Oil drilling permits in Nebraska are at 20-year high

With a barrel of oil nearly $140 and natural gas prices doubling in five years, western Nebraska is seeing its biggest spurt in oil and gas well drilling since the early 1980s. The number of drilling permits issued by Nebraska is at its highest level in 20 years. Bill Sydow, director of the Nebraska Oil and Gas Conservation Commission in Sidney, said Nebraska has issued more than 40 new well permits a month for the past two months. “The last time that ever happened, there were over 600 wells drilled, in 1981. We’re not going to get to 600 this year, but we have to go back more than 20 years to see any activity levels like that on a monthly basis,” Sydow said.

Nebraska showed small increases in both oil and gas production last year. It also issued 238 permits for new oil and gas wells, about two-thirds of them for natural gas. So far this year, 108 permits have been issued and an additional 16 requested. The wells are being drilled on land owned by area farmers and ranchers by relatively small independent drilling companies who lease oil and gas rights from the landowners. Nebraska ranks in the mid-20s among the states in both oil and natural gas production.

Nebraska oil production peaked in 1962 at nearly 25 million barrels. It had declined to 2.31 million barrels in 2006. But in 2007, oil production rose slightly — to 2.33 million barrels — the first increase since 1989. The state now produces about 6,000 barrels of oil a day, Carlson said. Bruce Evertson, a Kimball, Neb., “wildcatter” who explores for oil and gas, said there’s a good supply of high-quality sweet crude oil beneath the Panhandle and southwest Nebraska — but dense rock formations make it difficult to recover because there is not enough pressure to force it through the rock. He said it likely would cost millions to drill a high-tech well that would recover only about 20 barrels a day because of the low pressure. Evertson Operating Inc., a 24-year-old company, has been the largest oil producer in Nebraska for the past four or five years.

Evertson said his company pumps 1,500 barrels a day in Nebraska. While Colorado, Utah and Wyoming have more oil than Nebraska, they also have more regulatory requirements, Evertson said. He said an industry-friendly attitude from Nebraska regulators, combined with rising oil prices, have increased interest in Nebraska oil.