OIL PIQUES INTEREST IN SPRINGHILL, CLAIBORNE PARISH - Vickie Wellborn, August 28,2011 - shreveportitmes.com

SPRINGHILL — Wooden stakes protruding from the ground at several locations in the city could be tangible signs of more lucrative times ahead for this sometimes struggling north Webster Parish community.

The stakes indicate potential drilling sites — for oil.

A landman has been working the city in recent weeks, seeking permission from landowners to drill within 500 feet of their homes or businesses. City Hall is one of those properties.

"It does excite me," Mayor Carroll Breaux said. "Seriously, I hope this thing does at least what they are talking about."

And if so, the city could anticipate additional revenue through royalty payments. "The city definitely would benefit from it," Breaux said.

While mystery surrounds specifics of the oil interest in Springhill and north Webster Parish, more is known about similar drilling plans in neighboring Claiborne Parish. Houston-based Southwestern Energy announced in July its intent to spud a well in north Claiborne Parish this fall, with 10 others possible in 2012.

The company already has been busy in south Arkansas with more than 50 landmen working in the area for the past year or so. Southwestern has leased about 460,000 acres targeting development of the Upper Smackover Brown Dense formation, an oil reserve found in southern Arkansas and several north Louisiana parishes.

The play is among several gaining attention in Louisiana, south Texas and other parts of the nation as oil and gas companies focus exploration efforts on oil, which had become more profitable as the price of natural gas has been stagnant.

The plays, including the Tuscaloosa Marine Shale that cuts a swath from Texas across central Louisiana and into southwest Mississippi, have been known for decades. But it wasn't until the effective combination of horizontal drilling and hydraulic fracturing was perfected in the extraction of natural gas did the industry find renewed interest in some of these oil plays.

Drilling plans

The Brown Dense got its name because it's a dark-colored lime and mud stone, according to descriptions in geologists' bulletins. It's at about 8,000 to 10,000 feet and is 300 to 530 feet thick.

The formation has previously produced oil — albeit a small amount — in Louisiana. A well in the North Farmerville Field in Union Parish was completed in December 1984 and produced about 45 barrels of oil a day. After a short production of 7,200 barrels, it was plugged and abandoned and went off production in April 1986.

"That's the only one, but it was a vertical hole," said M.B. Kumar, director of geology for the state conservation office's oil and gas division.

Southwestern Energy presented its proposal for a drilling unit at a public hearing Aug. 9 in Baton Rouge. The unit includes 1,045 acres in the Lower Smackover zone in the Helick Creek Field in Claiborne Parish and is about 12 miles east of Haynesville and 6 miles west of the Union Parish line.

An additional 235 acres will be added to the unit across the Arkansas line in Union County.

"This will be the first unit for the production from Lower Smackover zone," Kumar said.

The conservation office's staff is reviewing Southwestern's request, and if all is in order, Commissioner Jim Welsh will issue an order in less than 30 days.

Welsh's main concerns, Kumar said, are to protect the drinking water in the area and proper disposal of the backflow water from the fracking process.

"They have to use as much as they can surface water," Kumar said. "Then again, the operator will be submitting their plan and information on how much water they'll be using for drilling and fracking operations."

Southwestern should be able to gauge the potential of the Brown Dense for oil production after completion of the horizontal well, Kumar said.

He added: "They are optimistic. They have expressed optimism they will be successful. Again, only time will tell. There are lots of risks involved. Too, it's very, very expensive. But if it's successful, then you can imagine 460,000 acres being in production. It could be a tremendous boom. ... They are kind of fired up about the potential."

'Positive guesser'

Springhill businessman Lamar Smith is always optimistic about oil and gas plays but admits "everything's a guess at this point. But I'm a positive guesser."

Smith, owner of Springhill Land and Timber, has leased his property in Louisiana and Arkansas, particularly in Columbia County where most of the lease activity is taking place. "They started there and worked south," he said.

As far as the drilling interest around Springhill, Smith said that's a separate company and different play, but it still promotes optimism and excitement among the locals.

"With the amount of lease people in the area at this stage, we can't guarantee anything, but somebody is going to drill something. But if they are dry holes, then they'll go home," Smith said.

Breaux welcomes potential of newly infused revenue into the city. Springhill has had its share of a yo-yoing economy for quite a while. The loss of International Paper Co. in 1979 dealt a significant blow and the loss of hundreds of jobs. But Springhill slowly rebounded, only to be knocked down again in more recent years with the loss of other major employers such as Georgia Pacific and the Trane Co..

The landman who has been working in Springhill represents a Baton Rouge energy company. City officials have not signed a lease. Breaux is waiting on paperwork.

It's still too early to know how much money the city could earn in royalty payments if the company's oil exploration and drilling are successful.

"We'll take whatever we can get, though. It won't be just from the land, but the roads and rights of way," he said.