LINCOLN, Neb.—Oil and gas leases over the Niobrara shale formation in western Nebraska have been in high demand over the past year, but some associated with the drilling business are skeptical of the prospects for an oil boom.
Richard Endacott, chief executive officer of the Nebraska Bureau of Educational Lands & Funds, said the board’s last two lease auctions have been the most lucrative in its history. They brought in a combined $3.2 million for 133,000 acres in 2010, and each surpassed the single-auction record.
Endacott told the Lincoln Journal Star that there’s a serious interest in drilling but he doesn’t think a boom is in the cards.
“I hope the Niobrara works,” he said. “I just don’t have a lot of faith in it.”
Most of the leases Endacott’s group auctioned off have been in Banner, Cheyenne, Kimball, Morrill, Scotts Bluff and Sioux counties, which sit atop the Niobrara shale formation. The 90 million-year-old formation is under parts of Colorado, Wyoming, Nebraska and Kansas and is estimated to hold up to 2 billion barrels of oil.
Recent interest in the Niobrara shale appears to be fueled by success in drilling the Bakken shale formation in North Dakota and soaring oil prices.
Bruce Evertson, CEO of Evertson Cos., the largest oil producer in the state, has been drilling for oil in western Nebraska for more than 40 years. He said he’s never seen a strong showing from the Niobrara shale there and thinks most of the oil is Colorado and Wyoming.
“There are a lot of people who have put up a lot of money for leases who disagree with me,” he said.
Evertson said a boom would be good for Nebraska’s economy, bringing jobs, royalties and tax revenues.
The demand for leases hasn’t yet carried over to drilling, said Bill Sydow, director of the Nebraska Oil and Gas Commission, which tracks drilling permits.
Sydow said he thinks there is oil under Nebraska’s part of the Niobrara shale but expects it will be hard to get to.
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Information from: Lincoln Journal Star,
