PIERRE -- Work is under way to develop an oil field near Bear Butte in Meade County that could eventually produce 4 million barrels of crude.
The state Board of Minerals and Environment on Thursday approved Nakota Energy LLC's application to establish a 960-acre field for the production of oil and gas, with spacing of no more than one well in each 40-acre tract.
Bob Townsend, administrator of the minerals and mining program in the state Department of Environment and Natural Resources, said developers already have drilled one well to discover oil in the area.
The spacing order allows the company to ask the department for a permit to drill a second well to learn how best to develop the field, Townsend said Friday.
The oil field is on private land slightly more than a mile from Bear Butte, an important religious site for Native Americans that juts above the prairie on the northern edge of the Black Hills. Developers said the oil field should not bother anyone at Bear Butte.
Roch Bestgen, who lives about a mile west of the proposed drill site, said he is not concerned about the potential increase in activity. "If it helps the neighbors and somebody can make some money, I'm not against it," he said. He said he is more concerned about damage to county roads than harm to groundwater.
The third-generation Meade County landowner said this isn't the first time oil speculators have focused on this part of the county. He recalled stories from his grandfather who settled the area west of Bear Butte in the 1920s about people looking for oil.
The project was developed by the Inyan Kara Group, a Rapid City firm of geologists that generates prospects for oil and gas operations.
Tony Petres, president of Inyan Kara, said he hopes drilling on the second well can begin within three weeks. Additional wells will provide more information on how best to obtain the oil, he said Friday.
The Bear Butte project is far from existing oil and gas wells in the northwestern corner of South Dakota.
You have free articles remaining.
Petres said estimates indicate the site contains about 6 million barrels of oil and about 4 million barrels can be recovered.
The oil is at a relatively shallow depth, around 400 to 650 feet below the surface. It likely came from deeper in the area or migrated from sources to the north, Petres said.
With the existing spacing order allowing only one well in each 40-acre tract, the field has room for about a half dozen wells, Petres said. If tighter spacing is needed, more wells would be drilled, he said.
Petres said the oil field is not visible without binoculars from S.D. Highway 79, which is just west of Bear Butte.
"It's nothing that's going to stand out as you cruise by the butte, that's for sure," Petres said.
Ranchers in the area face pressure to allow their land to be subdivided for development, but they likely would be better off making some money from an oil field that would operate for 10 to 15 years, Petres said.
Townsend said no opponents to the project appeared at the Board of Minerals and Environment hearing, but a ranch family urged the board to make sure water supplies are protected during the oil drilling.
Journal staff contributed to this report.