Ind. oil production hits 10-year high

INDIANAPOLIS (AP) - Indiana's oil production hit a 10-year high last year as the state's oil-drilling industry ramped up output to capitalize on high crude-oil prices.

The state's production jumped 8.3 percent, to just under 2 million barrels in 2011 — the highest output since 2.02 million barrels were extracted in 2001, according to data from the Indiana Department of Natural Resources.

In contrast, production was flat from 2009 to 2010.

Jim AmRhein, assistant director of DNR's Division of Oil and Gas, told the Indianapolis Business Journal for a story published Thursday that high crude prices that brought pain at the pump for consumers created an opportunity for the state's oil industry.

"At $90 to $100 (a barrel) oil, it's like, 'Well, let's give it a shot,'" he said.

Indiana ranks 24th among states in the production of oil and of natural gas, according to the U.S. Energy Information Administration. Texas, Alaska, California, and North Dakota lead the crude-production pack.

Most of Indiana's oil comes from the Illinois basin, a bowl-shaped depression in the state's southwestern corner. There, crude is generally found at a depth of 1,000 to 3,000 feet.

The Indiana Geological Survey says the state's oil production in the Illinois basin peaked in the early 1950s, at 12.6 million annual barrels.

With crude oil prices on the rise, some operators are revisiting old wells to recover oil left behind. They're using horizontal drilling or various injection techniques developed more recently.

Also, some new oil deposits have been found the state in the last few years, most notably a large oil discovery on land owned by the Hulman family, of Indianapolis Motor Speedway fame, near Terre Haute.

Agricultural fuels maker CountryMark ramped up extraction at that site last year.

Bill Herrick, a former CountryMark executive who now is president of Indianapolis-based Midwest Energy Partners, said he believes CountryMark's wells in Vigo County "are the biggest reason" for last year's jump in production.

CountryMark raises money from investors to drill wells in southern Indiana and southern Illinois. Midwest Energy Partners has investments in 82 wells through partnerships with Evansville-based Core Minerals and with Pioneer Oil Co. of Lawrenceville, Ill.

The Illinois basin in the southwest corner of the state is not the only place to find oil. Oil and gas production in Indiana began in the 1880s in the so-called Trenton Field in east-central Indiana.

By the mid-1920s, the Trenton Field, dubbed "America's first giant oil field," had played out. Much of that region's natural gas had been burned off due to poor well-management techniques.