don?t want that information out because direct competitors will come in and drive up the price on small pieces that they might want.?

If the amount of oil recovered is significant enough to warrant it, the company may choose to lease additional land.

?Obviously, the company is proud of who they are?they don?t mind telling the landowner,? Doffing said. ?It?s just that early on, we have to establish the area so that another local driller doesn?t come in and try to sell us the land we want for our drilling project as a pirate.

?It?s about everybody doing business in a fair manner. Any business that doesn?t have information they want to protect is probably not in business anymore.?

Overcoming reticence

Doffing said in the initial stages of his work, local landowners were reticent about getting involved with oil and gas leases.

?A lot of people were skeptical just because of the way Kansas oil has been done in the past,? he said. ?It?s not that Kansas oil did anything wrong, they were just smaller companies.

?There are some great Kansas companies on the rise that are starting to adapt to this new technology and find ways to grow their business. But there are some small Kansas oil companies that have done things back in the day that were barely legal. They didn?t do anything really wrong, they just made a mess.?

Doffing said his philosophy has been to be transparent and realistic with the landowners.

?In the oil business, you have to allow people to make their living,? he said. ?For the oil companies, (finding oil) should be a nice bonus, and it should never be overstated. You tell the people what your goals are, and if it turns out better than that, then they?re going to be happy.?

Doffing and his team have made it their goal to meet face-to-face with landowner they have approached rather than do business by telephone.

?Of the people I?ve gotten to meet face-to-face, I?ve signed almost every one?it?s in the upper 90 percent range,? he said. ?I think it?s just a testament that the area is ready for something new and different.

?I?m not knocking Kansas oil, because it?s been great. But there is need for improvement. People are tired of having a pump on their property pulling minimal oil and barely being profitable. It?s kind of like it?s better than buying a lottery ticket, but not much. It?s just not worth the inconvenience.?

Personal goal

And what is Doffing?s goal for this particular project?

?I would say sustained, profitable oil production that everybody can be proud of, and that doesn?t interfere with how people are making a living,? he said.

?A lot of this (oil) money may not be life-changing money,? he added. ?But it certainly will help to ensure that a lot of people will get to go to the college of their choice, and a lot of people will get to retire and not have to worry about what the stock market?s going to do.

?I want to see it have long?evity,? he added. ?I want to see it be profitable for the local economy. I want to see Hillsboro and Marion grow. I think wherever we go we send a little stimulus money into the economy.?

Next week: Perspectives on fracking.

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