Kansas oil production up

Prices, demand for natural resources increase -- for now

? A boom in the oil and natural gas industry means Kansas rig operators are doing well — for now.

Far from certain, however, is how long today’s prices — $28.77 in January for Kansas crude and $5.12 a unit for the February natural gas index — will last.

“The last time we had a little boom like this, the price went right back down again,” said Jim Molz, owner of Molz Oil at Kiowa and a 28-year veteran of the oil business. “That was the end of the line for a lot of operators.”

For contractors, a prolonged slump in oil prices in the 1990s meant the erosion of labor crews as operators quit drilling, and there wasn’t enough work for everybody.

Ralph Hamilton, who manages Duke Drilling of Wichita, said all of his rigs are busy. He has jobs booked well into the future.

“The hardest thing last year was finding people to work when you did get jobs. It had been so spotty that people left for steady work. Now, with prices coming up and all the layoffs in the factories, we’re starting to see some people coming back to the oil field. It’s fairly good pay, lots of overtime. It can be hard and nasty, but it pays good.”

Like Duke, Tim Sanders, with Big A Drilling at Great Bend, is a contractor for operators wanting wells drilled. He operates mostly in the Hugoton field near Liberal and said the demand for drilling rises and falls with the price.

An increase in the price of oil generally translates into an increase in the price of natural gas, Hamilton said. The prices of both are high right now, and people are encouraged to drill.

Most of the profit in Kansas is in natural gas, he said.

“Kansas oil wells generally aren’t big producers,” he said. “The new money here is in natural gas.”

Danny Bittle, left, lubricates the threads on an oil drilling pipe while Jesse Harger aligns the next length into place on an oil-drilling platform near Sharon. Oil and gas-drilling activity has picked up in the oil patch -- and elsewhere across the country -- as crude oil prices continue to rise.

While being in business now is good, Sanders said he worried the price of oil and gas might be headed too high.

“You want a good price, but too high a price starts to hurt the economy as a whole,” he said. “It starts costing you more to operate, and it hurts other businesses.”

Sanders would like the price of oil to hover around $25, so he could make plans. “But it goes up and down like a yo-yo. The price may be $40, but by the time you drill the well, it’s down to $18. That’s what hurts,” he said.

A natural gas price in the $3.50 per unit range encourages drilling, contractors say. Prices now are well above $4.

In Barber and Comanche counties, drilling almost stopped after prices dropped after the Sept. 11 terrorist attacks. Now, it’s rapidly picking back up.

“We have lost an awful lot of people,” Keen said. “But guys like Molz, they just keep going. I think that’s the secret. You just hang in there.”