Two hours northwest, oil boom is in the making

04 19, 2014 by The Sun Herald

Hundreds of millions of dollars are being invested in southern Mississippi to develop oil and gas production that, if successful, could cause a boom for the Coast and the rest of the state not unlike the one North Dakota is experiencing with its Bakken formation.

Technology is the key for this, however.

Oil companies need a way to drill into the especially deep oil and gas deposits without eating up profits. There's no doubt the Tuscaloosa Marine Shale -- deep beneath central and southern Louisiana and southwest Mississippi -- holds untold caches of sweet crude and natural gas. Studies put the amount of oil there at 7 billion to 9 billion barrels; information about the amount of natural gas there isn't as available.

And hydraulic fracturing and horizontal drilling, the techniques that have helped America hit the jackpot with shale oil and gas deposits elsewhere, is the technology that can get to it.

But the cost per well is still high for drilling in this area, about $15 million, those in the industry say. Yet there are indicators, some subtle and some not so subtle, that are very positive for Mississippi and Louisiana.

Companies committing

For one thing, oil companies are renewing five-year leases in the hot-spot area that includes Amite, Pike and Wilkinson counties in Mississippi and five parishes in Louisiana.

"That shows promise," said Richard Metcalf, with the Louisiana Mid-Continent Oil and Gas Association. "If they're holding on to the leases for another five years, they must think there's something there.

"I think it's still early in the development of the field. But with each well, they're learning more and more."

Also, this shale is one of five areas of the United States that Canadian-based Encana

Corp. oil company is focusing on. And the drilling is getting closer to the Mississippi Coast. A major Louisiana independent, Helis, announced plans this month to drill near Mandeville.

But the companies have been at it for only a few years with only 35 to 40 wells drilled so far, Metcalf said, so he keeps it in the category of potential boom. A big drop in the price of oil and gas could put the brakes on, he said. Whether Mississippi can get better roads to the area could be another factor.

Oil wells going in

Around McComb, in Pike County, the number of $15 million wells drilled likely will double this year, from six to 10 or 12. McComb is two hours from Gulfport.

"I think this has got the potential to be the biggest economic happening ever in the state of Mississippi," said Britt Herrin, director of the Pike County Economic Development District, "with billions of dollars in income and thousands of jobs. It will make waves across the state … and it could last for 20 or 30 years.

"They know the oil is there, 90 percent of it high grade."

"I think between 2014 and 2015 we'll see a massive change in McComb, a boom if everything goes as stated. It's already hard to get a hotel room."

Oil company Halcon is shifting rigs to the area from Texas, as is Goodrich Petroleum, Herrin said. And there are a half-dozen new players.

It's still in experimentation and not in full-blown production, but "everybody's telling us, in some ways, the wells here could be more profitable than in the Bakken (formation in North Dakota)," he said.

They're getting closer

"We hope that it blossoms into something really big," said Patrick Sullivan, director of the Mississippi Energy Institute. "It's emerging."

The Bakken, in full production for four to five years, is way ahead of this area. It's hard to compare. Companies are optimistic, he said, but it's cautious optimism.

"The trends in the last two years are moving in the right direction," he said. "But it's still a high-risk game."