American Oil and Gas Reporter - January 2012 - 236

hydraulic fracturing regulations.
Hydraulic fracturing has become a
rallying cry for environmentalists. Environmental activists have long accused
the oil and gas industry of practically
everything from pollution to killing President Lincoln (only a slight exaggeration).
Some of the environmentalists are merely misguided and misinformed, and truly
believe that hydraulic fracturing is a threat
to our environment. Others are simply using a controversial topic to raise money and
gain attention.
Tennessee Legislature
Environmentalists have attempted to
ban or highly restrict hydraulic fracturing
through the legislative process. A legislator
from the Memphis, Tn., area, 300 miles
from any oil and gas production, sponsored
legislation that would have highly restricted fracturing.
Jobs are the number one priority at the
state legislature. Senseless and cumbersome environmental regulations cost jobs.
Thankfully, legislators from both parties
realize this. Environmentalists' efforts to
ban or restrict fracturing failed, thanks in
no small part to Tennessee Oil & Gas Association lobbying efforts. Considering the
aggressiveness of the environmentalists in
our state, TOGA thought it prudent to hire
a lobbyist to represent its interests at the
legislature.
Hiring a lobbyist is a necessity these
days. We have a relatively small oil and gas
industry in Tennessee, concentrated in
only a dozen or so counties. The environmental groups are both local and national.
Some of them are well funded. TOGA has
had to focus on raising funds to pay for its
lobbying efforts. Unfortunately, this is going to be continuous. The environmentalists are not going away and we aren't either.
TOGA has made efforts to show that
our industry is a good steward of the environment. We supported a legislative
resolution that called for association members and representatives from certain environmental groups to sit down in very
small groups to discuss their concerns. This
idea was hijacked by Department of Environmental Conservation and resulted in
large group meetings under the auspices
of Water Pollution Control in Knoxville.
As one can imagine, nothing was accomplished. The one positive thing to
come out of these meetings is that government regulators realized the fruitlessness of these large group meetings. It has
been decided not to have any more of them
anytime soon.
Drilling Activity
There have been positive changes in
Tennessee's oil and gas activity. The low
oil prices during the winter of 2008-09

greatly slowed oil drilling programs.
Drilling for oil in Tennessee gradually
picked up in 2010, and increased significantly in 2011. New players and old made
2011 a good year on the oil drilling front.
Drilling for natural gas on the Cumberland Plateau has remained steady, despite low prices. Drilling for oil has seen
the greatest increases.
Along with increased drilling have
come increased oil discoveries, especially in the Overton County area. New companies such as Mountain V Oil and Gas,
and Hornet Corporation have moved into
the state and had success. In-state operators such as Miller Energy Resources of
Huntsville continue to find oil on the Cumberland Plateau. Miller got good oil production from the Monteagle and Fort
Payne formations in the Coal Hill Field.
Atlas Energy and CNX Gas Corp. have
been the most active operators searching
for gas, and continue drilling on their leaseholds. The Chattanooga Shale is the favored target zone.
With oil prices in the $80-$90 a barrel
range, lots of people are interested in
drilling for oil in Tennessee. Oil exploration targets include the Mississippian
limestones in the Monteagle and Fort
Payne formations on the Cumberland
Plateau. The Trenton (Sunnybrook), Stones
River, and Knox formations in Overton,
Pickett and Fentress counties in the Eastern Highland Rim area continue to be the
most popular targets for oil well drilling.
Significant Discoveries
Mountain V Oil and Gas Inc. of Bridgeport, W.V., had success off the bat in Overton County. Mountain V used its fracturing
expertise learned while working the Marcellus Shale in Pennsylvania and West Virginia to successfully frac the Knox formation in a New Hope Field well. This well
would have made no more than 0.5 barrels
a day before the frac, but has been producing steadily at 27 bbl/d since May.
The company also found substantial
production in a step-out of the Independence School Field. The Ramsey No. 1
found oil in a cavernous section of the
Stones River formation. This well had an
estimated open flow of more than 20
million cubic feet of gas a day from fractures in the Sunnybrook and Upper Stones
River. The well now is making oil at pump
capacity.
Hornet Corporation moved its headquarters from Kentucky to Hendersonville,
Tn., last year, and stepped up its drilling operations in the state. Hornet successfully extended the Old Eagle Creek Field in Overton County eastward for more than a
mile. An exploratory step-out on the Ricky
Melton lease proved highly successful. The
Ricky Melton 2A, drilled in July, came in

236 THE AMERICAN OIL & GAS REPORTER

flowing 350 bbl/d oil from the Knox formation at a depth of 1,700 feet. Additional drilling has extended the field farther to
the east with production from the Sunnybrook and Stones River formations.
Opening New Areas
Higher oil prices have increased interest in oil development, not only in areas
of known production, but also in places
where little or no oil has been produced.
For the second consecutive year, Knoxville-based Planet Energy LLC has drilled
a wildcat in a previously undeveloped Tennessee county.
In October, Planet Energy drilled and
logged the RMK-Graham No. 1 in Perry
County. This well was drilled to 5,050 feet,
and was undergoing completion work and
testing. Chief Manager Jim Bruner stated,
"We have worked through the learning
curve phase and are very encouraged."
Planet Energy holds a large lease position in this area and is planning on doubling its drilling budget for 2012.
Perry County has never had any oil or
gas production. The closest oil production
is located in Overton County, more than
100 miles to the northeast. Oil companies
have shown interest in areas in west and
north of Nashville in middle and West Tennessee.
If Planet Energy is successful in its completion efforts, it will open a huge area of
the state that has been largely overlooked.
Only about 15 percent of the state of Tennessee has oil or gas production, but most
geologists believe 60-70 percent of the state
has the potential to produce.
All in all, 2011 was a good year for Tennessee's oil and gas industry. Hopefully, this
year will be even better. If oil prices remain
high, drilling activity will also.
There are possibilities that new markets
for local gas will be found and that gas
prices will increase. That would help natural gas drilling efforts. Hopefully, continued wildcat drilling by companies such
as Hornet Corporation and Planet Energy
will pay off.
The ending of one year and the beginning of the next is a time when thoughts and
wishes for the coming year come to mind.
First on my wish list is a recovering national
economy in which energy sector jobs lead
the way. Next on the list would be a less
acrimonious political climate in Washington. This would help my first wish. Finally, I would like to see a less restrictive
regulatory environment. This would include
cooperation between public and private sectors to produce our nations' resources in a
safe and efficient manner.
Do I think these things will happen?
Well, maybe. If you have been in the oil
business as long as I have, you have to be
optimistic.
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American Oil and Gas Reporter - January 2012

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