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Why producing more domestic oil is so difficult right now

AILSA CHANG, HOST:

High gas prices have everyone from truckers to politicians demanding more domestic oil production. While drilling is up, oil production in this country is still down from three years ago. But as Frank Morris of member station KCUR reports, turning that around just isn't going to be as easy as some might have you believe.

FRANK MORRIS, BYLINE: Oil is expensive now, but Dick Schremmer, president of Bear Oil near tiny Peck, Kan., says there was a time early in the pandemic when he literally could not give this stuff away.

DICK SCHREMMER: The oil that they took that day from us, they charged us $38 a barrel to take our oil.

MORRIS: Of course, nobody knew how long the losses would go on. And domestic production plunged 20% as small companies folded or cut staff. Companies also shut down active wells, nearly 5,000 in Kansas alone. Schremmer's standing next to one of them today in a field south of Wichita. The oil thousands of feet below this ancient pumpjack is now worth more than $100 a barrel. But pumping it out will take time and lots of money.

SCHREMMER: You know, this well probably cost me $12,000 to get up and running.

MORRIS: Idle wells corrode. For most to come back into production, they'll need repairs. And the price of hardware and chemicals used to get oil out of the ground has shot up along with the price of crude.

SCHREMMER: I just ordered a new truckload of pipe out of Houston, and that one truckload of two-inch tubing cost me $75,000. Last year, that would probably cost me $25,000 to $35,000.

MORRIS: That's big money to small operators like Dick Schremmer. While big players like ExxonMobil and BP operate wells producing hundreds or thousands of barrels a day, hundreds of small companies work on the margins, running low-producing stripper wells in states like Kansas, Ohio and Texas. And Mickey Thompson, past president of the Oklahoma Independent Petroleum Association, says many of those companies face a serious challenge finding employees.

MICKEY THOMPSON: The main reason it doesn't happen overnight is because of the thousands of workers who were let go during the downturn, which was not that long ago. Well, they're gone, most of them.

MORRIS: And those remaining are putting in a lot of overtime.

(SOUNDBITE OF CLANGING)

MORRIS: Close to a riverbank near Oxford, Kan., two men labor to bring a 1940s-era well back into production. Rank crude, reeking of skunk and diesel fuel, sloshes out of an old pipe, splattering the workers as they toil in the mud, slinging heavy 4-foot-long wrenches and manhandling 200-pound sections of pipe.

SCHREMMER: Everything is heavy and dirty and slimy.

MORRIS: Dick Schremmer says workers like these guys are a vanishing breed.

SCHREMMER: This is pretty tough work - gets out in all the elements and the heat and the cold and work, you know, eight-, 10-, 12-hour days. And there are just a lot of people who don't want to do that anymore.

MORRIS: And it makes for lots of delays. Robert Wagner, who runs Dan D Drilling in Lamont, Okla., has 20 semitrucks outfitted with all the equipment it takes to drill new oil wells. Of those 20 rigs, he's able to staff just two - two - and then only partially.

ROBERT WAGNER: And so we're not able to meet the demand. It's not just us here in Lamont, Okla. It's everybody in Odessa and everybody in Louisiana. All of them are having the same problem.

MORRIS: So oil companies wanting to drill new wells have to wait. And while regulation isn't much of a hurdle in this part of the country, financing can be. And Mickey Thompson says there's one other thing checking a rush to ramp up production - common sense.

THOMPSON: Because there's no guarantee that the price of oil is going to be anywhere near where it is today next month. So they spend all this money and then the price drops could drop dramatically.

MORRIS: Domestic production is still down about 10% from its all-time peak in 2019, but it's on the upswing.

(SOUNDBITE OF WELL PUMP)

MORRIS: This well chugging away just beyond a leafy front yard in Belle Plaine, Kan., came back on line this year, producing a paltry barrel and a quarter of oil a day, enough to make about 25 gallons of gasoline. The U.S. Department of Energy forecasts that domestic oil producers will reach 2019 production levels sometime in the summer of next year. For NPR News, I'm Frank Morris. Transcript provided by NPR, Copyright NPR.