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KU: Oil production up, natural gas down -- Ellis County still No. 1

5/7/2013

Special to The Hays Daily News

Special to The Hays Daily News

LAWRENCE -- Oil production in Kansas increased in 2012, buoyed in part by output from horizontal wells in several southern counties, as natural gas production continued to decline, according to estimates from the Kansas Geological Survey at the University of Kansas.

Oil production in Kansas rose from about 41.5 million barrels in 2011 to 43.7 million barrels in 2012, an increase of 5 percent. Over the same period natural gas production in the state declined 4 percent from 3.12 billion cubic feet (bcf) in 2011 to just under 3 bcf in 2012.

"Consistently higher oil prices since 2000 -- when the price was $25 per barrel compared to $84 now -- have sustained the increase in the state's drilling activity," said KGS geologist Lynn Watney. "In contrast, new drilling in the Hugoton Gas Area, the state's largest natural gas field, has essentially stopped due to continuing low gas prices."

The cumulative value of the state's oil production increased from an estimated $3.5 billion in 2011 to $3.7 billion in 2012 as prices remained relatively steady. The cumulative value of natural gas dropped from about $1.2 billion in 2011 to $790 million in 2012. The price of natural gas, which peaked at $14 per thousand cubic feet (mcf) in 2008, is about $4 per mcf today.

Innovation in horizontal drilling and multistage hydraulic fracturing, popularly known as "fracking," has been the main force behind recent activity that focuses on Mississippian-age oil-bearing rocks about 5,000 feet underground in southern and western Kansas. Easily accessible oil in the rocks, which were formed about 350 million years ago in shallow sea deposits, has already been removed through traditional vertical well production.

Drilling in the producing zone dubbed the Mississippian limestone play, or colloquially the Mississippi Lime, started in Oklahoma before progressing into an area of southern Kansas centered on Barber, Harper and Comanche counties by mid-2010.

"Horizontal wells since 2010 have been drilled to access poorly drained reservoir compartments and low-permeable oil zones in Mississippian carbonates, particularly in the tier of counties immediately north of the Oklahoma state line," said KGS geologist David Newell.

One hundred sixty-two of the hydraulically fractured horizontal wells drilled in Kansas from mid-2010 through December 2012 have reported production. All but five are in the Mississippian limestone play. Although the primary target in the play is oil, wells there have also produced, on average, 7,469 cubic feet of natural gas per barrel of oil.

"By the end of 2012, the 162 recent horizontal wells were generating 5.9 percent of monthly oil and gas production in Kansas," Newell said. "The other 94.1 percent is produced from 49,275 oil wells and 24,625 gas wells across the state."

The state's county-by-county production numbers reflect the gains in the Mississippian limestone play. Barber, Harper and Comanche counties saw oil production increase 18 percent, 72 percent and 71 percent, respectively, between 2011 and 2012. Barber County, which produced nearly 2.3 million barrels of oil in 2012, moved up to second in the state for oil production from fifth in 2011 and seventh in 2010.

Ellis County in northwest Kansas, however, continued to be the top producer with nearly 3.6 million barrels, an increase of about 5 percent over 2011. Following Ellis and Barber counties, the other top-10 oil-producing counties in 2012 were Barton, Russell, Ness, Rooks, Haskell, Finney, Graham and Stafford, with Barton, Russell, Rooks and Ness counties all producing between 2 and 2.21 million barrels.

The expansive Hugoton Gas Area in southwestern Kansas remained the most prolific natural gas region in the state, with all but two of the top-10 gas-producing counties--Barber and Neosho--in the Hugoton area. Stevens County continued to lead, followed by Grant, Kearny, Barber, Haskell, Finney, Morton, Seward, Stanton and Neosho counties.

Production from the Hugoton, however, declined as lower natural gas prices made development in the area less profitable. Stevens County's 2012 production of 4 bcf was down from 4.4 bcf in 2011. The other southwestern counties also showed declines, as did Neosho County in southeastern Kansas, where natural gas is mainly produced from shallow coal beds.

The only top-10 county to show gains was Barber County, where gains in gas production are tied to rising oil recovery in the Mississippian limestone play.

"The low price of natural gas has affected new drilling and development," Watney said. "The mainstay Hugoton Gas Area has undergone a steady 7.6 percent decline since 1995, while the Cherokee Basin Coal Bed Methane Gas Area began to decline after prices fell in 2008."