OKLAHOMA CITY—Oklahoma Governor Mary Fallin told oil and gas producers at the DUG Midcontinent conference on Sept. 20 that efforts to reduce workers compensation costs, train suitable workers for the industry and changes to laws governing lateral well lengths are paying off.

Earlier this year, Fallin signed a bill allowing longer laterals in all geological formations in the state, not just shale. The new law allows for laterals in any target reservoir.

Fallin said the state is seeing the results.

“If you go into the areas where the Scoop and Stack is, you will see a lot of traffic, a lot of companies coming in, a lot of companies waiting for the right moment to when they [can] begin drilling,” she said.

The governor noted that during the oil bust about 75% of rigs were mothballed due to low commodity prices.

Oklahoma E&Ps are operating about 130 rigs in September up from an average of 66 rigs in September 2016, according to Baker Hughes Inc., a GE company (NYSE: BHGE).

However, the state is still averaging nearly 40% fewer rigs than it did just before the downturn. In September 2014, the state averaged 214 rigs.

“The rigs are going back up,” Fallin said.

She also said Oklahoma is seeing new jobs, new investment and talk of further investments.

The state has reduced workers compensation costs by 40% in the past several years and prepared students for oil and gas jobs by emphasizing training in math and science.

Fallin said that with the Oklahoma Energy Jobs Act, which extends laterals in non-shale areas, non-shale areas will open up to more investment.

The Oklahoma Tax Commission estimated that oil and gas production from increased use of long laterals would result in an additional $18.9 million in state revenue. About half would go directly to counties and schools.

“We know that our new piece of legislation in long laterals will go a long way and change in policy that we know will generate millions of dollars into our state's economy,” she said. “It will help those who are landowners receive their royalty payments.”

“And unleashing what we call the drill bit will fuel millions of additional dollars in direct and indirect economy activity into our Oklahoma [oil and gas sector]. Some of those are already in motion,” she added.

George Solich, CEO and founder of FourPoint Energy LLC, spoke after Fallin at the conference. Solich was among oil and gas executives in Oklahoma that lobbied for legislation that enabled drilling longer laterals.

Asked how FourPoint handles drilling longer laterals in harder rock, Solich pointed out that FourPoint has yet to drill a 10,000-ft lateral though “we’re just about ready to spud.”

“We very successfully just drilled a 7,500-ft lateral,” he said. But he added that drilling in the Granite Wash and Western Anadarko is far different than other plays that measure spud-to-completed wellbore in days.

“That’s not the country we’re in. We’re hoping to get our drilling days down to three weeks in the Granite Wash,” adding that is for standard laterals.

However, he added that with properly designed bits, casings and geosteering, “we think it will definitely pay off.”

Fallin said that the energy climate in Oklahoma continues to improve, in part thanks to President Donald Trump and Scott Pruitt, Energy Protection Agency administrator who was also the former Oklahoma attorney general.

Fallin credited Pruitt for understanding the importance of being a good steward of the environment while recognizing that Oklahoma has “great resources in our nation that can lift our people out of poverty, create jobs and opportunities.”

Darren Barbee can be reached at dbarbee@hartenergy.com.

Comments