Oil boom on the horizon in Kansas? Also, a hint of the lucrative economics of fracking.
Walter Russell Mead points to an article here that says prospectors are spreading out across southern Kansas looking for oil. They are in the Mississippi Lime formation, roughly between Tulsa and Wichita and spreading to the west.
Two really cool comments in Mr. Mead’s post, What is the Matter with Kansas? If You Like Oil, Nothing.
First, here is a hint at the economics involved:
Each horizontal well costs about $3 million and is expected to deliver a 90 percent return on investment, paying for itself after 18 months of production.
18 month payback.
No wonder there are frantic efforts to snap up millions of acres of leases. No wonder the economy in Williston, ND is going crazy.
Second, as I’ve said before the future is so bright we need sunglasses:
Abundant natural resources powered the great American boom after the Civil War and then lifted the country to unprecedented prosperity in the 20th century. So far, from the standpoint of energy at least, the 21st century looks like more of the same.
The Tulsa World article lists a few of the large fields that have huge amounts of oil and gas:
Names like Barnett, Marcellus, Haynesville, Bakken and Woodford Cana became synonymous with unconventional drilling and revived U.S. energy reserves.
Make note of those names. Add to the list Mississippi Lime.