By James Neal, Staff Writer
Enid News and Eagle
ENID, Okla. —
New exploration and drilling for oil and gas in north central Oklahoma is expected to taper off in the next three years, but that doesn’t spell the end of play in the area.
Industry forecasts and local economic development officials are predicting continued production and service activity to remain strong through the foreseeable future.
Drilling activity in north central Oklahoma continued to pick up pace in 2012, with the intent to drill and completed wells increasing in comparison to 2011, according to figures provided by Oklahoma Corporation Commission.
Intents filed with OCC for Garfield County were up more than 82 percent in 2012 over the previous year, with 115 filed in 2012 compared to 63 in 2011.
OCC data for 2012 drilling completions still is being collected, but those already in the books for 2012 show a corresponding increase — 63 wells completed in Garfield County in 2012 compared to 27 in 2011.
Grant County, in the heart of the Mississippi Lime play, also showed strong growth in intents-to-drill and completions in 2012, with 276 intents filed in 2012, compared to 162 in 2011, and 201 completions already filed for 2012, compared to 99 for 2011.
Moving away from the Mississippi Lime play, some counties showed only modest growth in oil and gas activity in 2012 as compared 2011.
Kingfisher County registered 69 intents-to-drill in 2012, up six percent over 2011, and 35 completions in 2012, down about 32 percent from 2011.
The state as a whole showed growth in the oil and gas industry in 2012, at rates lower than individual counties involved in the Mississippi Lime play.
OCC registered 4,214 intents-to-drill in 2012, compared to 3,732 for 2011 — an increase of about 13 percent. Completions also were up in 2012 for the state, with 2,978 already filed, compared to the complete figure of 2,600 for 2011.
Rig counts also were up in 2011 — the most recent annual report complete from OCC — with a monthly average of 180 rigs operating in the state in 2011, compared to 128 in 2010, 94 in 2009 and a 20-year peak of 200 in 2008.
Total production figures provided by OCC show significant statewide growth in natural gas production in 2012, and a decrease in oil production. The year-to-date figures for October 2012, compared to the same period in 2011, showed an 87 percent increase in the state’s natural gas production and a 20 percent reduction in oil production.
The major players in the Mississippi Lime area showed corresponding growth in their activity in 2012, and don’t show signs of slowing down in the immediate future.
Chesapeake Energy, the largest leaseholder in the Mississippi Lime play, reported 273 horizontal producing wells in the Mississippi Lime play in the company’s most recent report to investors.
Chesapeake’s fourth quarter 2012 net production averaged 32.5 thousand barrels equivalent per day (mboe/d), and 41.6 gross operated mboe/d, up 208 percent year over year.
Other companies are buying their way into the Mississippi Lime play, and its future production.
Chesapeake in February signed a joint venture agreement with Sinopec International Petroleum Exploration and Production Corp., whereby Sinopec purchased an interest in 425,000 acres in the Mississippi Lime play — half of Chesapeake’s lease area in northern Oklahoma.
Sinopec agreed to pay $1.02 billion in cash for the purchase, and the total area is estimated to hold 140 million barrels of oil equivalent in reserves, according to a February press release from Chesapeake.
Sandridge Energy also reported strong growth in its Mississippi Lime production in the fourth quarter of 2012. The company reported a 35.9 mboe/d production from the play in the fourth quarter of 2012, up 19 percent from the same quarter in 2011, according to the company’s February report to investors.
The report listed Sandridge’s total 2012 production from the Mississippian at 17.4 million barrels of oil equivalent in 2012, up 72 percent over 2011.
While production and investment in the Mississippi Lime play continue to increase, new lease acquisitions have slowed over the last year.
The pace of signing new oil field leases in the Mississippi Lime play peaked in 2011, with 12,540 new leases in the Oklahoma portion of the play, according to figures provided by Enid Regional Development Alliance.
That pace slowed in 2012 with 3,642 new leases, the lowest level since a 10-year low of 1,414 leases inked in 2009.
A majority of the active leases in the Mississippi Lime play are set to expire in 2015-16, according to ERDA executive director Brent Kisling.
But, Kisling said a slowing pace of new leases doesn’t necessarily signal a slowing of the booming pace in Enid’s economic growth.
Kisling said even once the majority of exploration and drilling is complete, the wells still will require more service than operating wells have in the past, since the new production is being completed by hydraulic fracturing, which requires more ongoing service.
That ongoing service will keep service companies operating in Garfield County and surrounding areas for the foreseeable future, Kisling said.
He said ERDA still is getting calls from service companies and larger production companies looking for facilities from which to stage operations in the Mississippian, “and that’s an indication there’s still a lot of work to be done in that play.”
Kisling said the focus now needs to be not so much on when or if the oil play will slow down, but rather on how to capitalize on the increased activity.
“It is still our role at Enid Regional Development Alliance to make sure we capitalize on this golden age in our local economy, and to help figure out what’s next, because there will be something that’s next,” Kisling said.
He said Vance Air Force Base and agriculture likely will remain the second- and third-highest contributors to the local economy behind oil and gas, but added the local economy is becoming more diverse.
He said the local economy experienced a significant benefit in 2012 from the presence of construction crews building the Chisholm View Wind Project, and will experience a similar benefit in 2014 from crews building the planned Northstar Agri Industries canola processing plant.
The local area also continues to see increased investment from crews working in the railroad and pipeline industries, Kisling said.
Enid’s economy also will continue to expand in the retail sector, Kisling said, as national retailers take note of local investment and record sales tax returns.
“When you set a record for retail sales in 2011, and then turn around and beat that by 13 percent in 2012, that’s going to get a lot of attention from the retail industry,” he said.
Kisling said Enid’s economy is poised to continue its growth, through the oil boom and beyond.
“There is still a lot of wealth moving to the area right now,” Kisling said, “and I expect that to continue.”