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Cove stakes claim in oil industry

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Posted: Thursday, September 13, 2007 12:00 pm | Updated: 4:54 pm, Wed Aug 15, 2012.

By Joshua Winata

The Cove Herald

Copperas Cove began as a cattle town, evolved into a cotton-farming town and is currently known mostly as a military community, but now the city may be poised to claim a role in the oil and gas industry as well.

The Salado-based Scully Energy Corp. has already drilled 17 wells in Coryell and Lampasas counties, concentrated along the county line in and around western Copperas Cove.

The company, which began preliminary exploration four years ago, has been eyeing the area for some time now and began drilling in October 2005. Jeff Evans, president of Scully Energy Corp., believes the company has made a major discovery.

“It’s there. I know where it’s at over here. We’re sitting on top of it,” he said. “Basically, when everybody was drilling around here, they really were just drilling in the wrong place. We just happened to drill on the right place.”

Although the company has spent most of its efforts looking for oil, recent discoveries of natural gas has Scully Energy expanding its priorities.

Last year, the company discovered a large reserve of natural gas just west of Copperas Cove, the first commercial gas discovery in Lampasas County, which contains an estimated 65 billion cubic feet of recoverable natural gas, and more drilling is already under way.

More than 50 wells are planned in the area over the course of the next five years.

“We couldn’t be happier, Evans said. “To find a field with 50 wells in it is huge. To find that it shallow as we did is quite unheard of these days.”

Over the last 20 years, gas has been a much stabler commodity than oil, and gas wells are usually easier to manage, but oil is more lucrative. Current market prices indicate that oil costs $79.73 per barrel versus $6.17 per every thousand cubic feet of natural gas.

“I’m still looking for oil,” Evans said. “We just keep finding gas.”

One glaring challenge the company faces as a producer of natural gas is the need for a pipeline to transport its findings.

“We were looking for oil. Oil is easy. If we would have found oil, we’d have been selling oil for the last two years. With gas, you have to have a pipeline to take the gas away,” Evans explained.

Scully Energy has plans to tie into a pipeline owned by Atmos Energy which reaches to the eastern edge of Copperas Cove.

The company is still negotiating easement agreements, but once the it gets tied into the pipeline, Evans said the company’s contribution will be a huge boom to the Fort Hood area. Currently, only one gas pipeline runs for more than 100 miles east to west from Groesbeck to military base.

“If that line was interrupted, there wouldn’t be any gas power to Fort Hood. It all comes from the east,” Evans said, noting that a pipeline to from Copperas Cove would be less than five miles. “That’s huge. It’s national security.”

Another benefit to the Copperas Cove area, Evans said, would be diversification.

“This is something new for the area,” he said. “We’ll certainly help to make a bunch of landowners a healthy monthly stipend from their royalties.”

To conduct drilling and exploration, Scully Energy has leased more than 10,000 acres centered primarily along the county line near Big Divide Road. The company has leased land from more than 50 owners in the Copperas Cove area, and property owners receive a one-eighth cut of the royalties from discoveries on their land.

“If you happen to get oil or gas, it’ll have a big impact on your pocketbook,” said Rodney Barnes, who is leasing his land off Grimes Crossing to the company. “On your land — practically nothing.”

The well on Barnes’ property was one of the first ones drilled by Scully Energy two years ago.

“Because most people around here aren’t familiar with oil and gas drilling and completion operations and production operations, they’re afraid that we’re going to come in and just leave a bare, lunar-type landscape on their property, and that’s not the case,” Evans said. “We leave a very small footprint.”

The city of Copperas Cove has also been cooperative in allowing drilling in the city limits, provided companies remain within the oversight and environmental restrictions set by city ordinance.

“The city’s been great. We’re another construction-type entity with the city now,” Evans said. “They haven’t singled us out for special treatment, good, bad or indifferent.”

Scully Energy is currently the only company actively drilling in Coryell and Lampasas counties. However, several other energy companies are hot on their tail.

Lometa Exploration Corp. conducted geologic surveys and leasing in the Copperas Cove area beginning in 2002 and remains interested in the region’s potential, said President Lynn Elliot.

Last year, Lometa Exploration drilled one well that is not in production, but the company is formulating a drilling program along with some other petroleum companies and hopes to pursue more wells before the end of the year.

“We hope to be successfully finding production and we plan to be a good corporate citizen,” Elliot said.

Contact Joshua Winata at jpwinata@kdhnews.com or call (254) 547-6481

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