Elk City, population 11,693 at the last official count, is situated on the western edge of Oklahoma. It is also fortuitously on the eastern periphery of the Granite Wash play that stretches beyond the state line 30 miles distant and on into the Texas Panhandle. Elk City roots for the high school Elks, no surprise, although no wild elk have been known to roam the gentle hills of pastureland and crops surrounding the town—ever. It is proud of its Route 66 heritage and features the now-idle Parker Drilling Co. Rig #114 on its main highway through downtown, its highest structure and a symbol of its economy.

The active drilling rigs are scattered around the edge of the town.

Apache Corp. operates three. These rigs are targeting the Marmaton “D,” an overpressured, shallow Granite Wash zone. The Marmaton here in Beckham County is an oil-bearing sandstone formation, not to be confused with the carbonate Marmaton formation in the Oklahoma panhandle. On a predawn drive to the Gregory #216H well, Apache senior production foreman Richard Lovelace points out the battery of tanks for a series of producing wells. The Smith wells, he says, came online at 1,000 barrels of oil and 10 million cubic feet of rich gas a day, on average.

“Big oily wells with NGLs (natural gas liquids),” he describes. “We’re trying to find some more of that.”

That sums up the goal of E&P operators all across the Granite Wash play. Touted until recently as one of the most economic plays in the U.S. due to its liquids-rich gas stream, now the liquids themselves have dropped in value like natural gas before, victim of a supply glut. NGLs historically average 60% of the price of West Texas Intermediate, but plunged to 40% over the summer. NGLs delivered to Conway, Kansas, where most Granite Wash production flows, have fared even worse: ethane—the major part of the wet-gas stream—traded at a 95% discount to Mont Belvieu, Texas, in July.

While operators are quick to point out that drilling for Granite Wash wet gas is still economic, in spite of the recent price downsizing, their actions show they will turn their drill bits toward oil opportunities when available.

Rig data reflects the trend. According to Baker Hughes, 81 rigs were running in the play as of the end of August, a 14 rig exit year-over-year. More telling: gas-directed rigs have declined 63%;the