By JOHN P. TRETBAR
Baker Hughes reported 928 rigs actively drilling coast to coast, down five oil rigs. The number of active horizontal rigs was down six on the week. Canada reported 212, an increase of three gas rigs. Independent Oil & Gas Service reports 38 active rigs across Kansas, 14 east of Wichita (unchanged) and 24 in the western half of the state (down one). In Stafford County, operators report drilling ahead at one site, they’re moving in rotary tools at another, and they’re moving in completion tools at two more.
Operators filed 19 permits to drill at new locations across the state last week, 12 in eastern Kansas and seven west of Wichita (including one in Barton County and one in Ellis County). So far this year, we’ve seen just 1,112 new drilling permits issued across Kansas, compared to 1,852 by mid October of 2015 and just 797 by this time a year ago.
Kansas operators filed 124 new drilling permits last month, for a year-to-date total of 1,078, compared to third quarter totals of 785 permits last year, and 1,802 in 2015. There were 69 permits filed in eastern Kansas during September, and 55 west of Wichita, including three in Barton County, five in Ellis County, one in Russell County and five in Stafford County.
Independent Oil & Gas Service reported 16 well completions across Kansas last week. There were ten completions east of Wichita, and six in western Kansas, including one in Ellis County. The year-to-date total is 1,006, compared to 3,160 two years ago at this time, and just 888 last year.
Through the third quarter of this year, about one in every four completed wells across Kansas has been a dry hole. Independent Oil & Gas Service reported 27 dry holes out of 87 completions last month, for a third-quarter total of 237 dry holes out of 952 completions. There were 36 completions reported east of Wichita and 51 in western Kansas last month. Ellis County reported one completion in September. Barton County reported two completions. There was one well completed in Russell County, and three in Stafford County.
The Kansas Geological Society recognized and named two new oil fields in Kansas at its September meeting, 40 so far this year. They also recognized new pay sources in nine existing fields including the Post Rock North field in Ellis County and three fields in Ness County.
Record-setting US crude exports are creating what Bloomberg termed an “increasingly disruptive force” on international markets, with North Sea producers suffering “collateral damage.” US exports reached 1.98 million barrels per day during the week ending September 29. That’s roughly equal to the amount shipped from the North Sea. More than half went of those exports went to East Asia and nearly a third was shipped to Northwest Europe and the Mediterranean region. All three are important North Sea markets.
The publication Texas Monthly offers reporting on just how the Administration’s new tax reform plan will impact the oil patch. One big plus for the patch is the expansion of deductions for investment expenses, which taxpayers could immediately write off the cost of new investments for at least five years, to incentivize domestic investment. Under the new plan, oil and gas companies will continue deducting Intangible Drilling Costs and will get to deduct other investment costs as well. Some deductions will go away under the new plan, including one for domestic manufacturing. These deductions cost the federal government about $152 billion per year overall, of which $1.25 billion comes from the fossil fuel sector. The tax plan would also exempt overseas profits, which would offer big benefits to companies with international oil and gas operations.
North Dakota’s oil production rose 3.5 percent in August, hitting the highest monthly mark in over a year. The state pumped 1.085 million barrels of crude per day in August, up nearly 40,000 barrels from the month before, according from the Department of Mineral Resources.
A new report says more and better inspections of freight railroad tracks and greater training for emergency workers are needed to address the continuing risk of fiery oil and ethanol train crashes. The report by the National Academies of Sciences says preventing derailments is imperative. Derailments are overwhelmingly caused by track wear and defects.
An economist this week warned CNBC that China will “compel” Saudi Arabia to trade oil based on the Chinese currency the yuan. With Chinese demand set to dwarf US demand, Carl Weinberg of High Frequency Economics says once this happens, the rest of the international market will follow suit, and abandon the US dollar as the world’s reserve currency.
China is the world’s largest importer of oil, due largely to purchases for its strategic petroleum reserves, now over 850 million barrel. Reuters reports China has spent $24 billion since 2015 for its reserves. IEA announced Chinese oil imports hit 9 million barrels per day in September. That , along with new tensions in the Middle East propped up prices Friday, with US crude posting a 2% weekly gain, and the international benchmark jumping 4% week over week.
A Miami businessman pleaded guilty in Houston to federal bribery charges in a corruption scheme involving Venezuela’s state-run energy company. He is the tenth person to be snared in a federal probe of foreign corrupt practices involving PDVSA according to a news release from the Acting U.S. Attorney. Fernando Ardila Rueda admitted to offering bribes to illegally secure contracts from the national oil company. He pleaded guilty to violating the Foreign Corrupt Practices Act, with sentencing scheduled Feb. 8.
OPEC crude production hit the second highest monthly level this year in September, returning to growth after falling in August for the first time in five months. OPEC’s 14 members pumped 32.75 million barrels a day in September, up about 88,500 barrels, according to independent sources cited in the group’s monthly report. Nigeria and Libya, both exempt from the cartel’s production cuts, led the gains with monthly increases of about 50,000 bpd each. The cartel on Wednesday also raised its forecast for world oil consumption in 2017 and 2018 for a third-straight month. OPEC forecasts the world’s appetite for oil will grow by 1.5 million bpd this year and 1.4 million bpd in 2018. It cited higher-than-expected demand in China and other developed nations this year, and an improving economic outlook in Russia and China next year.