The oil and natural gas industry largely is made up of small, fiercely independent companies.
While those firms often work together to drill and produce multi-million-dollar wells, they also tend to maintain a strong sense of competition and distrust.
Competition can be especially fierce as companies vie for the best leases and for access to critical infrastructure, such as power lines, pipelines and access to market.
While heightened competition may work in some parts of the oil patch, the Mississippi Lime play of northern Oklahoma and western Kansas apparently requires more cooperation.
Three times over the past two weeks, I've heard industry leaders talk about the need to work together in the Mississippi Lime, one of the newest and higher-potential oil fields in the country.
Stretching up to about 20 million acres, the play has attracted the country's largest independent producers and the state's smaller and mid-size operators.
The land grab essentially is over, and producers are now testing drilling and completion techniques to get the most oil and natural gas out of the ground.
Because the play is so new and still largely untapped, cooperation is especially critical, said Robert Sullivan, owner of Tulsa-based Sullivan and Co. and chairman of the Oklahoma Independent Petroleum Association.
“We should all make available to the industry our drilling, completion and production data on a more open and timely basis,” Sullivan said Wednesday at the Mississippi Lime Congress in Oklahoma City. “The faster we learn how best to drill, produce and complete the Mississippi rock, the sooner we will realize the rewards on our respective lease blocks and the greater those rewards will be.”
The call for increased openness came just one week after I talked with oilman Steve Slawson and Oklahoma Corporation Commissioner Dana Murphy about the lack of electricity and other infrastructure in the rural Mississippi Lime field.
A problem in the area is that electric cooperatives and pipeline companies are reluctant to spend millions of dollars on infrastructure when they don't know how many wells are planned or where they will be located.
“These operators need to talk to their neighbors and say, ‘I'm drilling 10 acres here and you're drilling six acres there, so let's go in together,” said Slawson, vice president of Slawson Exploration. “But the operators still aren't talking to each other. The operators need to communicate with each other and with the co-ops.”
To address the power shortage, many cooperatives are asking producers to build their own distribution lines and substations, which would add many millions of dollars to the companies' drilling costs.
Again, cooperation appears to be best answer.
“What we're going to have to see is more dialogue and collaboration among these various producers, both big and small,” Murphy said. “It could be that a bigger company could build part of the distribution and substation and allow space for more to be added by the smaller producers. I think you're going to have to see a collaborative effort.”