Is the new oil boom going to make you rich?
If you own mineral rights to your home, there may be an unexpected paycheck in your future – but for the rest of us, America's new horizontal drilling and hydraulic fracturing technologies could mean relief from oil cartel boycotts, fuel shortages and high prices at the gas pump. However, not everybody is happy about it.
BY: Rob Kerby, Senior Editor
Imagine a return of the oil boom days, back when you could strike it rich by drilling for oil in your back yard. All across Oklahoma, Texas, Wyoming – and even in Pennsylvania and California – overnight millionaires were created as gushers erupted “black gold.”
Those heydays were the stuff of legends – with hundreds of real life “Beverly Hillbillies” – ordinary people striking it rich and leaving poverty for opulence and luxury. In recent decades, we've seen the result of oil money as the Third World nomad kingdoms of Saudi Arabia, Kuwait, Abu Dhabi and Qatar were transformed into wealthy political heavyweights building extravagant tourist destinations along the Persian Gulf. But it's happened before -- in the U.S.
In the late 1800s, the Osage tribe, which had ranged across Kansas and Missouri for centuries, was forced off of their ancestral lands and ordered to settle on a reservation in Oklahoma’s Indian Territory. At the time, nobody dreamed that the new Osage lands sat atop a vast reservoir of petroleum. As a result, at the height of what became known as the "Osage oil boom" the tribe earned millions annually – half a billion a year in today’s dollars. Under the Osage Allotment Act of 1906, oil profits were tribally owned with each of the 5,500 members of the tribe receiving royalties. In 1925, a family of four earned $52,800, comparable to approximately $600,000 in today’s economy – earning the Osages the title “the wealthiest people in the world.”
Today the unexpected is happening again. From rural North Dakota, Reuters news service reporter David Bailey reports, “The retired men shooting the breeze at Joyce’s Cafe in Stanley don’t look like oil barons, but appearances can be deceptive. The oil is so plentiful in Stanley,” that a well drilled under the town could mean homeowner will start receiving royalties.
Fred Hambright has seen a lot in his more than 60 years in the oil business, but nothing prepared him for the craze now sweeping the prairies of Kansas. Since 1951, the 83-year-old Kansan has made a living buying up leases for oil drillers. Six months ago, Hambright says he was purchasing leases for $15 to $20 per acre. Now those prices have skyrocketed. Hambright says the largest check he has written so far was for $900,000 – just for the right to drill.
“The Mississippi Lime formation in Kansas is the latest ground zero in a gold-rush-style oil boom sweeping the U.S.,” report Jake Whitman and Sharyn Alfonsi for ABC News. “New technology is turning lands once thought to be sucked dry of oil and gas into vast untapped reserves that could produce for more than 100 years.”
From Pennsylvania and North Dakota to Texas, the newly developed technologies of horizontal drilling and hydraulic fracturing are quickly turning the U.S. into an oil superpower. By some estimates, 2 trillion barrels of oil are waiting to be drilled — nearly twice the reserves in the Middle East and North Africa.
“Over the last three years the oil and gas industry has been churning out millionaires,” writes financial advisor Matt Insley. “No. I’m not talking about company CEOs or Saudi oil sheiks. Instead I’m referring