But That Could Spell Trouble for Texas’ Drilling Boom
From the first geyser to burst from the salt domes of Spindletop to the Texas fracking pioneer George Mitchell, who helped unlock massive oil and gas deposits in shale, the Lone Star State has always been willing to gamble on drilling. And the bets are big. The latest boom has been mostly the work of companies and investors with access to plenty of capital — it’s estimated each oil well in the Eagle Ford shale of South Texas costs between $5 and $10 million to drill.
Now, with a minimum investment of $80,000, one Texas company is offering you your very own oil well. Oil Boom USA, a subsidiary of Texas oil and gas company Nakoma Petroleum, is inviting investors into the oil well game. Why? Because it’s an “unequaled tax shelter” and “exciting and fun,” according to the company’s website.
But opening up drilling to more than just oil and gas companies could signal trouble for the industry. As Michael Webber, Deputy Director at the University of Texas’s Energy Institute, explains to KUT’s Texas Standard host David Brown, oil well investing is “pretty good on the way up, but it could be pretty bad on the way down.”
“Usually a sign of the next peak coming is that people get most frenzied with their speculation and their investments,” Webber says. “All those people investing will help drive the boom even further, until it all collapses.”
Take a listen to the conversation: