Coming year looks better for oil and gas sector following terrible 2016

The coming year has to be better for the state’s oil and gas industry than 2016.

And, at this point, it looks as if it will be.

Saudi Arabia and other global oil producers flooded the market in 2015 and early 2016 to drive U.S. shale oil companies out of business. It worked.

Kansas Common crude oil fell below $20 a barrel in January. That pushed most of the state’s drilling and drilling-services companies into inactivity or out of business.

The story of natural gas was similar, with overproduction by the country’s shale gas producers.

Prices for oil and gas have risen somewhat since, encouraging some U.S. producers – including many in Kansas – to drill again, said Nick Powell, chairman of the Kansas Independent Oil & Gas Association.

In December, OPEC and Russia agreed to cut oil production in order to boost prices.

“We are definitely looking for the better year, with the OPEC agreement,” Powell said. “If they will abide by it.”

Powell said he expects the benchmark West Texas Intermediate crude prices to stay in the $50 to $60 per barrel range. If it goes over that, it will spark a major surge in U.S. shale drilling. OPEC doesn’t want to provoke a shale drilling revival and will work to keep prices in a medium range.

“It’s still not going to be the bonanza we had at $100 oil, but you will see some increase in activity in eastern and western Kansas,” Powell said.

This story was originally published December 28, 2016 at 12:37 PM with the headline "Coming year looks better for oil and gas sector following terrible 2016."