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On Monday (November 3), the price of crude oil dropped again, closing below $65 a barrel. 

Missouri's oil producers were not happy with the news. 

While many Missourians might not be aware of it, oil wells are pumping in the Show-Me state.

It is an industry which largely lay dormant here for the past couple of decades.

But last summer, when crude oil shot to $147 a barrel, petroleum production companies rediscovered the potential of the Show-Me state.

"Oil was first discovered (in Missouri) just immediately after the Civil War," says Missouri Department of Natural Resources (DNR) geologist Scott Kaden.

But the oil now coming out of the ground in Vernon County has only been pumped to the surface since last spring.

A Canadian company called Megawest Energy Corporation specializes in a process that squeezes the oil out of tar sand. It starts with turning water into steam, which is then piped to a 30 ft. layer of sandstone about 200 ft. below the surface.

"The heat from the steam will thin the oil out, somewhat," explains Megawest area Superintendent Jim Long, "And the pressure from the steam will drive the oil through the sandstone formation to a collection point."

Once pumped to the surface, the water is removed from the oil, which is then trucked to a refinery in Coffeyville, Kansas.

Megawest now has 30,000 acres of Missouri land under lease. Long's 10 acres along U.S. Highway 54 is the first of that to produce oil.

"Right now, we're approaching 80 barrels a day," says Long, "Some time not too long from now, we should be somewhere over 350 to 400 barrels a day."

The Missouri DNR issues the permits needed to go after the oil.

"Those folks have bent over backwards," assures Long, "And it's been a pleasure to work with 'em."

DNR officials say the recovery of oil from sandstone creates very few environmental risks.

Kaden says the steam heats the subterranean formation, but there is no environmental issue as far as the steam injection itself.

Long says Megawest's standards for protecting water sources from oil spills currently exceed those imposed by the state.

So far, the only new oil exploration in Missouri is in the counties along the Missouri-Kansas border, where the tar sand is close to the surface.

Economic development incentives for oil and gas exploration in Missouri have been part of the political debate, not that the regulatory environment is hostile now.

"There is no production tax in Missouri," explains Kaden, "There are no permitting fees,"

Indeed, right now, oil drillers need only post a bond to get underway.

"That is basically an insurance to the state," said Kaden, "If this operator jumps up and leaves, and leaves the holes in the ground. We can take the bond and cash it in and close the site out.  And that's the way it's been since the regulations were put in place in the 1960's."

Despite the current plunge in oil prices, Long says Megawest has not curtailed production. In fact, since KRCG's visit to Vernon County in October, Long has starting pumping oil from a second field. He says Megawest has told him simply to keep a close watch on expenses.