By JOHN P. TRETBAR
Rig counts across the US were lower Friday, but higher in Kansas, especially the eastern half of the state. Independent Oil & Gas Service reported a nearly six percent increase in the number of active drilling rigs across the Sunflower State over the last week. There were 15 active rigs in eastern Kansas, up four, and 21 west of Wichita, down two. Operators report drilling ahead at one site in Stafford County, and they’re moving in completion tools at one site in Stafford County, one site in Barton County, and three sites in Ellis County. Baker Hughes reported 946 active rigs across the country, a decrease of five oil rigs but an increase of one gas rig. Canada reports 214 active drilling rigs, down six.
Independent Oil & Gas reports ten well completions across the state last week, one in eastern Kansas and nine west of Wichita including one new completion in Stafford County. So far this year, operators have completed 830 wells, compared to 719 at this time last year, and 2,768 two years ago at this time.
Operators filed 23 permits to drill at new locations across Kansas last week, 882 so far this year, including 13 east of Wichita and 10 in western Kansas. There’s one new permit in Barton County and two in Stafford County.
The Kansas Corporation Commission is expected to rule within a couple of months after a hearing last week on that controversial saltwater disposal well proposed in Morris County. A lawyer for opponents of the project asked commissioners to reject the application or reduce the allowable pressure. KCC staff surprised some observers by proposing to reduce the volume and pressure proposed by Quail Oil & Gas. The company points out there have been saltwater disposal wells in the area for decades without any earthquakes. Manager Wray Valentine also said their proposal calls for much less water than is being dumped in wells in southern Kansas and northern Oklahoma, where earthquake activity has spiked.
The first sand mine serving the oil patch in West Texas is open for business in Kermit, Texas. The $325 million mine is owned by Houston sand supplier Hi-Crush Partners. Over the next 18 months, rivals including U.S. Silica Co. and Fairmount Santrol plan to build more mines that will send millions of tons of sand into the Permian Basin. This allows oil producers to circumvent expensive rail lines that transport white sand from Wisconsin, one of the costliest obstacles in West Texas.
The volume of natural gas being “flared” in North Dakota is creeping back up. In June the amount of gas being burned at the well head reached 222 million cubic feet per day in June, up 31% from the same month last year. That’s far lower than the peak in 2014. Most other oil-producing states don’t allow long-term flaring. Lawmakers passed regulations in 2014 to limit flaring, but it appears some producers are not following the new regulations. The state’s oil fields have historically lacked the pipelines and processing plants needed to get that natural gas to market.
North Dakota will get $10 million in federal funds to help pay for law enforcement expenses during months of pipeline protests. The state faces up to $38 million in bills for protest-related costs. It’s not yet clear whether state taxpayers or even the pipeline developer will pay the rest. Senator John Hoeven announced the grant from the Justice Department’s Emergency Federal law Enforcement Assistance Program.
It might surprise you to learn that in Colorado the biggest source of complaints against the oil and gas industry is noise. In 2013 state regulators fielded 252 complaints. Last year, 419 complaints were filed with the state. Through July of this year, the tally is already higher — 704 complaints. The biggest reason for the jump in those complaints is not concern about water safety or fear over explosions. It’s noise. More than one noise complaint per day on average has been filed so far this year.
Our energy exports continue to grow. US crude exports are now going to India and South Korea for the first time, a significant change to global oil flows.
Total is buying Maersk’s oil and gas business in a $7.45 billion deal which the French energy company said would strengthen its operations in the North Sea and boost earnings and cash flow. Maersk Oil has reserves equivalent to around 1 billion barrels of oil.
Bloomberg reports state-owned Citgo has started to make quiet inquiries to buy Canadian crude for its refineries in Texas and Louisiana. The imports would be used to replace dwindling shipments from Venezuela, which is is redirecting more of its shrinking supply to Russia, China and India to repay loans. Analysts say Canadian crude is a natural replacement, because it’s equally heavy and high in sulfur.
Venezuela is handing over unprecedented control of its state-owned oil assets to Russia, its longtime financial backer in an effort to stave off insolvency and economic collapse. The socialist government has offered an ownership stake in up to nine of Venezuela’s most productive oil projects, according to Reuters. The deals give Russian President Vladimir Putin an even stronger foothold and, potentially, a way to skirt U.S. economic sanctions.