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News From the Oil Patch, Aug. 28

By JOHN P. TRETBAR

Despite a devastating tropical storm and a drop in the national active drilling rig counts, domestic crude futures prices were lower by mid-morning Monday. The Nymex benchmark contract was down 74 cents to $47.13/bbl. The international benchmark fared slightly better. London Brent was off 19 cents to $52.22. At CHS in McPherson, Kan., the price for a barrel of Kansas Common crude on Friday was up a quarter to $38/bbl.

US gasoline futures have jumped to two-year highs. Triple A says the national average retail price for a gallon of regular on Monday was $2.368, up a half penny over Sunday and 3.4 cents higher than a week ago. The average across Kansas actually dropped three tenths of a cent Monday to $2.21 a gallon. The average price in Hays was $2.214 and in Great Bend, $2.192. Both are lower than last week.

Tropical storm Harvey forced the shutdown of more than one tenth of the US refining capacity. Refineries along the Houston ship channel were shut down early and are now surrounded by water. On Sunday, S&P Global Platts Energy said there had been no reports yet of damage to refineries in Corpus Christi, near where then Hurricane Harvey hit Friday night. It could take a week or two to restart those refineries. Analysts say some could decide to perform seasonal maintenance, which would delay restarts even more. Over the weekend the EPA suspended some emission-related formulation regulations, and that could help offset shortages of gasoline and diesel fuel. The Web site GasBuddy.com activated its crowd-sourced Gasoline Availability Tracker to help you identify areas with shortages and where gas is available.

Independent Oil and Gas reported a drop in the Kansas drilling rig count for the week. There were 13 active rigs in eastern Kansas, down two, and 22 west of Wichita, which is up one. Nine Kansas contractors are working out of state, three more than last week. There’s a lot of activity in Stafford County: with drilling underway at two sites, and drilling ahead at one more. Contractors reported drilling ahead at one site in Barton County and one in Ellis County. Baker Hughes said last week the national rig count was 940, down four oil rigs and two seeking natural gas. The count in Canada was 217, up three rigs.

Independent reported 17 new well completions across Kansas last week. That’s 847 so far this year. There were seven completions reported in eastern Kansas and ten west of Wichita, including two in Barton County and one in Ellis County.

Operators filed 17 permits to drill in new locations across the state over the last week, nine east of Wichita and eight in western Kansas, including one in Barton County. So far this year we’ve seen 899 new drilling permits, compared to 623 at this time last year, and 1,607 at the point in 2015.

The company that built the Dakota Access oil pipeline filed a lawsuit in North Dakota federal court against Greenpeace and other groups, alleging that they disseminated false and misleading information about the project and interfered with its construction. In its lawsuit, Texas-based Energy Transfer Partners requests damages that could approach $1 billion. According to USA Today, the company alleges the groups’ actions interfered with its business, facilitated crimes and acts of terrorism, incited violence, targeted financial institutions that backed the project and violated racketeering and defamation laws. Greenpeace attorney Tom Wetterer said the lawsuit is “meritless” and part of “a pattern of harassment by corporate bullies.” Wetterer says the lawsuit is “not designed to seek justice, but to silence free speech through expensive, time-consuming litigation.”

Analysis published by the Houston Chronicle asserts that most new crude oil produced in the Permian Basin of West Texas will be exported. Analytics firm IHS Markit says oil exports are expected to triple to about three million barrels per day by 2025. Permian production is approaching 2.5 million barrels per day now, up from less than one million six years ago. But new pipeline projects are in the works to move that crude to Houston and Corpus Christi. The projects are expected to increase Permian pipeline capacity to nearly five million barrels by 2020.

Colorado Governor John Hickenlooper says the state will not offer an online map of oil and gas pipelines in the aftermath of a fatal house explosion blamed on a gas leak. Hickenlooper cited concerns about security and theft. Instead the state will require energy companies to provide that information to an existing program used to locate underground utilities for homeowners. Among a half dozen other steps announced Tuesday are efforts to get the industry to fund a program to seal off old, inactive, “orphan wells.”

North Dakota’s daily crude output fell 0.8% in June after dropping 0.9% in the previous month. The Department of Mineral Resources said daily output remained above 1 million barrels for the fifth month in a row. At the end of June, the state’s total number of producing wells reached an all-time high of 13,915. By way of comparison, last year Kansas listed 52,832 wells, and produced just shy of 104,000 barrels of crude oil per day, according to the Kansas Geological Survey.

Russian crude-oil shipments to China last month were up more than 54 percent over a year ago, marking the fifth month in a row as China’s top oil supplier. That’s about 1.17 million barrels per day according to Reuters. So far this year Russian shipments grew nearly 16 percent.

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