By JOHN P. TRETBAR
US oil production reached 9.64 million barrels per day in October, a 46-year record. The highest U.S. production based on monthly government data is above 10 million barrels per day, which dates back to 1970.
The Government data show New Mexico was the number three oil producer in the US in October, more than 16 million barrels, thanks to production in the Permian Basin. Texas led the way with 116 million barrels. North Dakota pumped 36 million. The Energy Information Agency placed Oklahoma fifth on the state production list with more than 15 million barrels. Kansas production came in at number ten with 2.9 million barrels in October.
A research firm says the United States is poised to become the planet’s leading crude producer. Rystad Energy says the US could ramp up crude oil production by 10% in 2018 to about 11 million barrels per day. CNN reported surging shale oil output should allow the United States to dethrone Russia and Saudi Arabia as the planet’s leading crude oil producer. The U.S. hasn’t been the global leader, nor ahead of both Russia and Saudi Arabia, since 1975.
ONEOK recently announced plans for a new 900-mile natural gas liquids pipeline that terminates in our area. The Tulsa-based company says other pipelines from North Dakota are at capacity and production is increasing there. The project is also expected to play a role in reducing natural gas flaring, a recurring problem in the booming North Dakota oil patch. The proposed Elk Creek Pipeline will have the capacity to transport up to 240,000 barrels per day of natural gas liquids from a terminal near Sidney, Mont., to the company’s facilities in Bushton, Kansas.
Opponents of TransCanada’s proposed Keystone pipeline expansion have filed their appeal of a decision by Nebraska regulators to okay an alternate route through the state for the project. Their attorney told Reuters last week that TransCanada’s approval was for a “route not supported by an application.”
Interior Secretary Ryan Zinke announced a proposal to greatly expand offshore drilling in the US. The proposal includes 47 potential lease sales for virtually all acreage on the Outer Continental Shelf, including most of the Atlantic, Pacific, Arctic and Gulf coasts. The government proposes making over 90% of outer-shelf acreage available for exploration, including areas of the Atlantic and Pacific that have not had lease sales since the 1980s.
Oil prices were trading in a narrow range Monday morning, but domestic prices remained at two year highs, approaching $62 per barrel Monday. The market remained in a state of backwardation, with later-term futures contracts cheaper than the near-month contract. By Monday, the spread between the near-month and next-month futures price was about two cents per barrel. On Jan. 4, the spread reached 16 cents, the highest backwardation in more than three years.
Kansas Common at CHS in McPherson starts the week at $51.75 per barrel, after dropping half a dollar on Friday.
The weekly rig counts from Baker Hughes show 924 active rigs, a drop of five oil rigs. (The number of rigs actively drilling for natural gas was unchanged at 182). Independent Oil & Gas Service reported a nearly 20% increase in the statewide rig count last week. There were nine active rigs in eastern Kansas, which is down three, and 28 active rigs west of Wichita, up nine rigs. Operators are moving in completion tools at a pair of leases in Barton County, two sites in Ellis County, one in Russell County and two in Stafford County.
In the first weekly count of the new year, five permits were filed for drilling at new locations across Kansas, three east of Wichita, and two in the western half of the state.
Independent Oil & Gas Service reported 26 new well-completions for the week ending Jan. 4, 12 in eastern Kansas and 14 west of Wichita. There was one completion in Ellis County and there were two in Stafford County.
According to a Shanghai-based news portal, oil-futures trading could start as soon as January 18 on the new Shanghai International Energy Exchange, which will allow Chinese buyers to lock in oil prices and pay in local currency, and allow foreign traders to invest, a first for China’s commodities markets.
A new pipeline link between Russia and China started operations on Jan. 1. According to Chinese news sources, the move doubles the crude shipments between the two countries. Last year for the first time China imported more crude than the US, and Russia has already become China’s biggest supplier. The pipeline extension into China will increase Russia’s exports there by nearly 220 million barrels a year.