Signs suggest oil production ramping up
After several years of anticipation, oil industry observers in Mississippi are holding their breath at the possibility that the Tuscaloosa Marine Shale oil boom could soon begin.
The Tuscaloosa Marine Shale is a marine deposited shale formation that has been the source bed for the Tuscaloosa sand sections that have been drilled in Mississippi for the last 30 to 40 years. Oil companies in the past have been able to drill through the shale to access the oil under it, but the migrating clays in the shale itself could clog drilling equipment and made operations difficult.
But the shale has received renewed attention in recent years as technology has evolved and made a profitable tapping of the formation possible, and oil companies have been buying oil and gas leases in Southwest Mississippi — especially Pike, Amite and Wilkinson counties — in anticipation of what is to come.
And now Britt Herrin, the executive director of the Pike County Economic Development District, said he’s seeing signs that the companies are ready to move forward.
“Goodrich (Petroleum Corporation)’s president has announced that they feel they have cracked the code on the TMS, that they have figured out how to drill it and make it work, and make it work multiple times,” Herrin said.
“The question has always been, can the shale hold a well bore and produce (oil), and they have said they have figured out how to deal with it. We have to do things a little different than they did in Texas or North Dakota, but they are bringing online three or four (wells) in the next few weeks, and you are not hearing that they are having problems with those that are being brought on right now.”
Couple that with the fact that both Goodrich and Encana Corporation — the other major player investing in the shale — applied last week to the state oil and gas board to permit up to 48 wells, and things are looking up, Herrin said.
“That is almost double what is done already,” he said.
Scott Wesberry, a member of the Southwest Mississippi Partnership for Economic Development’s board of directors, said he’s seeing similar developments in Wilkinson County.
“I watch the future permits on the oil and gas board website, and since Christmas there have been a great deal more permits,” he said.
And yet more permit applications may be on their way after that.
Hayden Kaiser III an engineer at Jordan, Kaiser and Sessions engineering firm said the firm started surveying work for a potential well site in Amite County last week, and as part of the surveying process, the engineers create the map that is used by companies in their applications to drill, he said.
Kaiser said he expects more such work to materialize in the coming months.
“At least that is what I am hoping, for everybody’s sake,” he said.
Sen. Melanie Sojourner, R-Natchez, said she has been visiting well sites and has seen some encouraging signs, including test wells that are producing at a solid volume.
Beyond that, who she is seeing on the ground is also important, Sojourner said.
“The companies are starting to bring in a lot of middle management and site management guys and are renting up a lot of spaces, and in the coming months we are looking at turning those rent opportunities into sale opportunities,” she said.
Herrin said the Pike County part of the play is starting to feel the early economic ripples through the economy as the oil production ramps up.
“We are seeing our hotels full for sure, and we are seeing a lot of rental housing has been gobbled up — I daresay with traditional apartments we are almost totally full,” he said. “With hotels, there are times you can’t get a room here in McComb at all, and we have had a few businesses move in that are here solely supporting the oilfield operations, oilfield supply companies doing special services they need.”
Further west in Wilkinson County, the effects of the oil exploration hasn’t been felt as directly on the housing market. Jim Derbes owns rental space in downtown Woodville, and he said that while he has been able to rent three commercial spaces to title companies during the oil exploration period, he doesn’t know what to expect when it comes to housing.
“We can assume that there will be several dozen wells pumping around, I can’t imagine what kind of housing demand that will generate since we haven’t seen any demand (for housing) for the two wells we have yet,” Derbes said.
“There are a lot of people in our courthouse who are checking titles every day, you can see people coming and going, but most of these people seem content to live somewhere else.”
But even if the Wilkinson County housing market doesn’t boom with the oil, Wesberry said he expects to see similar economic ripple effects as those in Pike County.
“They are getting groceries here and eating in the restaurants, and when the trucks are coming through the area fracking, most of them are staging at the truck stop south of Woodville,” he said.
“I know there is a big push for these folks to buy supplies locally.”
Meanwhile, the early effects of the exploration have not been unnoticed, he said.
“The trickle down from the (oil) lease money was great, it turned a lot of cash loose in the community,” he said.
“Everybody says this fall there will be increasingly more traffic coming in. Are we expecting a big boom? Yes.”