By JOHN P. TRETBAR
Several Kansas drilling contractors returned to active status last week with 14 rigs moving from the “pending” to the “active”column. Independent Oil & Gas Service reports a 30% increase in the number of drilling rigs moving in, rigging up, drilling or relocating: 10 in eastern Kansas, up one, and 29 west of Wichita, up eight since the last report. Operators are about to spud on one lease in Barton County and one in Russell County. Nationally, Baker Hughes reported 1,068 active rigs, up one rig. Texas and Louisiana each dropped by three rigs while the counts in North Dakota and Alaska were up two. Canada reports 200 active rigs, up nine for the week.
Independent Oil & Gas Service reported 35 new well completions for the week, 14 in eastern Kansas and 21 west of Wichita. Two wells completed in Barton County and one in Stafford County are producing pay dirt. There were two dry holes completed in Ellis County. Operators have completed 1,253 wells so far this year, which is 172 more than last year at this time. By the end of October during the boom year of 2014, Kansas operators completed 4,881 wells.
Operators filed 24 permits for drilling at new locations across the state over the last week, 1,479 so far this year. Fourteen of the new permits last week were in Western Kansas, with one each in Ellis, Russell and Stafford Counties. Eleven permits were filed in the eastern half of the state last week.
Gasoline prices are dropping locally and across the U.S. On Monday, we found self-serve regular as cheap as $2.59 in Hays and in Great Bend. Triple A reports a statewide average of $2.616 across Kansas, which is about 20 cents less than the national average. At $2.818, the national average is down nearly six cents in the last month.
At CHS in McPherson, the going price for Kansas Common crude gained a quarter on Friday to end the week at $57.75/bbl, down $1.50 from the week before.
In just over a year, shippers around the world will be faced with new rules mandating cleaner marine fuels, a shift that could hit Russian companies particularly hard. Bloomberg reports that European and American refiners are well positioned to make the change to low-sulfur output. But Russian companies have reportedly done little to prepare. Analysts say they’ll be forced to sell their sulfur-rich fuel oil at an increasing discount. In 2020, the first year of the new rules, Russia stands to lose about $3.5 billion, more than one third of their fuel export revenue last year.
The U.S. Energy Information Administration reports modest growth in U.S. inventories last week, up 6.3 million barrels to 422.8 million, or about two percent above the five year average for this time of year.
U.S. crude production dipped slightly last week to 10.873 million barrels per day. Our four week average is slightly above 11 million barrels per day.
Kansas City Southern moved more than 13,000 carloads of fuel by rail from the U.S. to Mexico in the third quarter of this year, up from just over 5,000 train cars a year ago. The spike in oil-by-rail shipments continues across the US, with 11,955 rail cars hauling petroleum products last week, according to the Association of American Railroads. That’s up slightly (+172) from last week and a 17% increase over last year. The weekly average so far this year is up 15.5%. In Canada, the weekly average so far this year is nearly 19% higher than a year ago.
The Trump administration approved a company’s plan to drill for oil in the Arctic Ocean north of Alaska, which would mark the first oil production from federal waters in the Arctic. Hilcorp Energy hopes to build an artificial gravel island for its 9-acre drilling pad, near similar oil-and-gas producing islands situated in nearby state waters. The company says the play holds as much as 150 million barrels of oil and could produce up to 70,000 barrels per day.
The government will try again next spring with oil lease sales within endangered bird habitats in Montana and North Dakota, after a judge struck down the limits placed on public comments during the first go-round. The Bureau of Land Management says the sale planned for December will be moved back to next March, to allow for open public review periods.
The Texas businessman who called himself the “Frack Master” agreed to settle with the government for nearly $24 million and serve 12 years in federal prison. Christopher Faulkner entered guilty pleas to charges of securities fraud, money laundering and tax evasion in an $80 million scheme involving hundreds of investors nationwide. According to the complaint, Faulkner bought and then sold to investors working and royalty interest in oil and gas prospects in Kansas, Texas, Oklahoma, and North Dakota. Federal prosecutors say he deceived investors about expenses and production to finance a lavish personal lifestyle.
The petroleum industry is pouring tens of millions of dollars into a campaign to defeat a Washington state initiative which would impose a carbon fee on emissions from the state’s major polluters. BP America joins two other major refiners, Phillips 66 and Andeavor, offering seven-figure donations. The total is now $25.87 million, a state record.
The Intercontinental Exchange, or ICE, has launched its West Texas Intermediate pricing guide. The Houston Chronicle reports the move could make Houston the new hub for U.S. oil pricing, as it is based on volumes produced from the Permian Basin and delivered to Houston’s refining and export hub. The Permian pumps nearly one-third of U.S. production.
Russian media reports of promised production increases in Saudi Arabia sent crude prices tumbling Tuesday, a nearly five percent cascade by noon. The Nymex benchmark futures contract dropped $3.03 to $66.33/bbl, the lowest price for WTI since August. London Brent was down $3.29 to $76.54.
The Saudi Energy Minister reportedly said his country would increase crude production to 11 million barrels a day, up from 10.7 million barrels a day now. That would surpass current U.S. output of 10.89 million barrels per day. New production figures due from Washington on Wednesday. Russia currently leads the world with production of 11.36 million barrels per day.