The Enid News and Eagle, Enid, OK

April 7, 2012

Northwest Oklahoma goes boom

Oil companies see sustainable growth in the area

By James Neal, Staff Writer
Enid News and Eagle

ENID — Drive almost any major road or try to get a seat for lunch in almost every restaurant in north central Oklahoma, and one fact becomes readily evident: the oil and natural gas business is booming.

Oil and gas activity has markedly increased throughout the past year, as evidenced — if not by the crowded businesses — by the total number of drilling rigs operating in the state.

According to the Baker Hughes North American Rotary Rig Count, Oklahoma’s rig count peaked at more than 200 in 2008, then dropped to little more than 100 in 2009 and 2010.

Drilling activity began picking up in 2011, and the state’s rig count now has recovered to 200.

Busy in the field

Some of the largest increases in production activity have come in the Mississippi limestone formation in north central Oklahoma and southern Kansas.

Chesapeake Energy began horizontal drilling in the Mississippi play in Woods County in 2007. Production spreads through Woods, Alfalfa and Grant counties.

Today, according to Chesapeake’s own figures, the company is the largest producer of oil and natural gas in the Mississippi, and production is continuing to increase.

Chesapeake was operating only two rigs in the Mississippi play in 2008-09. That number increased to seven in 2011 and has jumped to 22 in the first quarter of 2012.

According to a transcript of Chesapeake’s 2011 fourth-quarter earnings conference call, the company’s production in that area in the last quarter of 2011 was up 31 percent compared to the previous quarter and 141 percent compared to the previous year.

All of that increased production is evident to county officials, and even casual observers, in the state’s north central region.

“The roads are busy, and it seems like there’s something going on in every quarter,” said Grant County Assessor Phillip McCoy. “There’s quite a bit of activity around here ... that’s pretty unusual for this area, but it’s getting to be pretty normal.”

Busy at the office

Increased oil and gas activity is even more evident at the county clerk’s office, where land-men struggle for time and space in the clerk’s records office.

Grant County Clerk Debbie Kretchmar has had to limit the number of land men in the office. She has set a limit of 12 researchers in the records office at one time, and it is common for there to be a line of men waiting for their turn at the records.

“Sometimes, they’re scrapping like crazy,” Kretchmar said. “We’ve had up to 45 people waiting around to get in to look at the books. It’s been crazy around here, and really busy.”

Similar activity can be seen in Alfalfa County.

Alfalfa County Assessor Donna Prince reported the county only assessed “one or two” rigs in 2009. That number increased to “five or six” last year and tripled again to 17 rigs in January.

“There’s just a lot of activity going on, and a lot of excitement here,” Prince said. “It’s just booming and going strong.”

The busier the better

And, if Chesapeake’s projections hold true, activity in the area may become stronger through the remainder of the year.

The company plans to continue operating 22 rigs in Woods and Alfalfa counties through 2012, according to the fourth quarter earnings call.

The increase, maintenance or decline of production activity in the region will depend on economic factors driven on a global scale.

“Operational activity in each play is driven by economics,” said James Roller, Chesapeake corporate development manager. “In 2012, due to low natural gas prices, it became most economical for Chesapeake to focus on liquids. The Mississippi limestone is a liquids-rich play offering superior returns in today’s market.

“Chesapeake is working aggressively in north central Oklahoma to produce this play, create local jobs and support the regional economy. The returns thus far are positive and indicate a sustainable growth pattern for production in the area.”