The rock beneath your feet has a name: the Illinois Basin. This type of rock covers much of its namesake state, but it also spreads throughout Southwest Indiana and Western Kentucky. Much of the rock is a mixture of limestone, shale, sandstone, and coal. It is a geologist’s dream.
More than rock collectors have had a vested interest in this crag because somewhere in this portion of the earth’s crust is oil. The crude is the domestic kind, a small proportion of the world’s production but the same type with the fluctuating prices that globally dipped below $33 a barrel in 2008 and rebounded above $100 this year.
Interest in the Illinois Basin began more than a century ago when entrepreneurs drilled straight down into the ground. The drill bits moved vertically and reached oil only at the entry point.
For the past few years, oil production from the Illinois Basin comes to roughly 40,000 barrels a day. One method for taking that oil from the ground is horizontal drilling. The concept dates back to 1891 when John Smalley Campbell applied for a patent. He envisioned a drilling system traveling parallel with an oil bore. Decades passed before anything resembling today’s horizontal oil wells appeared, and it was the 1980s before the practice was possible. A 1993 U.S. Department of Energy report called the achievement the first “within the imaginable realm of commercial viability.”
Today’s drilling technology garners more excitement. The process uses specialized bits and electronic transmitters inside the drillhead. It’s steerable, making horizontal drilling “faster, cheaper, and more effective” than vertical wells, according to the Department of Energy.
Recent activity from companies such as Core Minerals, George N. Mitchell Drilling Company, and CountryMark over the past three years indicates that horizontal drilling projects are coming quickly. The reason: Horizontal drilling means a more predictable profit margin for oil companies in the Illinois Basin. Leaders there have “found the Illinois Basin to be attractive because it is a reliable, predictable stream of cash flow as opposed to some of these resource plays which are either flash grenades that go from very small to huge in value or they are zero,” says James Rode, president and CEO of Core Minerals, headquartered in Evansville.
Rode is an attorney by training. He started in the oil business in the 1980s when prices were around $40 a barrel (comparatively steeper than the highest price of oil today). The Owensboro, Ky. native soared through a career that moved him throughout the United States. He even took a brief break from the oil business to launch an IT business that morphed into a network service provider until he sold it in the early 2000s.
But Rode is an oil man, and since 2006, Rode’s company, Core Minerals, closed 17 oil and gas asset purchases. They integrated acquisitions and divested a consolidated asset group. One reason for such a busy half decade: horizontal drilling.
It’s a technique used by companies with a lengthy history in the Illinois Basin. Chris Mitchell had finished middle school when he landed his first job on a Missouri oil rig. “I wanted to spend some time with my dad,” Mitchell says. His father, George, was the rig’s field supervisor, and his grandfather, Thomas, was one founder of Mitchell Brothers Drilling. “I don’t want to make you think that it was like I was being driven like a mule,” he says. “It was just like a summer thing.”
That “summer thing” was hot and dirty. He was a roughneck, and he learned to appreciate and respect the value of those physically demanding jobs, but he wasn’t the biggest fan of the industry. “I went away to college and didn’t have any grandiose ideas about working in this business,” he says. When he graduated with a geology degree in the mid-1970s, “major oil companies weren’t recruiting geologists, engineers, or anybody with any kind of oil background really heavily.” Mitchell used his degree to act as a consultant on oil projects.
By then, his dad had been running the company, headquartered in Southern Illinois, and eyeing retirement. He had no successors to fill his role. “The business — this family thing — was just going to die,” Mitchell says. He felt well-suited for the role: He had been the low man on the oil rig, and he wanted to lead with a bottom-up mentality. “Because of all the different jobs that are out there,” he says, “I try to be a little more compassionate about people who help us do our job and make our living.”
Mitchell, who heads the company named for his father, George N. Mitchell Drilling, has every reason to believe the women and men in the domestic oil business will continue to make a living in the industry. “You can make some money doing it here,” he says, “and make a good living here if you want to get into it.”
Gary Evans of Evergreen Drilling also is optimistic. His company, headquartered in Mount Vernon, Ind., has around 80 employees, and Evans sees growth ahead, thanks to horizontal drilling. It’s a technology Evans focuses on, and he believes, when it comes to oil in the Illinois Basin, “there’s a lot of opportunity.”
Evergreen Drilling, www.evergreendrilling.com
George N. Mitchell Drilling Company, www.mitchell-drilling.com