There's Oil In Them Thar Hills

The Appalachian mountains are buzzing with the sounds of oil drilling.
Most of the 900 or so wells drilled in Kentucky this year won't produce more than a barrel or two of oil a day. But with prices around 60 dollars a barrel, those little wells are pulling in big profits, especially when they also pump natural gas.

With oil prices now double what they were two years ago, the US Congress has called hearings to address charges of "price-gouging."

The pinch at the pump is causing some economists to warn that consumers will have to reduce discretionary spending while the rising price of heating oil has raised concerns that some people won't be able to heat their homes this winter.

But for Kentucky cattle farmer Billy Carroll, 70, who has two oil and natural gas wells on his property that he leased out in exchange for an eighth of the profits, it means retirement is a lot easier than he had expected.

"The gas well sure has been good to me because I don't have to feed it," he said as he leaned against his truck parked beneath a mountain speckled with fall colors. "I don't do anything. Just get the check."

Two of Carroll's sons also have wells on their farms and many of his neighbors would like to get in on the boom. The problem is there aren't enough rigs to drill them.

"There could be more wells being drilled in Kentucky but because the industry has been depressed for so long there has been a lack of drilling rigs and a lack of skilled labor," said Brandon Nutall, a geologist with the Kentucky Geological Survey, a state agency charged with analyzing and cataloguing natural resources.

Nestled among Kentucky's famed coal mines are about five billion barrels of oil reserves, Nutall said. Most of the oil is in small fields that sit relatively close to the surface which makes for cheap drilling and long production cycles.

The fields are too small to interest big oil companies, but that hasn't stopped nearly 2,000 small ones from registering to operate in the state.

Drilling is hard in the mountains and the atmosphere can be reminiscent of a Wild West gold rush atmosphere, especially since many companies don't make it through the bust periods, Nutall said.

"The drillers are hardworking guys. They don't mind getting dirty. They play hard -- you'll hear a lot of cursing," he said. "Most of the people are fiercely independent. They don't want anyone telling them what they can and can't do."