There are rising prices and expectations in the oil patch. The selling price of Oklahoma sweet crude has nearly tripled since January. The News on Six examines how rising prices have affected small oil producers.
There is a large but hard to find oil reserve in the Osage Hills. Mac Alloway knows this land and how to find oil underneath it. For the last year, though, he's had no incentive to look, because oil was selling for as low as $8 a barrel. "Nobody was making any money there,â€ said Alloway. â€œEven if you didn't owe any money, just the operating costs alone will exceed the price of oil." But lately oil prices are up and things are changing in the oil patch. "We started two wells, Thursday,â€ Alloway explained. â€œWe're drilling at 1100 feet and we've got another one right behind it."
Higher prices are fueling optimism and restarting rigs. Now that the price of oil is nearly $22 a barrel, many operators here in the Osage Hills are eager to restart their idled rigs. "The price is very good at this point compared to what it was six months ago," said Dewey Bartlett, Jr. He represents an oil industry trade group for small producers. "The number of rigs in Oklahoma is still the same as it has been for several years, about 55-60,â€ he said. â€œWhen that figure changes, that will tell me that the industry is beginning to feel better and has good positive feelings about the future."
Bartlett believes the higher prices will stick for a while, but that it will take several months to restart all the rigs shut down in the last year. Up in Osage County, Mac Alloway isn't waiting. "Well I'm 75, and If I'm gonna do it, I better be doing it," he said. The industry got a state tax break when the prices hit bottom. The taxes automatically took effect again when the price topped $17 a barrel.