The oil and natural gas industry in Kentucky could see a rebound in the next year or two, according to industry officials, as companies seem to be showing a renewed interest in the state’s natural resources.

A new report released by the Kentucky Oil and Gas Association shows the economic impact of the oil and gas industry in Kentucky, which in 2011 contributed more than $34 million in severance taxes. Perry County, where more than 1 million barrels of oil and just less than 100 billion cubic feet of natural gas were produced from 2001 to 2011, was responsible for approximately $23 million in taxes.

Natural gas in Kentucky took a hit in 2011, however, as prices plummeted to around $2 per unit, noted Andrew McNeill, executive director of the Kentucky Oil and Gas Association. Companies weren’t showing an interest in new natural gas exploration in Kentucky because it wasn’t economical to do so at the time, he said. In early 2012 for instance, EQT announced it would halt all new drilling in the state and concentrate on production in the Marcellus Shale region in West Virginia and Pennsylvania.

“Now we’re starting to see companies that had not been investing or drilling in the state are starting to come back and do some new exploration,” McNeill said. “We’re seeing some of the revitalization of the industry back in Kentucky.”

McNeill noted EQT, the largest producer of natural gas in Perry County, recently announced the company would now drill 50 new wells in Kentucky in 2013, and while his organization certainly would like to see more production, he views that as a step in the right direction from the industry’s outlook in 2011.

“I think what it’s telling us is that we’re making a comeback from a low point in 2009-2010, 2011-2012,” he said.

While each of the top 15 gas-producing counties in the state are located in Eastern Kentucky, the state’s western counties ranked high in oil production (Perry County ranked 6th). McNeill said because oil prices have remained high, at near $92 per barrel, more companies are showing an interest in production in Kentucky.

“A lot of folks have diversified and taken equipment for gas exploration and started developing oil opportunities,” he said.

In addition to tax revenues, the oil and gas industry also has a direct effect on the labor market in the state, according to the association’s report. More than 9,000 people in Kentucky were employed either in the direct extraction of oil and gas, or through drilling or support operations in 2011. Average salaries topped out at $61,448 for oil and gas extraction, while support industry salaries stood at just over $50,000.

Dr. Paul Coomes, a professor for the University of Louisville who conducted research for the association’s report, said as prices for natural gas rebound from the lows of the past few years, he also expects the industry in Kentucky to rebound. The number of producing wells in the Kentucky dropped to a five-year low in 2011.

“Kentucky has been a steady producer of oil and natural gas for over a century. Today, the industry is a major economic engine, particularly in Eastern Kentucky,” Coomes said. “The region will get an economic boost as natural gas prices recover from the extremely low levels of the last few years.”