Oklahoma is continuing to live up to its reputation as an oil and natural gas state in 2012.
Drilling activity has increased this year as producers found opportunities to search for oil after natural gas prices hit decade-low levels in the spring.
“Our 2012 activity level in Oklahoma has averaged about seven rigs for the year, and we have made a major shift out of gas-prone areas into our new SCOOP area, which we feel will become a large, repeatable, oil-prone resource play,” Continental Resources Inc. President Rick Bott said.
In October, Continental unveiled the South Central Oklahoma Oil Province, a field it has dubbed the SCOOP.
The play, which covers most of four counties, is a portion of the Woodford Shale located below fields tapped decades ago by some of the biggest names in Oklahoma's oil-rich history.
“From midyear 2013, we plan to ramp up our activity in the SCOOP area and end the year with 12 to 15 rigs running,” Bott said. “We are focusing on improving efficiencies and reducing costs in our operations.
“We see measured but steady economic activity as drilling and production increases and the industry builds out support infrastructure.”
Many of the state's largest oil and natural gas companies have made Oklahoma a focal point of their operations.
SandRidge Energy Inc. appears to be staking its future on the emerging Mississippi Lime play in northern Oklahoma and southern Kansas.
SandRidge, which already is the leading producer in the play, announced this week it is selling much of its holdings in West Texas' Permian Basin to focus on the Mississippi Lime. Greg Dewey, SandRidge's vice president of communications and community relations, said that will be good for the state.
“We intend to drill 570 horizontal wells in the Mississippi Lime in 2013; 370 of those wells will be in northwest Oklahoma,” Dewey said. “At $3 million a well, we project generating over a billion dollars of economic activity in that area of our state alone.”
Devon Energy Corp. also is ramping up activity in the Mississippi Lime, with prolific operations in western Oklahoma's Cana-Woodford Shale. The company reported increased production from both plays in 2012.
Drilling is up across Oklahoma.
Energy companies filed 3,912 intent-to-drill applications through November, according to Oklahoma Corporation Commission records, already eclipsing last year's total of 3,732.
Intents to drill peaked in 1981 at 22,685, records show. The lowest recorded figure was 2,317 in 1945.
Oil production has been on the rise in Oklahoma since 2009, after a collapse in gas prices spurred producers to switch their focus.
The state's rig count has been relatively consistent this year, with the monthly average staying between 189 and 205 rigs, according to the Corporation Commission.
Companies working in Oklahoma produced more than 75 million barrels of oil last year, according to the Oklahoma Tax Commission, which collects gross production taxes.
The state's income from gross production taxes on oil has risen steadily over the last four years, hitting more than $530 million in fiscal year 2012, according to Tax Commission records. That helped offset a corresponding decrease in taxes tied to natural gas production, as lower prices limited exploration.
Oklahoma collected $707.3 million gross production taxes on natural gas in fiscal year 2009. That amount dipped to $305.8 million this year.
Tom Price, Chesapeake Energy Corp.'s senior vice president of corporate development and government relations, credited state lawmakers for their support of the oil and gas industry.
“With 2012 natural gas prices at decade-low levels, the Oklahoma Legislature's support for the jobs created by the oil and gas industry through severance tax reductions reflects their understanding of the critical role our industry creates in our state's ongoing prosperity,” Price said. “That support is much appreciated.”
Price also praised Gov. Mary Fallin's efforts to boost demand for natural gas.