Sunday, January 22, 2006 at 3:12 PM ESTAdvances spur search for...

Sunday, January 22, 2006 at 3:12 PM EST
Advances spur search for state's oil

The oil strike on Jack Ferguson's farm in Clinton County back in 1990 was an honest-to-goodness gusher.

It spewed an average of nearly 1,700 barrels a day for the first two months -- and sometimes produced 2,700 barrels a day -- even without a pump.

"It was simply wonderful," recalls Ferguson, now 87. "I wish they'd come down and hit another one like that."

There is a growing possibility that it could happen.

Ohio Kentucky Oil Corp. Vice President Johnnie Spaulding, whose exploration, development and production company holds the mineral rights on the Ferguson lease and many others around the state, says signs point to the beginning of perhaps another Kentucky oil boom.



"Certainly a mini-boom," said David Harris, a petroleum geologist with the Kentucky Geological Survey. "We have a lot of area that the deeper targets have never been drilled. We think there's a tremendous potential for natural gas -- even more than oil."

Spaulding believes that south-central and Western Kentucky have the greatest potential for new oil discoveries, while Central and Eastern Kentucky have the most promising gas reserves.

"We have so much more science now," Spaulding said. "Just last year, the first well that we've drilled on the Ferguson lease in many years came in at 240 barrels a day. One well, one shot, using science."

Satellite imaging, two- and three-dimensional seismic mapping and other photo geology tools are now affordable for the first time for smaller exploration companies.

Ohio Kentucky Oil Corp. is now striking oil in about eight out of 10 wells that it drills and is developing more than 60,000 acres in Kentucky and Tennessee, Spaulding says. As crude prices approach $70 a barrel, many smaller exploration companies are using new extrusion techniques to pump oil from some long-abandoned wells, and there is renewed interest in "stripper" wells that may have been pumping no more than a half to one barrel a day.

"Eight years ago, when oil was $18 a barrel, a well that was producing one barrel a day was worth $6,500," Spaulding said. "That same well today, still producing the same 365 barrels a year -- at let's say $58 a barrel -- would now be worth $21,000."
Untapped reserves

Kentucky Geological Survey studies suggest that 67 percent to 70 percent of all original oil may have been left behind in many old wells because of antiquated production and completion techniques.

"In one of our operations in northwestern Kentucky, we went in and reworked all of our wells, using modern technology, and we got wells up from a half to three barrels a day to 10 and 17 barrels a day," said Spaulding. "Sometimes you can reinvigorate a well just by cleaning it out and chemically treating it."

Evidence of a possible boom is found in a 39 percent increase in new oil and gas permits issued last year -- a total of 1,759, the most since 1991. Already this year, 74 new permits have been issued.

Harris cautions property owners and potential investors to contact the Kentucky Geological Survey or the Kentucky Division of Oil and Gas before getting involved with unknown individuals or companies involved in leasing and exploration.

"I'd love to see somebody drill deep in this part of the country -- 5,000 feet or better," said Gary Ferguson, a cattleman whose family farm was where the gusher was struck at just over 1,000 feet. "Hopefully some day somebody will do it."