By JOHN P. TRETBAR
The government reported record U.S. crude production for the second week in a row. The Energy Information Administration says operators produced 10.9 million barrels of crude oil per day last week, equal to the week before, which was the highest weekly figure ever.
The United States has once again surpassed Saudi Arabia as the world’s largest holder of recoverable oil. The research firm Rystad Energy reports the US has added close to 50 billion barrels to its total over the last year and now holds an estimated 310 billion barrels of recoverable oil with current technologies, equal to 79 years of US oil production at present output levels. The report credits the rise mostly to a doubling of hydraulic fracturing operations in the Permian basin. Texas alone now holds more than 100 billion barrels of recoverable oil, 90% of which is from shale or other tight formations.
Operators across Kansas filed 43 new drilling permits last week, 27 east of Wichita and 16 in western Kansas, including one each in Ellis and Russell counties. Independent Oil and Gas Service reports 21 new well completions in eastern Kansas and 27 west of Wichita for a weekly total of 48 completions, 702 so far this year. There were three wells completed in Ellis County last week and one in Stafford County.
Baker Hughes reported 1,052 active oil and gas drilling rigs across the US, down one oil rig and six seeking natural gas. The count in Louisiana dropped four rigs. Oklahoma dropped by two and Texas was down one.
Independent Oil and Gas Service reported 18 active rigs in eastern Kansas, up five for the week, and 30 west of Wichita, up two. Drilling was underway at one lease in Ellis County. They’re moving in completion tools at five sites in Barton County, and five in Ellis County.
OPEC and its allies agreed to raise production by about 1 million barrels per day. This marks a compromise with Russia, which wanted bigger increases, and Iran, which doesn’t have the spare capacity to take advantage of the hikes.
A power outage last week at Syncrude Canada’s oil sands facility near Fort McMurray, Alberta took the facility offline at least through July. With the site’s 360,000 barrels per day production offline, space should open in the region’s pipeline capacity, and that could reduce the discounts on Canada’s heavy crude.
The oil patch in Oklahoma is mirroring earlier reports in Texas: across the country we’re producing more oil and gas with fewer employees. A report from the Oklahoma City branch of the Federal Reserve Bank of Kansas City says productivity in the U.S. oil and gas extraction sector has more than doubled in five years. In both Oklahoma and the United States, total oil and gas production is now about 10 percent higher than its previous record highs reached in mid-2015. Despite that, the report notes that rig counts and oil and gas employment in both Oklahoma and nation remain well below previous peaks.
Pipeline capacity may turn out to be the biggest obstacle to U.S. and Canadian production growth. Crude-by-rail exports from Western Canada to the U.S. reached a three-year high in March of just over 170,000 barrels per day according to the Canadian Press. Producers had been forced to accept bigger price discounts and, in some cases, curtail production, as export pipelines filled to near capacity earlier this year. Takeaway capacity is also reaching critical in the Permian Basin, where Goldman Sachs writes that producers could see discounts of around $20/bbl well into next year.
Reuters reports operators are returning to old plays, long past their peak, armed with new technology from shale operations. Wildhorse Resource Development is among the operators giving the Austin Chalk formation a second look using technology developed for fracking shale. Production from the Austin Chalk jumped 50% year-on-year to 57,000 barrels per day last year. It was just 3,000 barrels per day five years ago.
Wichita oil man Robert E. Campbell has donated $1 million to the Kansas State University College of Business Administration. K-State will name the dean’s suite in its business school in honor of Mr. Campbell, who graduated from KSU in 1950. Campbell is 93.