Oil production in Alabama on the rise for first time in decade
Though Alabama is better known for coal and agricultural products, new and revived oil wells are dotting the
landscape and production increased during the last fiscal year for the first time in a decade, spurred by soaring
prices. Since the early 1990s, oil production had been declining in Alabama, but production surged in fiscal 2005 and
is likely to rise even higher this year.
"The activity level has drastically increased," said Ralph Hellmich, Alabama Oil and Gas Board operations supervisor for south Alabama.
"There are wells that have been waiting there, and now the prices make them economical," said Dave Bolin, the Oil and Gas Board's assistant oil and gas supervisor.
New onshore wells can be found in Conecuh, Pickens, Escambia, Covington and Greene counties. Repairs also are being
made to old wells and new technology is being used to extract deposits. Alabama produced 19.8 mm barrels in 1989, a
figure that had fallen to 7.4 mm by 2004. Last year it was up to 7.9 mm.
Little Cedar Creek Field in Conecuh County, operated by Dallas-based Midroc Operating Co., is the state's highest-producing oil field. It has seen a dramatic increase in the last three years: In 2003, the field produced just 68,000 barrels; that number rose to 372,000 barrels in 2004 -- then nearly 1.2 mm in 2005.
It is on track to produce much more this fiscal year.
"This field is by far the most significant oil discovery in the state of Alabama in the past 10 years," Midrock CEO Don Clark told.
The pumps being used in some fields aren't the traditional bobbing-rod models used to pump shallower wells. The depth of the reserves in southern Alabama means there is enough pressure to force the oil up. When the pressure decreases, hydraulic pumps are used to access the remaining deposits.
Though oil and gas production is nowhere near what it once was, oil- and gas-related taxes are at record levels.
Bolin said gas and oil production have been declining nationwide. Alabama ranked 13th in the nation in oil production
in 1995. Though it now produces less than half what it did at its peak, the state still ranks 15th.
Offshore natural gas wells have also seen declining production. But due to higher prices, the state is collecting more in taxes than in the past. Fiscal year 2005 saw $ 132.3 mm in gas and oil severance taxes, Bolin said. From October through July, $ 155 mm in severance taxes had already been paid by companies.
"It's going to be another record this year," Bolin said.