Oil Boom Fueling Fortunes in Kansas

WICHITA, KAN., May 10, 2012 — -- Fred Hambright has seen a lot in his more than 60 years in the oil business, but nothing prepared him for the craze now sweeping the prairies of Kansas.

Since 1951, the 83-year-old Kansas landman has made a living buying up leases for oil drillers. Six months ago, Hambright says he was purchasing leases for $15 to $20 per acre. Now those prices have skyrocketed into the thousands of dollars.

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"All of a sudden nice quiet, conservative Kansas has been invaded by the horizontal drilling people," Hambright said. "Some people have really hit it big. We've seen leases go as high as $1,700 an acre."

Hambright says the largest check he has written so far was for $900,000, but other landmen in this state have shelled out millions just for the right to drill.

The Mississippi Lime formation in Kansas is the latest ground zero in a gold-rush-style oil boom sweeping the U.S. New technology is turning lands once thought to be sucked dry of oil and gas into vast untapped reserves that could produce for more than 100 years.

See images from the oil boom in Kansas.

From Pennsylvania and North Dakota to Texas, horizontal drilling and hydraulic fracturing are quickly turning the U.S. into an oil superpower. By some estimates, 2 trillion barrels of oil are waiting to be drilled -- nearly twice the reserves in the Middle East and North Africa.

The newer techniques can produce as much as 10 times more oil than a traditional well. Horizontal drilling works by digging 5,000 feet into the earth, then a mile across in several directions.

Using hydraulic fracturing, also known as "fracking," crews then blast sand, water and chemicals into the rock to draw out even more oil and gas.

Because of these new processes, Goldman Sachs predicts that in just five years, the U.S. could pass Saudi Arabia and Russia as the world's largest oil producer. Finally, a decades-old dream, talked about by every U.S. president since Richard Nixon, seems possible -- energy independence.

And in Kansas that independence will come with enormous prosperity -- thousands of jobs will pay $50,000 annually, tax monies will flood state and local governments and landowners will receive huge payouts -- first through leasing agreements, then if oil is discovered, through hefty royalty checks.

Landman Kenny Hoop spends most of his afternoons at the local courthouses in southern Kansas, searching through handwritten records scribbled down in land books. It's still the only way here to track down ownership of mineral rights to the thousands of acres of farmland mostly covered by wheat fields.

When he's not in a courthouse, Hoop drives the backroads of Kansas, meeting up with landowners who haven't already signed leases for the new horizontal wells. A knock on the door from Hoop can mean instant riches, even before any drilling begins.

"Depending on how much acreage they had, the bonus money got these landowners, mineral owners, millionaires overnight," Hoop says.

With so much competition for land, there's no time to waste. Hoop brings along his heavy electric typewriter so he can write up leases and get them signed on the spot.