By JOHN P. TRETBAR
US crude prices are on a tear, gaining more than seven dollars a barrel last week, and ending the first half of the year up more than 20% from January.
Prices were over $74 Monday afternoon, after dropping below that mark earlier in the day. The Nymex benchmark contract was up a dime to $74.25/bbl. London Brent was down $1.29 to $77.94. Kansas Common crude at CHS in McPherson starts the week at $64.50/bbl, after gaining 75 cents on Friday.
Baker Hughes reported 1,047 active drilling rigs across the U.S. Friday, a drop of four oil rigs and one seeking natural gas. The count in Texas was down three, and in North Dakota was down two rigs from the active list last week. Independent Oil & Gas Service reported 16 active drilling rigs in eastern Kansas, down two, and 31 west of Wichita, up one. Operators are moving in completion tools to five leases in Barton County and six in Ellis County.
Operators filed 37 new drilling permits for the week ending June 28, 806 so far this year, with 21 east of Wichita, 16 in western Kansas, including two permits for new locations in Stafford County. We’re nearly 90 permits ahead of last year at the end of June.
Independent Oil & Gas Service reported 33 newly-completed wells across the state last week, 15 in eastern Kansas and 18 west of Wichita. Operators completed one well in Barton County producing pay dirt, and one dry hole in Ellis County. So far this year, the state has completed 735 wells, up more than 70 wells from last year’s second quarter totals.
The U.S. is holding steady at record production levels. For the third week in a row, the government said we produced 10.9 million barrels per day for the week ending June 22. That’s the highest weekly figure ever. The four-week average is more than 1.5 million barrels per day higher than it was a year ago at this time.
Energy regulators in Texas report big increases in that state’s oil and gas production during the month of April. Preliminary figures from the Railroad Commission of Texas showed average production of more than 2.7 million barrels per day, up from 2.6 million a year earlier.
The election of Andres Manuel Lopez Obrador as the next President of Mexico could impact the oil and gas industry here and around the world. Obrador hopes to increase the country’s refining capacity instead of importing from US refiners. Mexico is their biggest foreign market, up to an average of 808,000 barrels per day last year. Mexico’s leftist president-elect has vowed to review the outgoing president’s energy overhaul, which included opening the country to foreign energy operators. He said some foreign investment could continue but threatened to cancel the reforms if he found corruption in the awarding of contracts.
The US exported more crude last week than was pumped by all but three OPEC countries. According to the Energy Information Administration, we exported a record three million barrels per day. Analysts say those totals typically fluctuate from week to week; last week’s numbers are up nearly 300,000 barrels a day from the week before. U.S. oil exports reached a record 3 million barrels a day last week— a greater amount than is pumped each day by all but three OPEC countries, and only Saudi Arabia and Iraq are exporting more oil than the U.S. did last week.
The Canadian government would like to see construction accelerate on the Trans Mountain pipeline expansion, but has no control over decisions to resume or start new work until it takes ownership of the project, which would move crude from Alberta to Canada’s Pacific coast. Canada’s Natural Resources Minister Jim Carr told Reuters he expects the deal to close in “mid to late summer.”
The United States is pushing foreign countries to cut oil imports from Iran to zero by November, as the Trump administration escalates its bid to pressure after pulling out of the nuclear deal. The price of U.S. crude topped $70 per barrel for the first time since May on the news that countries were now expected to completely eliminate their imports, rather than the earlier demands that they make “significant” reductions. A senior State Department official says the administration does not intend to give out waivers allowing close allies to keep importing. Among those allies are India, South Korea, Japan and Turkey. China remains the biggest importer of crude from Iran, which remains a party to the nuclear deal despite our withdrawal.
A Texas oil and gas businessman who called himself the “Frack Master” has been charged with securities fraud in connection with a scheme that defrauded investors out of $62.6 million. Federal prosecutors accused Christopher Faulkner and his company Breitling Energy, of selling working interests to investors in Kansas, Texas, Oklahoma and North Dakota, but defrauded them by, among other things, inflating the estimated costs of drilling and testing wells.
A federal judge on Monday threw out lawsuits filed to hold big oil companies responsible for global warming. U.S. District Judge William Alsup said questions about how to balance the “worldwide positives” of energy against its role in global warming “demand the expertise of our environmental agencies, our diplomats, our Executive, and at least the Senate.”