Record high oil prices continue to pump new life into the Kansas economy, according to new estimates by the Lawrence-based Kansas Geological Survey.

Kansas producers this year are expected to increase oil production for the fifth consecutive year, said survey geologist Tim Carr. That would be the first time since the early 1980s that the state has logged five consecutive years of production increases, he said.

“Basically, Kansas producers have turned on every pump they own and are pumping them as hard as they can,” Carr said Tuesday.

Carr estimates that the state’s 2004 production totals will rise 1.1 percent from 2003 levels and grow to 34.3 million barrels of oil.

The reason for the increase is simple, Carr said. It’s the prices. The price climbed above $50 a barrel Tuesday on the New York Mercantile Exchange before closing at a record $49.90.

Carr said many Kansas oil companies had turned their wells off in the late 1990s because they only produced two to three barrels of oil per day, which wasn’t enough to justify operation when prices were hovering below $20 per barrel. But once oil prices began to consistently top the $30 per barrel mark, the industry took notice.

“Right now it is a very profitable business to be in,” Carr said.

He said more Kansas producers were spending money — sometimes nearly $50,000 per well — to use new technology to boost production of aging wells.

The number of new wells being drilled in the state also is up, said David Williams with the Kansas Corporation Commission. He estimated the office would receive 3,500 applications to drill new wells in 2004, up from about 2,600 in 2003 and 1,700 in 2002.

Dan Hutchinson, of Rantoul, a production supervisor for Martin Oil, checks an oil well south of Wellsville in this June 10 file photo. The state's oil production continues to rise along with prices. Lawrence-based Kansas Geological Survey estimates this year's oil production totals will rise 1.1 percent from 2003. The state is expected to produce 34.3 million barrels of oil in 2004.

The higher prices aren’t just helping producers.

“We’re busy all the time now,” said Steve Salyer, a store manager at Rainbow Oilfield Supply in Wellsville, which provides parts to area oil producers. “I’m hoping that it sticks around for a while. I think it is about time that the small guys can compete again.”

Landowners whose property has wells are benefiting from the prices, too. They typically receive 12.5 cents for every dollar’s worth of oil that is pumped from their land.

“That’s money for farmers to go buy tractors and other equipment,” Carr said. “What’s going on right now is really a big deal for the rural economy of the state.”

The prices also are helping the state’s coffers.

Richard Cram, director of policy and research for the Kansas Department of Revenue, said the state’s oil severance tax collections were up about 15 percent. If that trend continues for the fiscal year, the state would collect $21.5 million in oil severance taxes, 15 percent more than the $18.7 million that state officials budgeted to receive.

“We’re definitely getting more than we thought we would, but unfortunately the severance tax is still a very small part of the state’s budget,” Cram said.

The state charges a 4.33 percent severance tax on oil pumped in Kansas, although wells that produce less than five barrels per day are exempt from the tax.

Carr said the state’s oil industry was long past its peak of 124 million barrels, which were produced in 1956. But he said current prices should keep the oil industry a significant player in the state’s economy for many years.

“With prices like this, I think Kansas can produce oil and gas until we don’t need it anymore,” Carr said.

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