By JOHN P. TRETBAR
Hiring in oil and gas extraction increased for three straight months through April, the longest stretch since April to July in 2014, which was right around when oil prices peaked. Business Insider reports sustaining that pace won’t be cheap, as companies revamp production for cheaper oil and the labor market tightens.
A Pratt company pleaded guilty last week in an oil and gas fraud scheme. Sonstone Trading pleaded guilty to one count of wire fraud admitting it agreed to sell 3,000 barrels per month of crude oil. The product turned out to be raw gas oil, a by-product from the recycling of used motor oil. At sentencing, the court will determine the amount of loss, which the government says was more than $994,000. Charges against Sonstone executive David Lawson were dismissed.
We’re still waiting to see how big a hit the oil patch in Oklahoma will take in the new budget given final approval on last week. The package may not be legal. The state constitution says no revenue bill should be passed during the last five days of the session, and no revenue bill can become law without a vote of the people or a three-fourths vote in the Legislature.
Baker Hughes reported an increase of two oil drilling rigs and five targeting natural gas, for a total of 908 active rigs across the U.S. In Canada there were 93, up eight. Independent Oil & Gas Service reports 12 active rigs in eastern Kansas, up one, and 23 west of Wichita, which was down two. They’re drilling at one site in Russell County, and drilling is about to commence at another. Completion activity is underway at sites in Barton, Ellis, Russell and Stafford counties.
Operators filed 22 permits for drilling at new locations across Kansas last week, that’s 584 so far this year, up from 333 drilling permits filed at this time last year. There were 11 new permits east of Wichita, and 11 in western Kansas including four in Ellis County.
Independent Oil & Gas Service reports 16 new well completions for the week, all of them in eastern Kansas. There have been 561 wells completed statewide so far this year, compared to 557 at this time last year.
The Kansas Geological Survey this posted oil and gas production numbers through February, reporting a decline from January’s figures. Total statewide production for the first two months of the year was 5.88 million barrels according to numbers posted on the KGS Web site May 21. The January total was just over three million. County totals also declined slightly. Ellis County led the way through February with 429,000 barrels, compared to 217,000 in January. Barton County’s two month total was 276,000 barrels. Russell County produced 256,000 barrels through February and Stafford County notched 170,000 barrels.
Top oil-producing counties 2017 (through February) per the Kansas Geological Survey:
Ellis County 429K bbl
Haskell County 351K bbl
Barton County 276K bbl
Finney County 266K bbl
Russell County 256.7K bbl
Rooks County 256.5K bbl
Ness County 245K bbl
Harper County 197K bbl
Barber County 175K bbl
Stafford County 170K bbl
OPEC and other exporters may have set back their own efforts to increase prices last year by increasing exports in the weeks leading up to the cartel’s production cuts. Now that the reductions have been extended, the Saudi energy minister tells Bloomberg that OPEC’s strategy this time around is to directly target the US. Saudi exports to the US will drop below one million barrels per day next month, down about 15% from current levels. The Web site Oil Price dot com says it will take a month or two for the effects to be felt, but U.S. import data should start showing some signs of the strategy by mid-July.
Four U.S. states on the Gulf of Mexico stand to lose billions in future payments under the latest proposed budget. The White House wants to end a program that shares revenue from offshore oil and gas drilling with the states. This comes just as those payments were scheduled to expand and coastal states try to close budget gaps.
President Donald Trump also wants to sell about half of the nation’s emergency oil stockpile and open the Alaska National Wildlife Refuge to drilling as part of plans to balance the budget. Last week’s White House budget proposal reveals the administration’s policy hopes, which include ramping up American energy output. The U.S. Strategic Petroleum Reserve, the world’s largest, holds about 688 million barrels of crude oil in heavily guarded underground caverns in Louisiana and Texas. Congress created it more than forty years ago, after the Arab oil embargo caused fears of long-term motor fuel price spikes that would harm the U.S. economy. The Trump budget proposes to start selling the oil in beginning October 1st, expecting to generate $500 million. The sales from the reserve would gradually rise over the following years, peaking at nearly $3.9 billion by 2027, and totaling nearly $16.6 billion between 2018 to 2027.
Bloomberg reports on a plan to sell sanctioned Syrian crude oil through Russia to Venezuela to be refined and then sold to gas stations in the U.S. and elsewhere. The plan was never executed, and it’s unclear whether the it is still under consideration. A key player has acknowledged his role, saying he scouted out and negotiated the purchase of a closed refinery on the island of Aruba, one of the world’s largest refineries. Venezuela eventually leased that refinery. Oil trader Wilmer Ruperti said the point of the scheme was to “avoid the boycott.” He recommended a five-year contract to supply 50,000 to 200,000 barrels a day of banned Syrian crude, as well as storage capacity for another 6 million Syrian barrels.
A feature film highlighting the oil industry in the ’30s and ’40s will have several scenes shot in Big Spring and Midland, Texas. The producers of ‘The Iron Orchard’ tell KTAB Big Country that shooting in Big Spring begins on June 7. Scenes will be shot inside the Hotel Settles and other historical sites as well as on location in Midland, San Angelo, Austin and Ackerly.