American Oil and Gas Reporter - July 2022 - 39

ConventionSec tion: Kansas Independent Oil & Gas Association
Red-Hot Industry Rivals
Kansas Summer Heat
By Del Torkelson
RUSSELL, KS.-Championship teams
pick last in the next draft. Successful entertainers
often endure unwanted attention
when they leave home. Lottery winners
face massive tax bills.
Everyone has challenges, reflects the
woman who chairs the Kansas Independent
Oil & Gas Association, but some difficulties
are more welcome than others.
As KIOGA prepares for its annual convention,
scheduled for Aug. 14-16 at the
Century II Convention Center in Wichita,
Ks., Andrea Krauss says she prefers the
headaches of summer 2022 over the ones
of only two years ago.
" It is better to wait on a drilling rig or
a pulling unit than the flipside, where
nobody is working and we all hunker
down and just try to get by, " says Krauss,
secretary/treasurer at John O. Farmer Inc.
in Russell. " Activity is ramping back up.
Companies want to take advantage of
current prices to do some of their postponed
drilling and reworks. We are finding,
however, that it is difficult to schedule
rigs, particularly workover rigs, because
the same labor shortage hitting everyone
else is affecting our industry. "
KIOGA President Edward P. Cross
notes that key indicators confirm the anecdotal
evidence: Through May, he observes,
the state had issued 650 permits,
compared with 409 during the same
period of 2021, a 59% jump. The rig
count offers an even more striking example,
he says, with 54 rigs running in
Kansas during the first five months of
this year, compared with 21 for the equivalent
time in 2021, a 157% increase.
" It is not only oil projects; natural gas
prices are the highest they have been in
14 years, and so the industry is very busy
right now, " Cross describes. " However,
even though more rigs are available, there
simply are not enough people to run them. "
Making Hay
The specialized knowledge and skills
necessary for most oil and gas jobs limit
" Everyone is trying to make hay while the
sun shines. The main theme for this summer is
that it has been a very, very busy time for the
Kansas oil and gas industry. Everybody is
getting some work done. "
-Andrea Krauss
KIOGA Chairman
how quickly activity can grow, Cross observes.
Experienced workers are particularly
prized, he points out, and even if
one company lures a seasoned employee
away from a competitor, the industrywide
personnel pool remains the same.
Inexperienced workers, meanwhile,
require training. In 2013, Cross recounts,
KIOGA helped provide training by working
with North Central Kansas Technical
College to create an oil and gas course.
" We promised a job to everybody who
finished that program, " he recalls. " Unfortunately,
the program ended in 201415
when oil prices fell. "
Not only is there a dearth of active
field crews, but many working crews are
understaffed, Cross continues. " It takes a
short crew longer to perform a service,
which raises the price tag when you pay
by the hour, " he considers. " Material
costs are rising too. "
Krauss cites tubular goods as an example.
" They have more than doubled, " she reports.
" We bought some 23
⁄8-inch pipe in April
and paid more than twice what we did for
that diameter in April 2021. "
Fortunately, Krauss says, strong commodity
prices seem to alleviate concerns
about ballooning authorizations for expenditures
to drill, complete and produce
a well. " Our partner group has not complained
about the AFEs, " she says. " I
think that is a recognition the price environment
enables us to embark on these
activities. "
John O. Farmer is one of many companies
in the middle of a very busy
summer after delaying much of its drilling
program during the pandemic. " Now we
are trying to catch up, " she details. " This
creates an opportunity to start investigating
the potential of some of our lower-graded
locations. "
The company's internal ranking system
assigns prospects letter grades in line
with traditional scholastic grading, Krauss
explains, and while the A+ areas always
get top priority, robust oil and gas prices
are prompting the company to test areas
where the 3-D seismic data may be more
ambiguous. " We have an opportunity to
drill some B locations, " she clarifies.
" That is especially true outside development
areas; if we have prospective acreage
in a B location, current prices allow us to
drill an initial well and determine whether
the acreage offers an opportunity for further
development. "
John O. Farmer's oil-focused drilling
program is exclusively vertical, she notes,
an approach that Cross reports continues
to dominate the Kansas industry. " The
vast majority of new Kansas wells are
vertical, " he states. " Kansas has some
horizontal wells, but most of the drilling
is conventional. "
But there is a lot of it, Krauss reiterates.
" Everyone is trying to make hay while
the sun shines, " she affirms. " The main
theme for this summer is that it has been
a very, very busy time for the Kansas oil
JULY 2022 39
American Oil and Gas Reporter - July 2022

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