Alabama DOC Signs Oil Drilling Pact
The cash-strapped Alabama Department of Corrections hopes to strike it rich by drilling for oil on prison property. Story from the Huntsville Times.
Prison Commissioner Richard Allen said Tuesday the department has signed a five-year contract with Foote Oil & Gas Properties of Gulf Shores to explore for oil near the G.K. Fountain Correctional Center in South Alabama. “It would help a lot,” said Allen. “Every dollar we get would be put to good use.” Under the contract, the department has already received $400,000, plus a guarantee of 25 percent royalties and a $300 bonus per acre on any oil or natural gas the company should eventually extract.
Andy Farquhar, director of Alabama Correctional Industries, said petroleum engineers asked to conduct seismographic surveys of the property a couple of years ago. “They came back and said their surveys showed some hot spots in the area of the prison and they wanted to nominate some land in the area for oil and gas exploration,” said Farquhar. The engineers believe the area around Atmore might be an offshoot of a crude oil reservoir that extends from Mobile up the west side of the state. Private property owners in the area also signed contracts with Foote.
Foote was the only company that responded to the state’s request for proposals to explore 15 prison-owned tracts totaling 800 acres, said Farquhar. So far, two 16,000-foot wells, one on the property of Fountain, a medium custody prison on Alabama 21 near Atmore, and another right outside the gates, have hit dry holes. Farquhar said the first well on the Fountain property found some oil, but not enough to justify drilling deeper. The company is now drilling a third well on prison property, about 2 miles northwest of the prison. If that one fails to yield oil, Farquhar said it’s unclear whether a fourth well will be drilled.
The drilling is being overseen by Laurel, Miss.-based Venture Oil & Gas and Tri-Star Petroleum of Houston. Farquhar said the drilling costs the companies about $1 million for each well. Allen said the department sold some farm property at nearby Holman Correction Facility for $100,000 and put that with the $400,000 from the oil and gas lease to add 125 new beds at the Easterling Correctional Center, a medium security prison in Clio.
Uncategorized