November 28, 2000

Oil search continues in Iowa
despite risks and red tape

Frances Starkey
digital iowa staff reporter
Drake University

DES MOINES, Iowa -- Despite the high risk and several procedures involved in drilling oil in Iowa, Kinderhook Oil and Gas Co. recently leased 3,000 acres of land in southeast Iowa for just that purpose.

In all of Iowa's oil exploration history, only two wells have produced oil and neither provided a commercial amount. Kinderhook's attempt to find oil will be the first in seven years, and one of the 140 test wells that have been drilled in the past, said Bob McCain, geologist at the Iowa Geological Survey Bureau.

James Christiansen, Kinderhook's president and biologist at Drake University, said he wouldn't put his money in the venture if he didn't believe it could be successful.

"I don't personally believe in throwing money away," Christiansen said. "I wouldn't have my money in it if I didn't believe we'd succeed. It's an extremely high risk venture. There have been 140 attempts to find oil and none [has] succeeded. So it's highly risky, but to what extent is hard to calculate."

McCain said whether or not to drill oil is a personal judgment.

"Drilling is a personal judgment and [Christiansen] thinks its worth it," McCain said. "It is definitely risky. The probability of finding oil is low, but I wouldn't characterize it as a waste of time. In general, drilling for oil is a high risk business venture."

Christiansen plans to drill one test well in June, but before he began drawing up his plans, there were several procedures Christiansen's company had to complete.

"There are many state permits that have to be pertained and regulations that have to be followed," Christiansen said.

In Iowa, the Department of Natural Resources created a certain set of standards and procedures for oil, gas and metallic minerals operations. Before a oil and gas company can begin drilling, it must first complete several forms and pay a $50 application fee. The required forms include an application for drilling or deepening a well, an organization report, and a bond for conformance with Iowa's laws, rules and regulations governing oil, gas and metallic minerals operations. No permit can be granted until these requirements are met.

There are also several standards and procedures the Department of Natural Resources sets up for oil and gas companies once drilling is complete. These standards speak to several of the environmental implications of drilling oil.

"We frown upon having our wells blow out when you drill without liquid," Christiansen said. "We work hard to prevent that."

Once drilling is complete, the state requires a company to fill out reports on well completion and well production. Also, the company must get a certificate of compliance and authorization to transport any oil found. No oil can be moved from the land leased until the area and oil has been inspected and approved by the state geologist.

Another important step that must be followed once drilling has stopped is that the company must complete sundry notices along with the well reports. This means the state must be notified of and approve the method in which the company plans to abandon the well drilled. Once approved, the company must also submit a record of all actions taken to plug any wells.

Besides any rare accidents that might occur when drilling oil, such as an oil spill, there are few environmental implications when it comes to drilling oil, agreed Christiansen and McCain.

"As long as oil companies follow the required guidelines, there is no environmental hazard," McCain said.

Also, Christiansen said he takes great pride in leaving any land he's drilled in the same condition it was before they began.

"We restore the land leased back to its original condition when the drilling is completed," Christiansen said. " … Any person can make an agreement to drill on their land. We who drill have all the expenses. The farmer whose land we're leasing gets one-eighth of the profits if any oil is found and doesn't have to pay any of the expenses. We have a large number of farmers who have leased their land to us. They understand that this is a high-risk venture, but they are grateful we're still trying. If this fails, the farmers are not hurt; we're the only ones who will be hurt because it's our money involved."