State Cities, Towns Discover Economic Development Works

Article excerpt

EDITOR'S NOTE: This is the second of a two-part series by the New York Times Service on economic problems of Oklahoma.

By Robert Reinhold ENID - All over Oklahoma, cities and towns are discovering ""economic development.''

State officials believe salvation lies in taking advantage of Oklahoma's central location in America, which makes it ideal for distribution, warehousing, light manufacturing, food processing and other industries dependent on transportation.

It is a strategy that has begun to work for Ardmore, a city of 25,000 in south central Oklahoma.

Since last year, the city's business leaders have pledged $1.4 million to the ""New Horizons'' strategy mounted by the Chamber of Commerce. Under the plan, an old Air Force base has been reopened as a 2,600-acre ""industrial airpark'' that has drawn several tenants that furbish and paint airplanes.

Meanwhile, a new 135-acre industrial park has been developed and the first tenant, Hardee's, the fast-food chain, is nearing completion of a 65,000-square-foot building that will serve as its food distribution center for the region. The hope is that this kind of industry will spawn truck repair and other service businesses.

But diversification will not occur quickly. Oklahoma is very young, having gained statehood only 79 years ago.

""It's practically impossible to diversify in that time,'' said Robert B. Perry of the D.C. Bass Construction Co., based in Enid. ""They've got restaurants in New York that are older than Oklahoma.Ups and downs are the history of our state. We're in a down cycle, but we'll be up again.''

The great oil boom brought every sort of opportunist, phoney and quick-buck artist to Oklahoma. It was a time when, as Holmes put it:

""Anybody with a sharp stick and a maiden aunt with some land was an oil company.''

The first crack in the boom, in the early 80s, swept out the slicksters, the J.R.s in their fast cars and fast planes who drank beer out of cowboy boots.

But now even the most prudent, careful oil producers, who did not get carried away in the frenzy, are having a tough time. Consider, for example, Melvin Moran of Moran-Kahn Oil in Seminole.

For 40 years, the private family-run company, founded by his immigrant father, has made a good living by buying small wells after the majors lose interest in them. During the boom, Moran resisted the temptation to buy drilling rigs or put on new staff and his debt is zero.

Yet at $13 a barrel, there is no profit in the oil that is pumped from his wells.

The Moran picture is a reflection of the economic geology of Oklahoma. The state has been so thoroughly pumped that 60 percent of production comes from ""stripper'' wells that produce less than 10 barrels a day.

There are 82,000 such wells in Oklahoma, and nearly a quarter of them will be abandoned if oil stays below $15 a barrel, according to the Interstate Oil Compact Commission. Such wells cannot compete in a world market in which Saudi Arabia can produce more oil from just 30 wells than Oklahoma can from 100,000.

The Anderson No. 1 well of the Moran Co., five miles north of Seminole, is fairly typical. The well was drilled 30 years ago and the ancient pumping jack labors day and night to squeeze out a meager five or six barrels a day.

It is costly to operate because, like most Oklahoma wells, the oil comes up mixed with brine, which must be separated and then disposed of to avoid fresh-water contamination.

Gary A. Kleiman, Moran's son-in-law and manager, stood beside the well and explained the unpromising economics:

- At current prices, the well grosses only $72 a day. Off the top comes about $18 in royalties and production taxes to the state.

- Electricity alone takes another $30 a day, and after servicing and repair costs are deducted, the well only breaks even. …