New oil boom for Terry County?
TERRY COUNTY, TX (KCBD) - This year oil companies are paying South Plains mineral owners millions of dollars because they think they're sitting on black gold.
Leasing is on the rise in parts of several area counties that have never pumped the precious resource before.
An estimated $80 million has been spent leasing around 200,000 acres of mineral rights in Terry County so far this year.
Several drilling rigs stick out over the flat land to the southwest. One land owner tells us they're already pumping.
"When daddy bought the land and bought the minerals with it he said, 'I probably won't see any of this but you kids or the grandkids will,'" Robert Noble said.
Noble owns more than 20 tracts of land in Terry County. He already has leasing agreements with an oil company. Now he says they're drilling one well and pumping from two more on his property.
Brownfield attorney Bill McGowan helps land and mineral owners negotiate leasing contracts with interested oil companies.
"When a family of 20 people gets $800,000 waved in their face for a 3,000 acre oil and gas lease it's pretty hard to turn down," McGowan said.
Tall drilling rigs, water tankers, sand trucks, fresh caliche roads, and new electricity lines can be seen in rural parts of southwest Terry County - all are evidence of the increasing oil activity in the area.
"I've worked on one oil and gas lease for a family for $1.75 million dollars," McGowan said.
Whatever happens will take time. McGowan estimated nine wells had been drilled, and more were on the way.
Noble also preached the importance of being patient.
"It's not going to happen overnight, but it will come," Noble said.
Noble says it took the oil company about a month to drill their first well.
"They're fixing to do the frack test on it and then put a pump jack on it," he said.
After they frack the strata, they'll try to pump. A tool pusher on one of the sites told us it can take 30,000 barrels of water to drill.
Since they use so much, it can take a few months to pump the water back out of the well. Right now they're pumping out a black, watery, bi-product. Once the water is gone, they hope the rest will be oil.
Noble says company men tell him they hope to eventually pump 200 barrels of oil per day out of his well.
We asked Noble what 200 barrels of oil a day could earn for his family.
"Well just price it at $100 a barrel and see what it does," Noble said.
The math comes out to $20,000 per day. McGowan says mineral owners get royalty cuts between 20 and 25 percent.
"That helps a sore toe in a bad farming year," McGowan said.
Most of the land owners are farmers, but just because a person owns the land doesn't mean they own the minerals underneath.
Mineral owners may like the oil companies' presence, but farmers who just own the surface rights may not.
"I've got friends that have land that have no minerals, they're like - I hope they don't show up," said land owner Craig Keesee.
Keesee leased his land, but says other farmers and land owners might not be so willing.
"They're going to have circle systems that have drilling rigs out there messing it up," Keesee said, recalling farmer's complaints.
Lawyers like McGowan try to negotiate with the oil companies to drill on the corners of farm land and to keep battery tanks and equipment below the path of irrigation pivots.
"We're trying to protect their living, protect their investment and protect their water," McGowan said.
Drilling and fracking operations use thousands of barrels of water. Land owners will sell their well water to oil companies, but they also need it for their crops - especially in dry seasons like last summer.
McGowan says the price of water may be a key in keeping the companies' interest.
"How high does the price of water have to be before they'll say it's not economical anymore?" McGowan asked.
"It's wait and see right now," Noble said.
It will take several weeks until all the excess water is pumped from Noble's well. Afterwards, oil companies will have a better idea of what's below.
"This is not going to be finished in my lifetime," McGowan said.
If oil companies do eventually find what they're searching for, it could be the start of something that changes lives for the people of Terry County.
"It just would be something we've never got to see in this community," Keesee said.
"It'll be worth it," Noble said.
McGowan said land men have told him the interest is spreading into Lynn County, parts of Hockley County and even small portions of Lubbock County.
Is this all good news?
"You're darn right. It's really good news," McGowan said.
Only time will tell.
Copyright 2011 KCBD NewsChannel 11