02-08-04

Prospectors have been drilling in Tennessee since the Civil War, searching for oil. While the industry has never amounted to much, this year, some big strikes and healthy prices have put the state back on wildcatters' maps.

As crude oil prices hover above $ 43 a barrel, new wells are being drilled in Tennessee and other unlikely states.

The number of US oil rigs has increased from 750 in 2002 to more than 1,200 this summer, according to oil field services company Baker Hughes. The industry publication World Oil said nearly every oil state is seeing more activity.

"There are fewer temporary abandoned wells than there have been in the past few years," said Larry Bengal, supervisor of the Illinois Oil and Gas Division. "Some marginal wells are now active that weren't a few years ago."

Tennessee is particularly attractive to wildcatters because there are still areas that haven't been drilled. It didn't hurt that news of a couple of big hits earlier this year is starting to circulate through the industry.

Young Oil Corp. said a well in north-central Tennessee flowed 150 bpd in June, following up on a big hit earlier in the year. The average well in the state produces about one bpd.

Most wells in the United States are small, so new domestic wells aren't likely to boost overall production that much or affect prices, industry experts said. But they certainly give small operators a chance to make big money.

The activity, coupled with higher prices, has helped the economy. North Dakota, for example, took in twice what it expected for oil-tax revenue in March, collecting $ 3.4 mm. And the number of people employed in exploration and production in the country increased to 363,900 last year from 322,400 in 1999.

Not everyone welcomes the new drilling activity. A few years ago, a well in north-central Tennessee exploded and began spilling an estimated 200 to 500 barrels per hour into Clear Creek and its tributary White Creek, both of which are inside the Obed Wild and Scenic River area. Environmentalists were hoping for see tighter restrictions in new regulations due out soon, including a buffer zone between streams and wells.

"We're not very happy about that. We're all writing comments into the state to tell them to get their act together," said Axel Ringe, with the Sierra Club's Knoxville chapter.

Source: Associated Press