RENEE MONTAGNE, host:
Oil prices are now at about $108 a barrel. That's much lower than the $140 a barrel oil we've seen this summer, but still very high. And that has oil producers cashing in in some unlikely places, like Tennessee. Tennessee produces less oil in a year than Texas produces in a single day. Still, in an area a couple of hours east of Nashville, oil producers are returning to wells that were shut down decades ago.
And that's where we're heading today on the Money Map. It's our occasional series on how global economic forces shape local economies. And we turn to Blake Farmer of member station WPLN.
BLAKE FARMER: Good morning, Renee.
MONTAGNE: So Blake, is there oil in these wells? I mean, they're not dry?
FARMER: Right. They're old wells, but they're not dry at all. They've just been low-producing over time. For instance, I met this guy, Bill Goodwin. He owns about 180 wells on roughly 50,000 acres in an area called the Cumberland Plateau. His company's called Ky-Tenn. So he's been out tracking down wells that he bought, you know, years and years ago, but he's never seen, and he knows that there's some oil left.
Mr. WILLIAM GOODWIN (Owner, Ky-Tenn): The theory is if we drill them a little bit deeper, more oil will roll into the well bore and we'll get more oil out of them. You know, when oil was $10 a barrel we knew we could do that, but why spend the money and time? Now it's worth doing.
MONTAGNE: So this oil man, Bill Goodwin, how much money is he making these days?
FARMER: Well, it's not your ExxonMobil. You know, he's got a couple of million dollars in revenue each year. And some of these wells, they're yielding just about a barrel a day. But he says it's still worth the cost.
But it's caused a bit of a problem, all these folks who are going back to these old wells. Let me show you how. I stuck my microphone in one of the storage tanks at Ky-Tenn.
So this is the sound of 150 barrels of oil.
(Soundbite of echo)
FARMER: So this is one of, you know, dozens of storage tanks that Ky-Tenn Oil has. And most of them right now are pretty full. They've got something like 6,000 barrels of oil on-hand, which is a lot for a company that is relatively small in the scheme of things. You know, it's more than half a million dollars worth of oil. And it's all because they can't get rid of it.
MONTAGNE: We're talking to Blake Farmer in Tennessee about reviving old wells there. And when you say they can't get rid of it, it seems like they sort of can't miss. If they're pumping the oil, why can't they get rid of it?
FARMER: Well, you know, we're coming off years of near record low production, at least in Tennessee. So low in production that the nearest refinery in Somerset, Kentucky, it went belly-up last summer, which means that these guys have to sit on their oil a little bit longer because trucks have got to come down four hours each way from the West Virginia-Kentucky line now. They can only pick up about 200 barrels at a time. So these oil producers in Tennessee are having to sit on their hands while they wait for somebody to come take their oil.
Here's Chuck Murchison; he's the chief of operations at Ky-Tenn Oil.
Mr. CHARLES MURCHISON (Ky-Tenn Oil): We're laughing right now in Tennessee that everybody's talking about oil. Everybody's talking about gasoline. And with oil and natural gas, we've probably got the most demanded product in the world and we can't get rid of it. We can't sell it.
(Soundbite of laughter)
FARMER: Yeah. And he can laugh about it, because they know the infrastructure will come if they continue producing on this kind of scale.
MONTAGNE: But also, Blake, as you said, these guys aren't producing on a mass scale.
FARMER: Yeah, and they realize that. You know, Tennessee might produce 300,000 barrels of oil this year. Well, Texas, the largest producing state, does nearly three times that in a single day. You know, but these guys, they do have some convictions about domestic oil production. And we here in the U.S., we use quite a bit. Something like 20 million barrels a day, according to the Department of Energy. And Chuck Murchison, he says he really feels like he's making a dent in that 20 million barrels.
Mr. MURCHISON: You know, this is not a thimbleful for a day of driving automobiles. The gasoline you've got, the oil here. But nonetheless, it still is oil we're getting here.
FARMER: And right now this business model makes sense for Ky-Tenn. Chuck Murchison says the real price of oil, he thinks, is somewhere around $70 a barrel, and at that price, you know, perhaps cranking up these old wells may not be worth the time it takes and the money. But right now they're really just riding out the wave.
MONTAGNE: Blake, thank you very much.
FARMER: You're welcome.
MONTAGNE: And that was reporter Blake Farmer of member station WPLN in Nashville, Tennessee. To see how some of the other local economies across the country are faring you can visit our money map at npr.org.
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