Oil Still Big, But Natural Gas Is Hot In East Texas
Published Dec 15, 2008
Oil derricks line the streets on the “World’s Richest Acre” in downtown Kilgore.
Oil may be the bedrock of the East Texas economy, but the bedrock itself is proving to be valuable in its own right these days.
Even as new technology allows for more and deeper oil drilling, natural gas has become a hot commodity.
“There’s going to be a lot more gas wells drilled right now because gas exploration is a little easier to pursue than oil exploration,” says Jerry Pybas, who along with Larry Tate owns Southport Environmental and Development Inc. in Kilgore.
“In East Texas, there’s an opportunity to find some big gas fields right now, and it’s not nearly as expensive to operate a gas well compared to an oil well,” he says.
Ramona Nye, spokeswoman for the Texas Railroad Commission, says overall energy prices are driving strong exploration now, with natural gas leading the way.
“Oil production plateaued in 1972 and has been dropping ever since, although it does go up and down,” Nye says. “Natural gas is continuing to go up. We have some of the largest natural-gas shelves in the nation, and we don’t have production on some of them yet.”
Drawing great interest is the Haynesville Shale formation, which runs under northeast Louisiana and East Texas.
Drilling has only begun recently, and early data indicate that the shale may run as far west as Panola and Harrison counties, perhaps even under Rusk, Gregg and others.
Preliminary costs for a well into the Haynesville Shale are estimated to be around $8 million, with a return of around $70 million at current natural-gas prices.
“There’s shale in every sedimentary basin in the United States, and nobody’s ever really messed with it,” Pybas says. “There are two things that make that possible now: technology and price. If you can drill down to it, get it up and make a lot of money doing so, then you’re going to do it. That’s why we’re seeing people coming in here, and paying what they’re paying for some of this acreage around here.”
With oil wells dotting the landscape for more than 70 years, it’ll be a shift for some to see the natural gas rigs popping up, but they’re becoming the norm, not the exception, he adds.
“There hasn’t been a major oil find in East Texas in a long time, but that’s not to say it’s not out there and that people aren’t looking for it,” Pybas says.
“But right now the energy folks are going for natural gas. We’re going to be oil and gas dependent for a long time, so the price is going to stay up, and that’s going to drive where the exploration dollars go.”
Story by Joe Morris
Photo by Staff
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