WICHITA, Kan. — A southern Kansas oil boom that started two years ago has given landowners an infusion of cash from lease payments and boosted local governments and businesses.
Largely out-of-state oil companies have drilled hundreds of horizontal wells in places like Sumner, Harper, Barber and Comanche counties, delivering an enormous financial boost.
But the Wichita Eagle reported that there’s a negative impact for some without a stake in the oil industry because of rising housing costs.
Eric Smith and his wife, Kathy, are among those reaping the benefits of increased economic activity.
The Smiths own the 16-room Anthony Motel, which normally gets decent business — especially during hunting season. Since the oil companies arrived in Harper County, it’s usually full.
As a result, the couple decided to build a 45-room motel at the northern edge of the city. The Cobblestone Hotel is slated to open next month and employ six to eight people.
“I felt like we needed to take advantage of this somehow,” Eric Smith said.
The revived oil industry and establishment of wind farms have meant an increased number of lease payments in the hands of local governments. The energy boom also has resulted in land values along the state’s southern border climbing sharply.
The Kansas Department of Revenue says total assessed value of Harper County land rose 33 percent between January 2010 and January 2012. Barber County’s assessed value went up 34 percent and Comanche County’s rose 27 percent during the same period.
But the farmland market has been hurt by the boom, said Brandon Gerber of Gerber Auction and Real Estate in Anthony.
“Why would I sell my land if there was a gusher of oil underneath?” he said
And home prices are going way up because people who are flush with cash can afford to pay higher prices for property that suddenly is in high demand. It’s hurting many residents, especially young people, said Allie Woods, a resident of Harper.
Woods said she pays $400 a month for a rental house, but has to move because the home is being sold. A similar house that she looked at is renting for $1,000 a month, she said.
“The ones that are getting money (from the oil boom) are enjoying it,” she said. “The ones who aren’t don’t like it so much.”
There’s also a lot of skepticism from traditional Kansas oil companies, though a few of the bigger ones are now trying horizontal drilling.
Shell Oil Co. recently filed an intent to drill notice in southwest Sedgwick County. Others also have started moving north and west of the original counties in search of oil.
Smith, the hotel owner, said even though he’s making a big investment in the future, he’s not completely convinced the boom will still be around in four years.
“If this stays and I don’t do this, I’d have missed out,” he said. “If it doesn’t, well, I’ll work it out.”