By JOHN P. TRETBAR
Crude prices posted their sixth consecutive weekly loss on Friday. Since early October, the selloff has cut more than 20 percent from the price of London Brent, the international benchmark, and 25% off U.S. prices.
Independent Oil & Gas Service reports drilling underway at one lease in Ellis County and one in Stafford County. Operators are preparing to spud one new well in Barton County, two in Ellis County and one in Stafford County. In Western Kansas, there are 33 rigs moving in, rigging up, drilling or relocating, up three for the week. The count east of Wichita was unchanged at 15 active drilling rigs. The number of rigs shutdown awaiting drilling contracts or stacked was also higher. The inactive rig count for the week was up 13 at 162.
There are 33 new drilling permits on file this week across the Sunflower State, 1,616 so far this year. There were 22 in eastern Kansas and 11 west of Wichita, including two new permits in Ellis County, one in Russell County and one in Stafford County.
Independent Oil & Gas Service reports 25 newly-completed wells across Kansas for the week, 1,351 so far this year. Out of 17 completions in western Kansas, six were dry holes. Operators completed one dry hole in Ellis County, and two wells in Barton County, with one dry hole.
The U.S. Energy Information Administration reported its highest weekly crude oil production totals ever last week, just shy of 11.7 million barrels per day, an increase of 111 thousand barrels per day over the week before. Production is more than two million barrels per day higher than it was a year ago. U.S. commercial crude oil inventories increased by 10.3 million barrels from the previous week to 442.1 million barrels, and about five percent above the five year average for this time of year.
Crude oil imports were down again, a drop of 87 thousand barrels last week. Over the past four weeks our oil imports averaged about 3.1% less than the same period last year.
The government said gasoline inventories dropped 1.4 million barrels last week but remain about 7% above the five year average.
The U.S., Russia and Saudi Arabia are pumping record volumes of crude oil, and in a monthly update, the International Energy Agency said global supply will significantly outpace demand. OPEC and its partners are discussing a proposal for their meeting next month to cut output by up to 1.4 million barrels per day.
Analysts now say Canadian producers could lose $3.78 billion in oil-sands royalties by the end of next year. Pipeline and rail capacity shortages have increase the discount to WTI of Western Canadian Select to 40%. Cenovus Energy, one of Alberta’s biggest producers, says the province already has legislation on the books that would allow them to require drillers to cut output temporarily to alleviate the glut.
Members have approved the merger of Oklahoma’s two largest oil-and-gas trade groups. For now, the merged Oklahoma Independent Petroleum Association and Oklahoma Oil and Gas Association will become “OIPA-OKOGA.” They’ll consolidate operations in the OIPA building in OKC, and promise a new name early next year.
North Dakota producers are bracing for a perfect storm this winter, as record production fights record low prices. The state’s all-time high production is once again overwhelming pipeline takeaway capacity, and with frigid weather likely to disrupt rail loadings, prices could head even lower. Reuters reported Bakken crude traded at a record $20-per-barrel discount to U.S. crude futures last week.
The State of New Mexico is researching ways to streamline regulations to encourage the treatment and reuse of produced wastewater. According to a draft white paper, the state’s oil and gas industry generated nearly 38 billion gallons of wastewater last year. Officials expect that flood to grow as the boom continues.