Prices driving Kansas oil production up, gas down

Wichita EagleAugust 22, 2011 

Kansas' oil and gas industry this year resembles identical twins walking in opposite directions.

These are good days in the oil business. Generally high global oil prices — although falling in recent weeks as the global economy suffers — and new technology have re-energized the domestic oil industry. Drilling and production are up in the country and in Kansas.

On the other hand, low prices for natural gas, now around $4 per thousand cubic feet, is dampening interest in new wells.

Prices are driving exploration. Nationally, oil rig counts are up 66 percent and gas rigs are down 10 percent, according to energy consulting firm WTRG Economics.

In Kansas, gas production has fallen every year since the early 1990s, last year hitting 331.5 billion cubic feet. The state's oil production has risen since bottoming in 2004, reaching 40.5 million barrels in 2010, according to the Kansas Geological Survey.

"Oil is good; natural gas is not good at all," said Dick Schremmer, chairman of the Kansas Independent Oil and Gas Association.

And hanging over the whole industry is President Obama's efforts to change federal tax rules for oil and gas drilling. His proposals would reduce the ability of producers and investors to write off expenses involved in drilling and in the depletion of production.

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