Oil prices expected to climb; wind power at a standstill

12/26/2012 6:59 PM

12/26/2012 6:59 PM

With oil prices high and natural gas prices low, Kansas oil production edged toward what could turn out to be the highest level since the mid-1990s.

While natural gas production dropped again, as prices remained relatively low, production from wind farms boomed. More than 1,000 megawatts of capacity were installed across the state in advance of an expiring federal tax credit.

Ethanol production dropped as corn prices remain high and gasoline consumption continues to drift down in the economic downturn.

Coming up

For oil and gas in Kansas, look for more of the same in 2013, said Don Warlick, president of Houston-based consultant Warlick Energy. Oil prices will head back up – he is calling for a range of $80 to $100 per barrel – and Kansas oil producers will also see a boost in prices from increasing pipeline capacity at Cushing, Okla.

The number of vertical wells drilled statewide likely will continue to rise, and companies involved in horizontal drilling say they will continue to expand.

Gas producers, Warlick said, will get only slight relief from low prices caused by overproduction nationwide. He projects a ceiling of $4 per 1,000 cubic feet of gas.

Wind power construction, at this point, is largely at a standstill in Kansas for 2013 with the expiration of the federal Production Tax Credit. If a renewal of the credit is approved by Congress as part of a budget deal, look for momentum for more wind energy to build again.

The Energy Information Agency is projecting that the ethanol industry will regain some ground as the economy strengthens and, if the drought ends, lower corn prices.

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