Kansas oil production rises 5% in 2012; natural gas production falls

05/10/2013 7:14 AM

05/10/2013 7:15 AM

Driven by continued strong prices and horizontal drilling, Kansas oil production rose 5 percent in 2012, while low natural gas prices idled exploration rigs, causing gas production to fall 4.3 percent, according to the Kansas Geological Survey.

The state produced 43.7 million barrels of oil last year, the most in 17 years. The top counties were Ellis, Barber, Barton, Russell and Ness.

Gas production in Kansas continued its steep decline, falling to 298.7 billion cubic feet, an annual amount not seen since the early 1950s. The top counties were Stevens, Grant, Kearny, Barber and Haskell. All of the traditional natural gas counties in the Hugoton Field in southwest Kansas saw big decreases.

The price for natural gas has been low for about three or four years as vast amounts of natural gas flow out of shale formations around the country.

“The consequences of supply and demand have been powerful,” said Survey geologist Lynn Watney.

The net result was a fall in value of the state’s fossil fuel production. The value of oil production rose from an estimated $3.5 billion in 2011 to $3.7 billion in 2012 as prices remained relatively steady. The cumulative value of natural gas dropped from about $1.2 billion in 2011 to $790 million in 2012. The price of natural gas, which hit $14 per thousand cubic feet in 2008, is now between $3 and $4.

One of the big stories of 2012, the spread of horizontal drilling, shows up in the big increases in the heart of the Mississippian Lime play in several counties along the state’s southern border.

Barber, Harper and Comanche counties saw oil production increase 18 percent, 72 percent and 71 percent, respectively, between 2011 and 2012. Barber County, which produced nearly 2.3 million barrels of oil in 2012, moved up from fifth highest producing county in 2011 to second.

Although fast growing, horizontal drilling remains a relatively small percentage of the state’s oil and gas production, at 5.9 percent in 2012.

Horizontal drillers were seeking oil, but also found on average 7,469 cubic feet of natural gas per barrel of oil.

But 2012 was a wake-up call for the horizontal exploration companies. Last year, 162 wells were drilled, but it’s been difficult to drill high-producing wells consistently, Watney said. A few wells will produce big numbers, but many are marginal. A few companies have already pulled out of Kansas or sold off their leases to concentrate elsewhere.

It turns out that economically recoverable oil in the Mississippian Lime is only in spots, unlike the more uniform Bakken Shale in North Dakota, Watney said. Producers in Kansas are working hard to figure out exactly where that oil is and how to finish the wells to maximize production.

“It’s more of a completion challenge,” he said. “There’s a lot of interest, but it’s more or less how do we really get in and understand the completion process and how that translates to the economics.”

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