Oil prices have upside for region

Higher oil prices have sparked renewed interest in drilling projects in Southwest Nebraska, but long-range prospects for growth in the area's oil business are dependent on the labor supply and the availability of drilling contractors and service rigs.

That's the view of two McCook men who have launched drilling projects in the past month. In separate developments, Jim Kenny of Kenny Energy LLC has set pipe on three wells north and east of Danbury, and Jim Burton of JB Operating LLC set pipe on the McCartney 9-7, a well located four miles southeast of McCook.

"There's an economic development opportunity here, as there are in other oil-producing areas," Burton said. "The problem thoughout the oil industry is that we are short-handed," he reported. This is happening despite the fact that wages are rising, with average hourly pay in the $15 to $19 range now, compared to $12 an hour not too many months ago.

The upsurge in oil drilling projects has been brought about by the rising prices, which have topped $65 per barrel in recent weeks. That is a huge turnaround from eight years ago, when prices plunged. As a result of the rock-bottom prices, the area oil industry floundered, with many oil workers leaving the area or finding jobs in other fields.

Despite the labor challenge, Kenny believes the increase in drilling projects will continue, even if the prices edge downward. "There is a lot of potential for new wells; for the development of new fields; and for drilling projects to define the limits of the fields," he said.

Other parts of the area are also benefitting from the increased oil activity, with Mica Energy developing projects in Dundy County.

Down through the years, oil has been a large contributor to this area's economy. The peak was reached in the late 1960s and early 1970s during development of the prolific Sleepy Hollow and Ackman fields in Red Willow County. Activity has slowed since then, but it's encouraging to hear that new development projects have been launched.

Oil helps this area in many ways, generating taxes for schools, royalties for property owners and jobs for oil workers. For all those reasons, and more, it's good to hear that activity is picking up again, giving a needed boost to the area economy.