Higher Oil Prices Boost Drilling
Higher oil prices have not only led to higher gasoline prices.
They've also spurred a renewed interest in drilling for oil and
gas in the state. Prices paid for crude oil in Kansas have fluctuated
between $25 and $30 barrel for the past several weeks. That's
the highest prices have been since the Gulf War in 1993, and
dramatically above the $7 per barrel levels in February 1999,
less than 18 months ago.
Those higher prices have translated into increased levels
of drilling in Kansas. According to industry sources, 19 oilrigs
are currently drilling in the state, up from a low of three rigs
during the time when prices bottomed out. Another measure of
industry activity is "intent to drill" forms filed
by drillers with the Kansas Corporation Commission. According
to the KCC, drillers filed 714 "intent to drill" forms
in the first five months of this year, compared to 260 in the
first five months of 1999.
Drilling levels might even be higher in Kansas, but low prices
during the past few years have led to a shortage of drilling
rigs and experienced crews.
The higher prices may also keep some wells in production.
About 95 percent of the oil wells in Kansas produce less than
five barrels of oil per day, and higher crude prices may keep
operators from plugging those wells.
According to the Kansas Geological Survey, Kansas is a net
producer of energy--that is, the state produces slightly more
energy than its people use, primarily because of high levels
of natural gas production from the Hugoton natural gas field
in southwestern Kansas. Maintaining that role as an energy exporter
is difficult, particularly as production slows from older oil
and gas fields. Kansas oil production totaled 34 million barrels
in 1999, down about 8 percent from 1998. |
