Drilling deep in the water or deep in the land – energy dependence vs energy independence

While more oil from BP’s deep-water drilling edges toward land every day, not too far inland Mainland Resources will soon be drilling the Burkley-Phillips No. 1 well deep into the land.

Mainland expects to begin drilling next month the Burkley-Phillips No. 1 well to test what it believes is an undiscovered Haynesville shale structure at the Buena Vista prospect in Jefferson County near Natchez, Mississippi. Mainland will drill the well using a RAPAD Drilling rig to 22,000 feet, or a depth efficient to test the Haynesville formation. Estimated cost of drilling the Burkley-Phillips No. 1 well at Buena Vista is approximately $13.5 million. Drilling is expected to start around July 10…

Mainland has leased more than 17,000 acres in the Buena Vista prospect area. Mainland will start with one well on a 1,280 are unit and then come back and start an infill drilling program that could potentially have over 200 wells. The company will use a vertical well because of the vertical thickness of the formation, which will be cheaper than drilling a horizontal well.

The 2000 Census reported Jefferson County, Mississippi, had a total population of 9740 and the highest percentage of African-American’s in its population of any county in the nation.  The County’s $9709 per capita income makes it the 17th poorest county in the nation; however, if the shale holds the amount of natural gas that’s being predicted, Jefferson County won’t be among the nation’s poorest counties for long.

A July 29, 2008 New York Times story reported the similar experience of DeSoto Parish, Louisiana:

They had to repeat the amazing number, $28.7 million, over and over, to make sure it was real and would not go away. Even then, the members of the De Soto Parish Police Jury — the county commission — could hardly believe it.

They laughed, rocked back in their chairs, shook their heads, stared at the ceiling and muttered oaths to each other. “We have — $28.7 million,” said the president, Bryant Yopp, to settle the matter, definitively if still incredulously. It was nearly one and a half times the parish’s entire annual budget.

A no-holds-barred, all-American gold rush for natural gas is under way in this forgotten corner of the South, and De Soto Parish, with its fat check from a large energy company this month, is only the latest and largest beneficiary. The county leaders and everyone around them, for mile after mile, over to Texas and up to Arkansas, in the down-at-the-heels city of Shreveport and in its struggling neighbors, suddenly find themselves sitting on what could prove to be the largest natural gas deposit in the continental United States.

Already, several dozen people who own parcels of land over the field are becoming instant millionaires as energy companies pay big money for the mineral rights to the gas, which like other energy sources is worth far more than it was last year. Jalopies are being traded in for Cadillacs, plans for swimming pools are being hatched in rusty trailers, and the old courthouse here is packed to the rafters day after day with oil company “landmen” (and women), whose job it is to frantically search the record books for the owners of the mineral rights to land that has become like gold.

In the space of months, the price of such rights on an acre has shot up to $30,000 from a few hundred dollars and is still climbing. Some very modest people, in a place where the Tough Steak Meat Market sits near the Triple J Motors car lot and the courthouse square is half boarded up, are becoming very wealthy, very quickly.

“These people are not college graduates,” said Reggie Roe, a parish official who has 987 acres and is looking at considerable enrichment himself. “Now they’re walking in with $2, 3 million. They don’t know what to do with it.

Not only is learning what to do with overnight wealth a far better proposition than having to learn how to mop oil from the Gulf of Mexico,  the trickle-down effect on the quality of life in Jefferson County is far more promising than that of the Mississippi’s three coastal counties flush with BP oil.

2 thoughts on “Drilling deep in the water or deep in the land – energy dependence vs energy independence”

  1. I know folk who kept their lands and leased it for the mineral rights and rights to explore. This was done in the Mroganza area, and none lost their property. Some did waste their fortune, but others knew the meaning of holding on to that fortune and doing quite well.

    Why is it we can drill inland for gas and may strike oil as well in some parts of the nation but not in others? Will this great supply be shipped to other areas and the price of utility gas remain high for individuals that live where this find is produced?

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