By JOHN P. TRETBAR
Producers in Kansas who sell oil outside the state should take note of a ruling from the Third Circuit Court of Appeals last week. The court upheld a district court ruling in favor of companies who bought oil from SemCrude a decade ago just prior to the Tulsa firm’s bankruptcy.
That oil came from mostly Kansas producers who hadn’t been paid. Their security interests in the oil had been “perfected” under Kansas law, but not in Oklahoma and Delaware, where SemCrude did business. The companies who bought that oil from SemCrude were off the hook, according to the ruling, because they had no knowledge of the security interests in Kansas. The National Law Review notes that the Third Circuit’s decision should serve as a stark warning for oil producers to not rely on automatic perfection provisions of state law, and to take efforts to put subsequent purchasers on actual notice. Kansas producers lost millions of dollars in the bankruptcy settlement.
Baker Hughes reported a drop of one oil rig and a drop of one seeking natural gas in it’s national weekly total Friday. There are currently 950 active rigs nationwide. Canada has 206 active rigs, up 15. Independent reports that the Kansas active rig count was unchanged at 36. They’re drilling at one site in Barton County and moving in completion tools at two more. In Ellis County, operators report drilling ahead at one site, and they’re moving in completion tools at another.
Baker Hughes, widely regarded as authoritative, has not reported a single active drilling rig in Kansas in about a year, while Independent Oil & Gas has reported between two and three dozen active rigs during that period. On Friday, Baker Hughes didn’t even list Kansas among the 14 “Major State Variances” in its weekly report.
New drilling permits (and new well completions) in Kansas continue to outpace last year’s dismal numbers, but are still well behind the totals from two years ago. Operators filed 30 permits for drilling at new locations last week. There were 13 in eastern Kansas and 17 west of Wichita, including one new permit each in Barton and Ellis County. So far this year, there are 782 new drilling permits on file, compared to just 480 a year ago and 1,356 two years ago.
Independent Oil & Gas Service reported a total of 23 completions statewide last week, 13 of which were dry holes. There were 16 completions in eastern Kansas and seven in western Kansas, including two in Barton County. One of those was a dry hole. Year-to-date, the state has seen 740 new well completions, which is up from the 661 completions reported last year at this time, but well below the 2,631 completions reported two years ago at this time.
The energy-industry downturn cost the State of Wyoming 25,000 workers, about ten percent of its total workforce, between 2014 and 2016. The Casper Star-Tribune reports a slight uptick in the oil and gas employment today, up 1,700 jobs compared to a year ago.
A judge deciding whether to shut down the Dakota Access pipeline while more environmental review is completed says he’ll allow North Dakota’s main energy trade group to weigh in. The North Dakota Petroleum Council and others maintain their input is important because none of the parties in a lawsuit speaks for the general oil industry. Judge James Boasberg might also allow some national energy and manufacturing groups to have a say, though he didn’t immediately rule. Roughly half of the state’s daily production is being shipped through the pipeline., and the council maintains a shutdown “would pull the rug out from under the North Dakota oil industry.”
The Trump administration has not specifically said it will target Venezuela’s oil industry for sanctions, but they’ve gone after top Venezuelan officials, and US refiners worry that the country’s oil industry could be next. The San Antonio Express-News reports officials on the Texas coast are mobilizing against such a move with a letter to the president. Such a move could have a big impact along the Gulf Coast including in Corpus Christi, Texas, where Venezuela’s Citgo refines 157,000 barrels per day and employs more than 1,000 people. Citgo refines a total of nearly 750,000 barrels of crude oil in the US, at that site and two others in Louisiana and Illinois. The Chairman of the Port of Corpus Christi Commission and others are warning the president of a significant economic impact on refineries in the US that are operated by Citgo. Venezuelan lawmakers warned Tuesday the country could be headed for a “catastrophic” meltdown if the United States limits or blocks its crude exports amid an escalating struggle over the fate of the socialist administration.
The “Raging Grannies” have lost their case in federal court in Spokane, Washington. That’s the nickname of a group of people who filed a lawsuit seeking to stop coal and oil trains from moving through Spokane. A federal judge last week dismissed the lawsuit that challenged the primacy of the Interstate Commerce Commission Termination Act of 1995. The lawsuit was filed after failed efforts to ban the trains using local initiatives. The controversy culminated with the arrests of three women, all grandmothers, who blocked rail lines in the Spokane area last August.
Three ocean-front California local governments are taking legal action against oil companies, saying they’ve known for almost 50 years that fossil fuels are changing the climate and causing sea rise. Northern California’s Marin and San Mateo counties and the city of Imperial Beach in Southern California filed the complaints last week in California Superior Court, naming 37 energy producers.