McCamey project on hold

Officials in Upton County are concerned they may have gotten the shaft on a project planned to mine oil out of the old McCamey Field.

"Right now, it's kind of on the stand-down stage," McCamey Mayor Sherry Phillips said Tuesday. "I don't know if it's going forward. I don't know if it's not going forward."

Phillips said officials with Sheridan, Wyo.-based Rock Well Petroleum told her about a month ago that it was putting on hold a plan to drill a slant tunnel below once-unreachable oil deposits in the field just east of her city on Highway 67. Gravity would have pulled the oil into the tunnel, where it would be pumped to the surface.

While the company hasn't given her a reason why it's delaying the project, Phillips said she has a pretty good idea.

"I assume it's because of oil and the economic downturn," she said.

When Rock Well announced it was purchasing 10,000 acres of mineral rights near McCamey in February, oil was pushing $100 a barrel. Tuesday, the price of a barrel of crude was hovering around $40.

Phillips said the company still owns the land and could use it in the future.

Ben Shepperd, executive vice president of the Permian Basin Petroleum Association, said he's not surprised to see expensive projects shelved while prices are low.

"Tunneling is definitely more expensive than traditional drilling," he said. "I expect the primary investors are anxiously awaiting prices to go back up a little bit."

In general, Shepperd said the more expensive projects would need oil to be around $50 to $60 a barrel to justify the cost.

But, once prices do recover, Shepperd said he expects the McCamey Field project to be a priority.

The field is estimated to have around 600 million barrels of oil in place.

Efforts to reach Rock Well representatives were unsuccessful Tuesday.

McCamey should be able to withstand the loss of the project. Phillips said it was never scheduled to employ more than about a dozen people once construction was complete.

"We had a lot of rumors that they were going to bring in 400 people," she said. "That's a lot of baloney."