By JOHN P. TRETBAR
Baker Hughes last week reported the first drop in its US oil rig count since September: 756 active oil rigs, down two. There were 184 rigs drilling for natural gas, up one. There are 189 active oil and gas rigs in Canada, up 19. Independent Oil and Gas Service reports 14 active rigs in eastern Kansas, up one, and 22 west of Wichita, down two. By Friday they were drilling at one site in Stafford County, reported drilling ahead at sites in Ellis and Russell counties, and they’re moving in rotary tools at one site in Barton County.
Independent Oil & Gas Service reported 46 new well completions last week. That’s 661 so far this year. There were 12 completions in eastern Kansas and 34 west of Wichita, including two in Barton County and three in Ellis County.
Operators filed 13 permits to drill at new locations across Kansas last week, that’s 710 so far this year. There were seven new permits east of Wichita, and six in western Kansas, including one in Barton County and two in Ellis County.
We’re expecting the formal final tallies for the month of June later on, but the weekly reports from Independent Oil & Gas Service confirm some trends in Kansas oil and gas production for the first half of this year (at least through June 29). As you might expect, comparisons to the totals from the last couple of years are not impressive. Blame it all on the price of a barrel of crude, down from over $105 dollars a barrel at the end of June of 2014 to just over $46 today. Statewide, operators have completed 661 wells so far this year, which is up from 635 at this time last year, but well below the 2,492 in June of 2015 and the 3,058 by midway through 2014. In Barton County, there have been 22 well completions this year, compared to 76 through the first half of 2014. Ellis County reports 26 completions, compared to 83 in 2014. In Russell County, producers have completed just 11 wells, compared to 56 three years ago. Stafford County notches 14 completions, compared to 41 through June of 2014.
New drilling permit totals also lag behind 2014’s numbers. Statewide, producers filed 710 permits to drill at new locations through June 29, up from 432 last year at this time, but way down from the 1,260 permits filed two years ago, and 3,802 at this time three years ago. In Barton County there were 21 new drilling permits filed, compared to 68 through June, 2014. Ellis County reports 25 new permits, compared to 62 three years ago. In Russell County, operators filed 13 new permits, compared to 52 by the end of June 2014. In Stafford County, 13 permits filed so far this year, compared to 42 by June of 2014
Chesapeake Energy is dedicating almost half of its capital expenditure program to its big new play in the Eagle Ford and Austin Chalk in South Texas. The company believes it may have more than 2 billion barrels of oil equivalent, and says they have more than 25 years of potential drilling targets in South Texas.
Houston’s Linn Energy and Tulsa’s Citizen Energy will combine 140,000 net acres of contiguous oil land across Oklahoma, with each taking half of the equity in the new company that will drill up the acreage. Officials with the Houston firm tell the Houston Chronicle Roan Resources (the new company) will focus solely on the SCOOP and STACK shale plays with a large footprint across the region. The firm plans to drill 58 wells this year with five rigs. They expect to take the company public early next year. The companies said the acreage has roughly 2 billion barrels of oil equivalent in resources that could last two decades.
There’s an unusual side effect of the oil glut reported by Reuters this week. Pipeline operators are offering steep discounts to new short-term customers to keep their lines full. That doesn’t sit well with customers whose long-term contracts are now more expensive than spot purchases. Some of those pipeline firms are offering prices as low as 25 percent of federally regulated rates, creating a secondary market that undercuts shippers with long-term contracts. Eight pipeline operators contacted by Reuters declined to comment on their discounted spot pricing. The discounts emerged after a global glut and crashing oil prices caused many shippers to let their pipeline contracts lapse or declare bankruptcy.
Oil-eating microbes have consumed a considerable portion of the Deepwater Horizon oil spill. A new study shows the chemicals used to disperse the oil kept it underwater, making it more available to the microbes that live in the deeper portions of the ocean. Scientists hope the discovery can help with the mitigation of future spills.
In what’s believed to have been a first, a supertanker three football fields long and six stories high navigated through the port of Corpus Christi, Texas last month. According to the San Antonio Express News, the tanker didn’t pick up any oil. Instead it docked at Occidental’s terminal to determine if some of the world’s biggest carriers could start ferrying Texas oil to foreign buyers. The shipping upgrade is necessary after a surge in production from U.S. shale fields brought more light sweet crude than Gulf Coast refiners could handle.
The U.S. Environmental Protection Agency and Colorado regulators are seeking potentially steep fines, upwards of $100,000 a day, for several years worth of alleged air pollution violations by PDC Energy of Denver. Federal and state officials accuse the company of failing to control air pollution at dozens of oil tank sites.