2001 Kansas Oil & Gas
|Kansas Geological Survey
Open-file Report 2002-38
During the last four years wellhead prices for oil and gas have fluctuated widely. The price of oil reached a low of $8.10 per barrel in December 1998. A high of $30.70 per barrel was recorded in November 2000. Gas prices spiked to $8.06 per thousand cubic feet (mcf) in January of 2001. However, gas prices were below $2.00 per mcf during much of 1999, recording a low of $1.68 per mcf in March of 1999. Fluctuations in oil and gas prices have resulted in year-to-year changes of one billion dollars. These rapid changes in the value of oil and gas at the wellhead have a significant impact on the Kansas economy, tax revenues and employment.
Using average monthly wellhead prices for oil and gas in Kansas, the value of the oil and gas produced in the state in 2001 was approximately $2.742 billion. Annual wellhead value in 2001 is up almost a billion dollars from 1998 and 1999, and is a slight increase of over $70 million dollars from 2000 (2.5%). The increase in total annual wellhead value from 2000 to 2001 is a result of increased prices for natural gas offsetting the decrease in oil prices (Table 1). In 2001, the value of natural gas production ($1.988 billion) is more than 2.5 times the value of oil production ($0.742 billion). The significance of Kansas’ oil and gas production relative to other parts of the Kansas economy is illustrated by a comparison to agriculture. Over the past 40 years, the value of Kansas oil and gas production is comparable to the value of total statewide crop production as measured by the cash receipts for all the crops produced in the state (Figure 1). In 2000, the wellhead value of Kansas oil and gas production exceeded the value of Kansas crop production. The 2001 Kansas cash receipts for all crops are currently not available, but is probably less than 2000, and less than the wellhead value of oil and gas production.
Oil and Gas production is a major component of Kansas tax revenues through severance, ad valorum and other taxes. During fiscal year 2001, severance taxes totaled over $100 million. Severance tax revenues are estimated to have decreased in fiscal year 2002 to just over $50 million. Statewide 2001 property taxes on oil and gas mineral leasehold totaled over $115 million up from $83 million during the previous year. It is expected that assessed value and tax revenues from mineral leasehold will be down in 2002.
Oil and gas remain an important mainstay of the Kansas economy and government revenue. It is probably not an overstatement that changes in oil and gas production volumes and value continue to have a significant impact on health of the Kansas economy.