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New drilling techniques and technology make recovery more feasible

McComb anticipates second oil boom

McCOMB — From about 1959 until 1978, McComb was an oil boomtown, a mini-Dallas in the midst of Mississippi. Nearly 30 million barrels of oil and 27.2 million cubic feet of gas were extracted from the McComb Field that included 10,600 mineral acres in and near McComb.

The royalties received from the mineral rights made a huge impact on the economy of McComb, providing money for new homes and businesses, for art, for college educations and much more. The wealth made McComb a more sophisticated town than could be expected on average in Mississippi.

Norman Gillis Jr., attorney for the Pike County Economic Development Board, said that at peak production 10,000 barrels per day was being produced from the McComb Field. He said there were nearly 200 wells in the area, an average of one well for every 40 acres. The 10,000 acres represented a substantial amount of land, and many people benefitted from royalties from the production.

J. Britt Herrin, executive director of the Pike County Economic Development District, said the McComb Field oil production was a major part of the area economy.

“When it was cut off, it had a desperate effect of causing a pretty severe recession around here,” Herrin said.

Now a Dallas-based company, E.B. Germany and Sons, is moving their operations to McComb in an effort to recover another 30 million barrels of oil from the McComb Field using primary, secondary and tertiary methods of oil and gas recovery. N. Forest Germany, president of the company, said drilling costs could run between $50 million and $80 million.

Other investors in the project include Rosewood Partners and Comanche Energy. Comanche Energy (CMCY), a publicly traded company headquartered in Tulsa, Okla., with $80 million in assets, will serve as operator of the project.

While recovering that much more oil from the field is the optimistic view, it isn’t impossible, said Jack Moody, director of Energy and Coastal Geology, Office of Geology, Mississippi Department of Environmental Quality. Moody explained that a lot of people have done very well going into old fields. A common saying in the oil industry is, “Look for oil where oil is.”

Moody said that with secondary recovery, energy is introduced back into the oil reservoir normally using water. A series of injection wells push a wall of water through the formation that pushes oil towards producing wells. With enhanced or tertiary recovery, carbon dioxide can be injected into the formation to dissolve the oil.

“It makes it a little more liquid, and easier to move the oil,” Moody explains.

Even after all that is done, 50% or more of the original oil may still be in the reservoir. Moody said there is hope that in the future technology will allow for greater recovery in known oil reserve areas such as the McComb Field.

Moody said the effort planned by E.B. Germany and Sons will require a lot of investment, engineering and planning. But by multiplying the potential 30 million barrels of oil by the current price of oil, which is up considerably, the incentive to reproduce the McComb Field is readily apparent. Figuring an average price of $20 per barrel, the revenues from the field would be $600 million. The amount of royalties paid at one-sixth would amount to about $100 million. Assuming that mostly stayed in McComb, the economic impact would be huge.

The McComb Field represents one of the larger oil fields in Mississippi, and it also has produced a lot of natural gas. The field was discovered in August 1959 with the drilling of the Gillis-Pope No. 1 well by Sun Oil Co. Most production ended in 1978.

Germany said the project will initially involve five wells drilled to test the viability of the project. If successful, a total of 100 more wells could be drilled over the next three to four years.

Germany said that the new technology allows fewer wells to be drilled to recover the oil than were needed for the original production.

He added that the new wells are quieter and more environmentally friendly. Since the wells operate on electricity, they don’t make much noise.

“Once a well is in production, you won’t realize it is there,” said Germany, who heads the company that was founded by his grandfather in 1930.

Schools are already benefitting from the project. Germany has leased 600 acres of 16th Section land from the McComb school district for $22,500. The lease agreement calls for the schools to receive one-sixth of royalty revenues, which is the normal amount. If operators recover all their costs in reopening the field and producing the oil, the schools district’s share will increase to one-fourth.

“It will definitely help shore up the tax base and help schools from the immediate impact from leasing the 16th Section lands for drilling,” Herrin said. “I don’t know how much they are going to find or what is still down there. But schools will benefit no matter what. If they find a lot of oil, it will be a huge, huge boost to the economy.”

Herrin said that type of cash infusion into the economy would be welcome. But, fortunately, the McComb economy is also doing well in other areas.

“If we can add something more to the mix, it will make the mountains that much higher,” Herrin said. “We’ve just done real well economically in the past few years. From 1990 to 1998 we were one of the top five counties in the state in manufacturing jobs growth. We’re also seeing a lot of growth in retail.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com.

About Becky Gillette

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