Kansas oil production up, natural gas production down

6/4/2014

By KU News Service

By KU News Service

LAWRENCE — Oil production in Kansas increased in 2013, mainly in south-central and southwestern counties, while natural gas production continued to decline, although at a slower pace than in recent years, according to estimates from the Kansas Geological Survey at the University of Kansas.

Oil production in Kansas rose 7 percent, from about 43.7 million barrels in 2012 to 46.8 million barrels in 2013. Natural gas production declined 1.5 percent, from 299 billion cubic feet (bcf) in 2012 to just under 295 bcf in 2013.

The cumulative value of the state's oil production increased from an estimated $3.7 billion in 2012 to $4.1 billion in 2013 as prices remained relatively. The cumulative value of natural gas rose from about $790 million in 2012 to $1.1 billion in 2013. The price of natural gas, which peaked at $14 per thousand cubic feet (mcf) in 2008, ranged from about $3 to $3.80 per mcf in 2013.

"The relatively high prices for crude oil have fueled the steady increase in annual production in Kansas since the early 2000s," said KGS geologist Lynn Watney. "Natural gas produced in Kansas wells has continued a decline that began in 1995, with a brief reversal in 2008 when gas prices spiked. With current prices for natural gas, production has returned to the levels of the long-term decline."

Since 2010, much of the state's increased oil production has been from the Mississippian limestone play, colloquially known as the "Mississippi Lime," which is about 5,000 feet underground in southern and western Kansas. Oil companies have mainly used horizontal drilling with multistage hydraulic fracturing activities, popularly known as "fracking," to produce previously hard-to-reach oil in the play.

"Through January 2014, 334 horizontal wells in the Mississippian limestone play have reported production as have 12 horizontal wells that targeted other formations in Kansas," said KGS geologist David Newell. "However, it appears that production from the horizontal wells in Kansas is now somewhat steady or slightly declining."

Production from horizontal wells constituted 9.7 percent of Kansas oil and gas production in October 2013. By January 2014, that percentage had dropped to 7.7 percent.

"Unless new technologies are utilized, additional sweet spots are discovered, or drilling increases, that trend will likely continue," Newell said. "Production in new wells in the Mississippian play is now just about offset by declines in previously drilled wells."

Much of the new production is in Harper County where oil production rose 98.5 percent and gas production rose 84.3 percent over the last year. Of the 346 horizontal wells producing oil and gas in Kansas since late 2010, 105 have been drilled in Harper County. Neighboring Barber County, however, still produced a greater amount of oil and was second only to Ellis County in northwest Kansas for total annual production in the state.

Ellis County continued to be the top producer with nearly 3.5 million barrels, down 0.1 percent from 2012. Barber County produced nearly 2.4 million barrels, up 4.6 percent from 2012. The other top-10 producing counties, in order were, Barton, Ness, Russell, Haskell, Rooks, Finney, Harper and Graham.

Although not in the top-10 producers for 2013, Rawlins County in northwest Kansas jumped dramatically from 56th place in 2012 to 22nd in 2013. In the first four months of 2014, it has produced more oil than any county except Ellis.

"A significant amount of new oil has been found in Rawlins County in the Upper Pennsylvanian Lansing-Kansas City reservoirs," Watney said. "The Lansing-Kansas City accounts for a significant amount of Kansas' oil production, and a combination of higher prices, new ideas and use of latest technology have helped to reinvigorate this area."

Unlike in the majority of recent wells in the Mississippian limestone play, the new Rawlins County wells are vertical, not horizontal. Some have seen peak production in excess of 2,000 barrels of oil per day, while the average vertical well in Kansas produces about 2 to 2.5 barrels per day.

The expansive Hugoton Gas Area in southwestern Kansas remained the most prolific natural gas region in the state. However, all seven counties in the Hugoton Gas Area that made the top-10 list of natural gas producing counties in Kansas suffered declines. In the other three top-producing counties — Barber, Harper and Comanche — natural gas production is tied to oil production from the Mississippian limestone play.

Stevens County continued to lead in gas production, followed by Grant, Barber, Kearny, Haskell, Finney, Morton, Harper, Seward, and Comanche counties. Production in Stevens County dropped 5.8 percent to 38 bcf in 2013, compared to 40 bcf in 2012 and 44 bcf in 2011. Total production in the Hugoton Gas Area was about 116 bcf in 2013, down 4.8 percent from 2012.

"Production decline in the Hugoton is due to continued depletion of the field and lower gas prices, which have slowed efforts to enhance production from the reservoir intervals that have remaining reserves," Watney said.

Barber County, with natural gas production up 9 percent to 28 bcf, moved from fourth to third place. Harper County, with an 84.3 percent increase, and Comanche County, with a 59 percent increase, moved into eighth and 10th place, respectively, up from 14th and 13th place in 2012.

For the first time in several years, no southeastern Kansas counties were among the top producing counties in 2013. Gas there is produce mainly from shallow coal beds.

"Plenty more wells could be drilled in the coal bed methane province in southeastern Kansas if gas prices would rise," Newell said. "The current wellhead price of about $4.05 per mcf for natural gas simply doesn't justify the risk and expense for operators to acquire leases, drill and link up new wells to present pipelines."

The great amount of gas associated with oil production in the big shale gas and shale oil plays in the United States in combination with the slow national economic recovery has driven wellhead lower in recent years, he said. The low price commanded by natural gas causes most gas discoveries to be abandoned unless the resulting production rates are high.

"When price discrepancies are as great as they currently are between oil and natural gas, most companies are looking for crude oil, not natural gas," Newell said.

Current and historical production data for the entire state, as well as by county and field, are available at http://www.kgs.ku.edu/PRS/petroDB.html.

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