It came in at 30 barrels an hour. It soon dropped off but still produced about 350 to 400 barrels daily, even though it was shut off part of the day. The well also produced a million cubic feet of natural gas a day.
Woolsey credits the success to tweaks in drilling and changes in the frequency of the fracking.
The Mississippi Lime has a complex geology that can change in a short distance, and the amount of oil and natural gas in it can change as well.
"You have to learn the rock," he said.
A good 'play'
Travel a few miles southwest of the city of Medicine Lodge and you wonder if you're still in Kansas. The area, known as the Gypsum Hills, has flat mesas, high hills and red soil. It also has oil wells.
In November, Tug Hill Operating Co. was wrapping up drilling with a 164-foot rig that had been working around the clock. The rig's 21 workers drilled 5,500 feet down into the limestone and then 5,000 feet horizontally to expose more of the rock to fracking.
"It's pretty easy drilling," said Jay Dennis, the company's drilling superintendent.
Tug Hill is a Fort Worth, Texas, company that in 2010 formed a unit with a group of partners that includes oilman Boone Pickens. The unit focuses solely on Kansas, and has leased 850,000 acres and plans to add 50,000 more. It has drilled 10 wells so far.
The information gathered from the vertical drilling in the Mississippi Lime was convincing enough for a major investment that is now north of $250 million.
"This is a good place to operate," said Michael Radler, CEO of Tughill.
With the drought, finding enough water for the fracking can be an issue. Electricity, needed to power the pumps for years, can also be a problem. The company is working with electric utilities and cooperatives and is also mulling whether to build mini power plants at some of its wells.
But the economics of the Mississippi Lime are as good as expected. The well drilled in the Gypsum Hills cost $3.2 million compared to more than $8 million the company is spending for a well in the Eagle Ford field in Texas, where oil and natural gas is being recovered from shale.
A Kansas well will be profitable down to $55 a barrel, making it one of the best plays in the country. Oil was recently selling in the state for $89.
"I think optimistic is the right word," Radler said. "We like what we see."
So what should Kansans think as all of this unfolds?
It could take one to three more years before the full dimension of any boom is known, but there are already some signs of how it will go.
Ed Cross, president of the Kansas Independent Oil & Gas Association, said not all areas of the Mississippi Lime will be deemed productive enough.
"What we may have is a rolling boom," he said.
J.P. Dick, a petroleum engineer and owner of Pinnacle Energy Services in Oklahoma City, said if he had $3 million to drill one well in the Mississippi Lime he wouldn't do it. But if he had enough to drill 10 wells he would because the odds are several will be productive.
He said 1,100 wells have been drilled in the formation with most of those in Oklahoma. Production figures for 860 of the wells show an average after 30 days of production of 297 barrels of oil and natural gas a day, worth about $20,000 in today's market.
Nevertheless, the Mississippian number is significant, and as Brownback recently said, the "proof in the pudding" about the state's prospects is that the energy companies are investing a lot of money.
SandRidge Energy has drilled 91 wells in Kansas and plans to more than triple the number next year and spend another $700 million. In a recent presentation to investors, SandRidge executives said they have 64 producing wells in the state. The numbers were similar to what Dick reported. Just under half of SandRidge's production was oil, which is currently much more profitable than natural gas.
The results were good enough, when combined with the low cost of the wells, to be very profitable. In a November presentation to investors, SandRidge CEO Ward said the company recently decided it would try to sell some prized energy assets in Texas so that it can concentrate more on the Mississippi Lime.
"The problem with two fantastic plays is trying to feed them both," he said. "We can focus on the higher growth Mississippian."
Distributed by MCT Information Services
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