Large oil companies pulling up stakes in Kansas

AP via Fuel Fix ^ | December 2, 2013 | Roxana Hegeman

[thackney]

The economic future seemed so tantalizing just two years ago as the nation’s big oil firms rushed into Kansas. They snapped up mineral leases from landowners for high prices and drilled horizontal wells to extract unknown riches from the same Mississippian Lime formation that had spawned an oil boom in neighboring Oklahoma.

Things have changed. Most of those big out-of-state players are gone. The biggest blow came when oil giant Shell Oil Co. halted its Kansas exploratory drilling program in May and has since put up for sale 625,000 acres of leases it owns in the state.

Life here has for the most part settled back to normal in the rural farming communities in Harper and Barber counties which were once ground zero for the oil and gas exploration frenzy....

“All of the resources in oil are still there and I think you will still get exploration, but it is going to be done at a much more humble level — very consistent with what the Kansas oil and gas industry does historically,” said Art Hall, executive director of the Center for Applied Economics at the University of Kansas.

The differences in the geology of the two states dates back more than 250 million years, when shallow seas covered Kansas as rocks in the Mississippian lime play were deposited. But in the area that now encompasses Oklahoma the seas during that period were far deeper, forming the widespread and homogenous formation there that today holds vast oil reserves. By contrast, the lime formation now underneath much of Kansas is thinner and tends to undulate, experts say. That makes it more difficult to find the “sweet spot” of oil when the horizontal lateral off the well is drilled.

[Eric in the Ozarks]

Kansas has been worked over pretty hard in past decades.

[Zathras]

They all moved to Colorado.
Lots of new rigs popping up every week east of Fort Collins.

[IMR 4350]

That boys and girls is why you never give an oil company a long term lease.

2 years max so they don’t tie your land up and other companies can’t drill.

For the larger land owners, always put a performance clause in the lease so one well can’t hold all your property.

Make them keep drilling or loose the lease on the property that’s not part of a unit.

[COBOL2Java]

The differences in the geology of the two states dates back more than 250 million years, when shallow seas covered Kansas as rocks in the Mississippian lime play were deposited. But in the area that now encompasses Oklahoma the seas during that period were far deeper, forming the widespread and homogenous formation there that today holds vast oil reserves. By contrast, the lime formation now underneath much of Kansas is thinner and tends to undulate, experts say. That makes it more difficult to find the “sweet spot” of oil when the horizontal lateral off the well is drilled.

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Too bad that Kansas got the short end of the Cretaceous stick, oil wise. There's oil to be found there, but it's much harder to locate than in Oklahoma.

Geography of North America during the Cretaceous Period, about 100 million years ago. Present-day Kansas is outlined in red (from Wicander and Monroe, 1989).

[wita]

I would guess big oil feels like they have enough of the good stuff on their plates at the moment that chasing rainbows can wait.

[MrB]

Sounds like some prime food growin’ land just got freed up for cheap.

[thackney]

I don’t think they stopped growing on leased land that wasn’t drilled. Just collected an extra check while doing business as usual. And the ones that were drilled typically take up a few acres out of 50~100 acres or so.

[Wonder Warthog]

"I don’t think they stopped growing on leased land that wasn’t drilled. Just collected an extra check while doing business as usual. And the ones that were drilled typically take up a few acres out of 50~100 acres or so."

Absolutely correct. The oil companies prefer to lease large landholdings not because they need the surface acreage, but because it minimizes the paperwork.

Back when the "Tuscaloosa Trend" was hot in central Louisiana, the lease-seekers ALWAYS approached the big land-owners first, then the little guys.

The actual land used for drilling is a postage stamp by comparison.

[American Constitutionalist]

http://www.anwr.org/Technology/Today-s-drilling-leaves-a-small-footprint.php

[dangerdoc]

Driving around Kansas, you see many small pumps running in the middle of producing crop land.

[ckilmer]

By contrast, the lime formation now underneath much of Kansas is thinner and tends to undulate, experts say. That makes it more difficult to find the “sweet spot” of oil when the horizontal lateral off the well is drilled.
..................
North west of Kansas Missippi lime formation in colorado is a the Niobrara formation. Its out on the plains east of denver. It runs north. The Oil companies have called it it quits there several times. But someone keeps finding a sweet spot. Formation seems to have a rolling pattern that appears and disappears that may be superficially similiar to that seen in Kansas. Certainly, that the oil men have mastered the complexity of the niobrara wattenberg formation in colorado suggests that they may be able to break the code in the Monterrey basin. If they can do that — they certainly return to Kansas in big numbers.

[thackney]

suggests that they may be able to break the code in the Monterrey basin

The main problem in Monterrey (politics aside) is fractures. It is a far different production problem than undulations.