A book by Bryan Burrough entitled The Big Rich describes how four Texans made billions of dollars in oil and gas exploration and how the families of three of those men lost most of it in high living, risky investments, internal fighting and even in an attempt to corner the world’s silver market.
All four men – Hunt, Sid Richardson, Clint Murchison and Glenn McCarthy – started out dirt poor, got lucky when they hit gushers in different parts of Texas and were among the richest men in America by the 1960s, only to be dealt devastating financial setbacks when cheap oil was discovered in the Middle East.
Foreign oil flooded U.S. markets, forcing the shutdown of thousands of wells across America. With Arab oil selling for amounts cheaper than domestic producers could pump it from the ground, the bottom dropped out of domestic oil prices, forcing hundreds of wildcatters into bankruptcy.
Incredible as it sounds, oil at the time of their discoveries, was selling for less than 25 cents per barrel. Today, the price hovers around $100 a barrel. While the recent drop in gasoline prices at the pump may be good news for drivers, the drop in tax revenue does not bode well for the Louisiana state treasury.
But as long as the price remains comparatively high, domestic drillers will continue searching for rich new fields that will enrich the major oil company coffers.
East Feliciana parish happens to sit right on top of the Tuscaloosa Marine Shale play, a 2.7 million-acre tract that is estimated to hold a minimum of seven billion barrels of oil.
This map shows the parishes where there is major interest in obtaining leases and mineral rights for drilling for oil and gas in the Tuscaloosa Marine Shale play. East and West Feliciana are situated atop the so-called “sweet spot” in the play that includes all or part of nearly two dozen Louisiana parishes and Mississippi counties.
Called the Louisiana Eagle Ford because of its geological likeness to the highly productive Eagle Ford play in Texas, the Tuscaloosa Marine Shale is the second major find in Louisiana. The Tuscaloosa Marine Shale play has the potential to do for oil what the Haynesville Shale play in north Louisiana has done for natural gas.
The Tuscaloosa Marine Shale play cuts across central Louisiana from the Texas border to the Florida parishes. It includes all or part of the parishes of Vernon, Beauregard, Allen, Rapides, Evangeline, Avoyelles, St. Landry, LaSalle, Catahoula, Concordia, Pointe Coupee, East Baton Rouge, St. Helena, Livingston, Tangipahoa, St. Tammany, Washington and East and West Feliciana as well as all or parts of the Mississippi counties of Adams, Franklin, Wilkerson, Pike, Amite and Walthall.
Comprising nearly a third of the total land area for Louisiana, it is significant that the so-called sweet spot in the play is centered in East and West Feliciana, extending into parts of St. Helena, Tangipahoa and Livingston. Some 1.2 million acres have already been leased in that sweet spot. There are already about a dozen wells operating from Vernon to Tangipahoa parishes with the bulk of those located in the Felicianas.
That is important, given that once production starts for real in the Felicianas, the economic impact will be a major windfall. Production will create jobs as well as a demand for more housing, more restaurants, lease and royalty revenue for residents, and increases oil and gas severance tax collections for the state and the parishes.
To best demonstrate the potential economic impact, consider that for the month of November, East Feliciana Parish collected $2,436.27 in oil severance taxes and $2,284.70 in severance taxes on natural gas. West Feliciana did somewhat better, collecting $15,310.16 in severance taxes on oil and only $43.73 on natural gas.
In Claiborne Parish, the sweet spot for the Haynesville Shale play, severance taxes on oil totaled $886,892.91 for the same month and $106,094.70 for natural gas. Webster and Bossier parishes, also in the Haynesville play, recorded similar severance tax numbers.
Lease prices in the Felicianas, St. Helena, Tangipahoa and Livingston are running from $150 to $300 per acre, plus 3/16 royalties. In the Haynesville Shale play, however, land was leasing for as much as $30,000 per acre, plus 25 percent royalties.
At its most lucrative point, Haynesville was estimated to produce $10 billion annually in the state with each rig producing about 300 jobs, along with the growth of small businesses that serviced the oil and gas industry.
Similar figures would be huge for East Feliciana where the poverty rate is 19.7 percent and population showed a decrease from 2000 to 2010 of 5.1 percent.
In West Feliciana Parish, Police Jury President Ken Dawson said the parish has joined in an alliance with East Feliciana, Pointe Coupee and the City of Zachary to plan community needs in terms of infrastructure, natural resources and other issues related to drilling. He said the coalition has already met with Haynesville Shale counterparts in order to learn from their experiences.
Dawson said officials do not want to limit possibilities but at the same time, they want to be sure the public is protected.
East Feliciana, meanwhile, has already enacted requirements that drilling companies post a surety bond to cover any damage to parish roads.
Wells have already been drilled on the Beech Grove Plantation site near St. Francisville, on the Avondale Scout Reservation east of Clinton and on forest land owned by Weyerhaeuser Co.
Activity in East Feliciana has been such that local attorney Leslie Ligon Jr. has negotiated more than 500 least contracts over the past 15 months.
There seems to be little question that the oil—lots of it—is present in the Tuscaloosa Marine Shale. The question of bringing it to the surface then, is one of economics.
Because drillers must go as deep as 11,000 to 14,000 feet to extract the oil, well operation in the Tuscaloosa Marine Shale presents runs between $9 million and $15 million. If engineers can figure out the controversial issue of horizontal drilling and fracturing and if the reservoirs respond favorably, there will be a lot of large landowners who will become overnight millionaires in the Felicianas before it’s over.