By JOHN P. TRETBAR
Baker Hughes reported a steep drop in its weekly active rotary rig count on Friday to 991 active rigs. That’s down 20 oil rigs and one seeking natural gas. The count in Texas was down nine rigs, North Dakota was down three. Canada was down three to just 63 active rigs.
Independent Oil & Gas Service reported an increase of five active rigs in western Kansas last week, to 27. East of Wichita there were four active rigs, down two.
In mid-morning trading Monday, the benchmark Nymex crude futures contract was down 19 cents to $63.11 per barrel. London Brent was down 20 cents to $71.95.
Regulators approved 21 new permits to drill across the last week, 11 in eastern Kansas and ten west of Wichita, including one in Barton County. So far this year, operators have received 28 permits for drilling at new locations in The Sunflower State.
Independent Oil & Gas Service reported 46 newly-completed wells in Kansas last week, 517 so far this year. There were 18 in the eastern half of the state and 28 in Western Kansas, with one new completion reported in Barton County.
The Energy Information Administration last week reported an increase in U.S. crude-oil inventories, up five and a half million barrels to 460.6 million barrels. U.S. stockpiles are at their highest level since October of last year. Inventories are still about equal to the five-year seasonal average.
EIA said imports were up more than a million barrels to 7.1 million barrels per day for the week. Imports have averaged about 6.6 million barrels per day over the last four weeks, or nearly 20% less than the same four-week period a year ago.
The government reported domestic crude-oil production of 12.17 million barrels per day for the week ending April 19. That’s up about half a million barrels per day from the week before.
EIA predicts domestic production will average 12.4 million barrels per day for the year 2019 and 13.1 million barrels per day next year. The government estimates production in March was 12.1 million barrels per day.
The government is predicting slightly lower gasoline prices this summer driving season than we had last year. According to the U.S. Energy Information Administration’s Short Term Energy Outlook, pump prices will average $2.76 a gallon from April through September, compared the $2.85 a gallon in 2018.
Oil by rail traffic continues to spike in U.S., due mainly to the inadequate pipeline capacity in the large producing basins in Texas and North Dakota. The American Association of Railroads reports a nearly 38% increase in such traffic for the week ending April 20 compared to the same week last year. About 12,900 rail cars conveyed petroleum and petroleum products. The year-to-date total was up 23.6% compared to the same period in 2018. Canada’s oil-by-rail traffic also continues to rise, up more than 26% compared to the same week last year.
Exxon Mobil is the latest company to raise concerns that a stockpile of U.S. government crude is tainted with poisonous gas. Bloomberg reports the energy giant is the fourth buyer to complain to the government about “extremely high levels” of hydrogen sulfide in a cargo purchased last year from the Strategic Petroleum Reserve. Emails obtained under the Freedom of Information Act note that in some cases, the gas levels were 250 times higher than U.S. safety standards.
The government said it is working with Exxon to resolve concerns. An Energy Department spokesman disputes come of the claims, claiming the high levels were the result of contamination during shipping. But officials acknowledge spending about one million dollars to clean up a contaminated cargo sold to PetroChina. The prospect of tainted crude in the reserve complicates future sales of U.S. oil, a key tool for funding government programs. The government plans to sell 226 million barrels from the reserve over the next eight years.