CORRECTION: Far from Middle East, U.S. farmland yields oil

(Corrects “early to mid-1990s” to “early to mid-1900s” in paragraph 16)

By Carey Gillam

NEVADA, Missouri (Reuters) - George Stapleton has been in the oil business for 30 years, helping plumb sands and shale across the Middle East, Asia and Europe. Now the chief executive of MegaWest Energy Corp is drilling deep into Missouri farmland.

In a non-descript pasture bordered by a pecan grove and a fish pond, Stapleton's company has hit black gold -- and in doing so is demonstrating how record prices of more than $100 a barrel are fueling a modern-day American wildcat oil era.

"Every bit we produce here at home is some we don't have to import," said Stapleton, whose Calgary, Canada-based company is only one of many new entrants into the U.S. oil market.

Indeed, as giant oil and gas conglomerates focus on key resource sites in Alaska, off shore and abroad, a new breed of speculator is emerging to dig deep into hard-to-mine areas abandoned when energy prices sank in the late 1980s. New technology has made many formerly abandoned U.S. oil fields easier to access, and recent high prices have made using that high-cost technology profitable.

More than 17,000 new U.S. oil wells were tapped in 2007, the most active pace since 1990, according to the American Petroleum Institute, a leading U.S. trade group.

The amount of oil derived from some of these start-up sites is negligible at a few hundred barrels a day or less -- a drop in the bucket of U.S. demand, which is estimated at 20 million barrels a day, or 840 million gallons.

Still, such prospecting by a range of independent operators represents new-found investment opportunity along with the hope of at least some small measure of relief from dependence on foreign oil.

"It is a very significant trend," said Kishore Mohanty, director of the Institute for Improved Oil Recovery at the University of Houston. "It is all about the money. These high oil prices certainly make it feasible for people to go after it."

BELOW THE SURFACE

MegaWest specializes in recovering what is known as "heavy oil," a more dense version of the light crude preferred by many refineries.

Workers inject steam heated to 400 degrees Fahrenheit (204 degrees Celsius) into the ground, warming and thinning oil trapped in tight rock so it can be pumped to the surface. Stapleton said large oil companies gave up on the region decades ago because of the difficulty and cost of extracting the heavy oil, which generally commands about 20 percent less on the spot market than light crude.

"I don't think people realize how hard it is to find and produce oil in this country," said Stapleton.

Cano Petroleum Inc, a four-year-old Fort Worth, Texas-based company focused on drilling in Oklahoma, Texas and eastern New Mexico, uses a technique known as "water flooding" to free trapped oil in areas abandoned years ago by Exxon Mobil Corp and others.

The oil pursued by MegaWest, Cano and others is part of a vast trove underlying many U.S. states. Alaska is estimated to sit atop more than 15 billion barrels, and California and Texas are estimated to have oil fields of more than 10 billion barrels each. Geological surveys also indicate large oil reserves in Kansas, Kentucky, Montana and North Dakota.