Auction shows strong interest in Neb. oil drilling

Photo: Timothy A. Clary/AFP/Getty Images

LINCOLN, Neb. — Companies remain interested in acquiring the right to drill for oil in Nebraska even though production in the state remains stable.

The prices bidders paid last month at an auction of mineral rights shattered the old record of $39.35 per acre, the Lincoln Journal Star reported.

The bidders paid an average of $58.83 per acre for the right to drill on 16,171 acres, but a couple parcels in Dundy County drew more than $200 an acre.

“There weren’t a whole lot of bidders there, but the ones who were really bid things up,” said Richard Endacott, who leads the state Board of Educational Lands & Funds that oversaw the auction.

Officials say land in southwest Nebraska, where most of the state’s oil wells are found, has drawn considerable interest from oil companies recently.

The winning bidders included a firm called HOP Energies that was acting as a broker for several oil companies. And the Forestar Group also bid on the mineral rights.

Nebraska oil production remains well below the neighboring states of Colorado and Wyoming, which appear to have more oil and natural gas in underground deposits.

Last year, Nebraska wells produced about 2.5 million barrels of oil, up about 10,000 barrels over 2011. So far this year, production is down slightly.

Bill Sydow, director of the Nebraska Oil and Gas Conservation Commission, said he remains optimistic about the drilling possibilities in southwest Nebraska.

Sydow said he’s noticed more drilling rig activity in Dundy County, and that there may have been an oil discovery in Franklin County where there hasn’t been oil production before.

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