Official says Nebraska oil boom remains unlikely

LINCOLN, Neb. — Nebraska’s geology makes it unlikely that the state will experience an oil boom, despite the success of modern drilling techniques in neighboring Colorado and Wyoming, according to the Nebraska Oil and Gas Conservation Commission’s director.

Oil producers in Colorado extracted 48 million barrels of oil last year, mostly from wells close to Nebraska. Wyoming produced 58 million barrels of oil.

But the amount of conductivity in underground formations is considerably lower in Nebraska than in Wyoming and Colorado, Bill Sydow, director of the Nebraska Oil and Gas Conservation Commission, told the Lincoln Journal Star. Conductivity is an indicator of oil and natural gas deposits.

“I don’t know if we’ll ever have a resource play like those other places,” Sydow said.

There is still significant oil exploration in Nebraska. Last year, Nebraska wells produced about 2.5 million barrels of oil, up about 10,000 barrels over 2011.

Last year, 1,335 wells were producing oil in Nebraska, and 12 discovery wells were drilled in the state.

And the Nebraska Bureau of Educational Lands and Funds received more than $1.3 million in October when it auctioned off oil leases on land it holds in trust for public schools. That was the third-highest total ever for the annual auction.

Many of the wells drilled in western Nebraska don’t produce as much oil as companies expected. Sydow said that happened with two wells Fairways Exploration drilled in Banner County last year.

“I think if we just keep our production flat, that’s positive,” he said.

But some companies remain optimistic about the chances for Nebraska oil production because of new technology, such as three-dimensional seismic testing, and techniques like hydraulic fracturing.

Jim DeCosmo, Forestar’s president and CEO of the Forestar Group of Texas, said he’s optimistic about the company’s prospects in Kansas and Nebraska, but he wouldn’t address Nebraska individually.

DeCosmo said his company had 62 producing oil wells in the two states at the end of 2012 and plans to drill 82 more this year.

“We foresee several more years of activity in both Kansas and Nebraska developing and expanding our oil prospects,” he said.

Several other companies have leased large areas in western Nebraska, including Synergy Resources of Colorado and Apache Corp. of Texas.

Synergy spokesman Jon Kruljac said his company is waiting to see what results Forestar and Apache get before drilling any of its own wells in Nebraska.