In our latest installment of The CEO’s, Delta Trust and Bank CEO French Hill visits with Bennie Westphal, CEO of The Westphal Group, a Fort Smith-based oil and gas company.
Westphal discusses the merits of horizontal drilling and its transformative impact on natural gas exploration in the last 5 years.
“The thing that has really changed the oil and gas industry is the ability to horizontally drill basically in these shales, but sandstones too, economically,” Westphal said.
Westphal says the technology deployed in horizontal drilling has allowed for more cost-effective efforts resulting in the big glut of natural gas reserves and the low cost of gas prices, currently in the $3.50 mcf range. Westphal sees that changing eventually.
“I think the prices are going to be low for the near future, but over the next 5 years – and this is where some of the regulations taking place — they’re going to be shutting down dozens of these coal-fired generators, and replacing them with natural gas because its so plentiful,” Westphal said.
He also touched on how horizontal drilling techniques are now being deployed in oil exploration in North Dakota, Texas, and even in the Brown Dense Formation in southwest Arkansas.
“Southwestern Energy has like 400,000 acres that they have leased along the Arkansas-Louisiana line, down by Magnolia,” he said. “Those wells there cost about $10 million each to drill, but they can get that cost down to like $7 million – the extra $3 million is because they’re doing their studies to learn.”
Watch the video interview below to see where the oil and gas industry is headed in the foreseeable future, according to Westphal and Hill.