High prices renew interest in gas, oil exploration in Nebraska

A California oil and gas drilling company is exploring a site in Nebraska — the location of which the company declined to disclose — as early as next month, to see whether there is a potential for oil. If oil exists, the site could be home to 10 to 40 wells with 100,000 to 250,000 barrels of oil per well. Bill Sydow, director of the Nebraska Oil and Gas Conservation Commission in Sidney, said there were nearly 240 permits for new gas and oil wells issued in 2007, the most Sydow said he s seen in his 13 years at the commission.

Whether the renewed interest will translate into an increase in production, though, remains to be seen. Last year, there were 2,334,356 barrels of crude oil produced in Nebraska, a slight increase of about 21,000 barrels from 2006 and just the second year-over-year increase since 1988. The news on natural gas was a little better, with 1.4 billion cubic feet produced in 2007, up from just more than 1.2 billion cubic feet in 2006 and the second straight annual increase.

Sydow, for his part, thinks gas production in Nebraska may be ready to take off. At the end of 2006, Nebraska had proven natural gas reserves of 138 billion cubic feet, the highest level since 1981, according to the Energy Information Administration. And there is likely still more. According to a 2002 assessment of undiscovered oil and gas in Nebraska, Kansas, Colorado, South Dakota and Wyoming done by the U.S. Geological Survey, there is a 95% chance that there are more than 337 billion cubic feet of natural gas in the Niobrara Chalk formation and a 50% chance there are 843 billion cubic feet.