Drill to the Last Drop

City officials might be mildly disappointed by the lack of response so far to a recently passed ordinance that lifted Tulsa's century-old prohibition against oil and gas drilling in the city. But at least one local oilman believes that apparent lack of interest is not because there's a shortage of such material under the city.

"There is a pile of oil and gas under the old city center of Tulsa," said Mike Flick, president of Tulsa's Drake Exploration Inc. "But the only people who are going to do this are mid-size companies with deep pockets. The risks of doing it are so phenomenally high."

The City Council passed a measure on Jan. 14 that lifted a moratorium on oil and gas drilling inside city limits that had been in place since 1906. Those who supported the measure, including District 7 Councilor John Eagleton and Mayor Dewey Bartlett Jr., expressed the hope it would generate some income that would help the city get through one of the worst budget crunches in its history.

But city officials reported a few weeks ago that the measure had not led to a rush of inquiries from exploration companies.

A city spokeswoman said the mayor's Action Center had received only 15 calls about the ordinance, with none of those callers expressing any meaningful interest in drilling. Mike Bunney, the city's economic development director, said his office had been approached by one individual who had expressed an interest in purchasing city property for the purpose of oil and gas exploration. That inquiry went no further when Bunney told him the city was not interested in parting with the parcel.

Bunney said his office is working on its specific policies in regard to implementing the ordinance. He said when that process is complete, his office plans to go back to that individual and determine if he has an interest in obtaining a lease on the parcel for exploration purposes.

Flick believes there are substantial environmental, physical and legal hurdles that will discourage any drilling activity in the city. First and foremost, he said, it's a tremendous challenge to obtain the rights to drill in an urban or suburban setting.

"Those minerals are still vested with someone," he said of land this is likely to have traded hands numerous times throughout the course of a century. "Doing all the title work to find out who owns the minerals, you've got to go way back. Finding the mineral owners alone would be a nightmare."

Flick also said the environmental regulations associated with drilling in that setting would likely discourage any activity.

"Those regulations would be substantial when you're hard up against human habitation," he said.

Another sticking point, he believes, would be the issue of what to do with the natural gas that likely would be mixed with any petroleum. Flick said the only place to sell that gas is to a local utility, and the mechanical methods required to rid the so-called "rich" gas of any oil or water before it enters the utility's transmission lines likely would be very costly.

"The only thing you can do with gas is bring (it) to the surface, separate it, drill another well and put it back in," he said. "That adds monstrously to the cost. Plus, if you're doing it inside city limits, you've got to go to extraordinary methods to protect the public."

Flick said all those negatives are enough to outweigh his belief that substantial oil reserves exist beneath the city.

"The oil's here," he said. "There's a lot of oil here."

As an illustration of that point, Flick pointed to something that occurred at the 1976 International Petroleum Exposition, an annual event that used to take place at Expo Square before it moved to Houston when that city usurped Tulsa's status as the world's energy capital.

Flick remembers that year because he said he had the contract to run the exposition's trade show. He said a firm called Giant Petroleum was asked to drill and complete a new well on the fairgrounds as part of the exposition.

That effort apparently brought surprising results.

"They drilled a well that was bringing in five barrels (of oil) a day right on the Fairgrounds," Flick said. "It was all done during the IPE, as a showcase for the expo. It'd never been done in the history of the event, but after it was over, they shut it down and capped it."

Lee Levinson, a local oil and gas attorney who also is part owner of the LPD Energy Company, agrees that the new ordinance's impact is likely to be minimal, but he doesn't share Flick's assertion that oil reserves under the city are plentiful.

"I don't believe there is," he said. "The cost of drilling is very expensive, and it's very difficult to drill right now without proven substantial reserves."

Levinson said there is natural gas to be had at a relatively shallow depth.

"But the price of gas is so low right now, it doesn't make sense," he said. "I don't think it will have a big economic impact."

Levinson, an expert on oil and gas law, said he takes more of an interest in the recently passed measure from that standpoint.

"I'll be honest -- if I had wanted to, I would have drilled before (the moratorium was lifted), and I don't think the ordinance could have stopped me," he said. "I don't think they could have done that. The city does have a right to protect the health and safety and welfare of citizens. But to say you can't drill here? That severs somebody's minerals."

Levinson said other municipalities in Oklahoma have tried unsuccessfully to stop drilling in the past.

"And I don't think it works," he said.

In that respect, Levinson said he welcomes the lifting of the moratorium, even if it turns out to be much ado over nothing.

"I think it was great," he said of his response to the passage of the ordinance. "Oil and gas built this state, and I think it's great that they showed an understanding of that."

Flick said he could envision one scenario in which oil exploration in Tulsa would be less problematic -- purchasing an abandoned warehouse, gutting it and conducting all drilling activities inside, where they would be concealed from the public.

"There are a few places it could be done, although not easily," he said.

Flick acknowledged that other cities in the state have allowed drilling -- Oklahoma City, Edmond, Stillwater and Shawnee among them. He said a few of those municipalities, particularly Edmond, experienced some major economic benefits as a result.

He just doesn't believe Tulsa will join that short list. The risks are simply too much to overcome, he said.

"The horse has bolted on this idea, according to my belief," Flick said.