Oil boom strikes Kansas

@CNNMoney May 23, 2012: 11:28 AM ET

Anthony, KAN. (CNNMoney) -- It doesn't feel like we're in Kansas anymore.

Oil rigs are springing up in farmers' fields. "No vacancy" signs hang in the windows of local motels, and a steady stream of trucks barrel through Main Streets. Along the state's southern border, the once-quiet farm towns are quickly transforming into boomtowns.

Hundreds of workers seeking high-paying jobs are flocking to places like Harper County, which had resorted to paying people to live there because of its declining population. Businesses are coming back from the dead and a housing shortage has caused rents to triple.

Oil companies began exploring Southern Kansas over a year ago, seeing enormous potential in the area now that new technologies like horizontal drilling and fracking have made it possible to tap into the oil-rich Mississippian Limestone formation.

SandRidge Energy, which holds the most horizontal drilling permits in Kansas, estimates there are about 15 billion barrels of recoverable oil in this part of Kansas. The company plans to drill 130 wells in the state by the end of the year -- up from 10 last year. And its wells are hitting oil 100% of the time.

"[The oil companies] aren't hitting any dry spots," said Mike Lanie, economic development director of Harper County. "This is looking like it could be the largest economic impact in the state's history, and for many people in these small towns, this will be a blessing."

Thousands of jobs coming: Wherever oil is being tapped, the jobs soon follow -- just as they have in the oil boomtowns of North Dakota, where it's estimated there are between 4 billion and 24 billion barrels of recoverable oil.

The jobs pay handsomely. The average oil worker salary is nearly $100,000 nationwide, according to industry data provider Rigzone. And in Kansas, even high school graduates make an average of $60,000, said Ed Cross, president of the Kansas Independent Oil & Gas Association.

In Harper County, where the population is just 6,200, the impact has been dramatic. Oil companies have already brought in more than 500 new jobs in the past year. Meanwhile, the construction of the biggest wind farm in the state has brought another 500 jobs.

Many of the slots have been filled by out-of-state workers, leading to the county's first population increase in more than 100 years, said Lanie.

Prior to this year, Harper County's population was on a decade-long decline as a result of a nationwide exodus from farm towns to cities. The state and county have been offering incentives, including income tax rebates for up to five years to people who move to Harper County from out of state, and up to $3,000 a year toward student loans for college graduates who relocate to the area.

But, with tens of thousands of jobs expected to be added in the county over the next year, the incentives may soon no longer be necessary, said Lanie.

Farmers who own the mineral rights on their land, which oil companies must possess in order to drill, are leasing them out on thousands of acres for as much as $1,250 an acre -- and they are also getting royalties from whatever oil is produced on that property.

Because of the influx of workers and the oil money, Lanie said the city of Anthony, which is at the heart of Harper County's oil action, is finally being revived. Local businesses that were destroyed by a 2009 fire are bouncing back, a new shopping center is being built and old buildings are being renovated to create new stores and office space for oil companies.

Rents surging: As more workers move to the area, there are fewer places for them to live and that has caused rents to skyrocket. A year ago, a two-bedroom home would rent for about $400 a month, and now it's going for $2,000, said Lanie.

Budding entrepreneurs are already seizing on the opportunity. Bobbi Olivier returned to Harper County last year after working in Oklahoma's oilfields for more than 30 years. She has already bought more than a dozen properties -- including homes, trailers and even a former bank -- and she is currently housing nearly 40 workers.

The 16-room Anthony Motel has been fully booked for the last couple of months -- mostly with oil workers. Motel owner Kathy Smith said she turns down more than 25 people every day because she doesn't have any vacancy. Often, the only available rooms are an hour away in Wichita.

"It's like a gold rush. No one knew this little area was worth anything, and now all of a sudden there's all kinds of business going on -- and everyone wants a piece of it," said Smith.

But not everyone wins. One couple, Eileen and Eddie Morris, said they were kicked out of their home of 11 years in April because their landlord wanted to take advantage of rising property values and sell it for big bucks.

'A little good and a little bad': As the drilling ramps up, the county's six-person police department has been trying to keep up with an increase in crime, car accidents and DUIs, said Tracy Chance, Undersheriff of Harper County.

"I'm not blaming the oilfields -- it's local people, too -- but since the oil companies have come in, everything has increased," he said.

In particular, reports of thefts and bar fights, he said. Recently, a group of oil workers suspected of stealing trailers from someone's property were allegedly just finishing up a new paint job on them when the men were arrested.

"With anything like this, you get a little good and a little bad -- I'm just hoping we get more of the good," said Smith.

There are also environmental concerns. Donn Teske, president of the Kansas Farmers Union, said the union's members are concerned that the drilling could deplete and contaminate the area's water supplies.

And of course, no one knows how long this boom will last. "The jury is still out on just how big this will really be," said Jesse Borjon, a spokesman for the Kansas Corporation Commission. Oil companies will know more in 12 to 18 months, once they've had more time to assess the situation, he said.

SandRidge said it expects to be drilling in Kansas for at least 15 years. And Lanie is confident that the boom is there to stay for quite some time.

"I hate to say boom, because that usually means there's going to be a bust, but this boom doesn't look like one that's going away any time soon," said Lanie.

Have you worked in multiple boomtowns? Are you always looking for the next boom? E-mail blake.ellis@turner.com for the chance to be included in an upcoming article on CNNMoney.com. To top of page

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