By JOHN P. TRETBAR
U.S. crude oil production is spiking again. The Energy Information Administration reports total production of 11.697 million barrels per day for the week ending Dec. 21, an increase of 99-thousand barrels per day over the previous week and 1.9 million barrels per day more than a year ago at this time.
The government reported U.S. commercial crude oil inventories remained virtually unchanged from the previous week. At 441.4 million barrels, U.S. crude oil inventories are about 7% above the five year average for this time of year.
EIA said imports averaged 7.7 million barrels per day, up by 233,000 barrels per day from week before. Over the past four weeks, crude oil imports averaged about 7.4 million barrels per day, 2.3% less than the same four-week period last year.
It’s been a bumpy ride for oil prices, which posted two percent losses last Thursday after gains of 8% on Wednesday. Those were the biggest price gains in two years. But the U.S. and international crude oil benchmarks have lost more than a third of their value since the beginning of October and are heading for losses of more than 20 percent for the year. At $35.50 per barrel last Friday, Kansas Common crude at CHS in McPherson has dropped more five dollars since the beginning of the month, and is about $20 lower than the price at the end of October.
Crude oil output has more than doubled in New Mexico over the last four years, but a change in state leadership to Democratic control in January has industry executives fearing tougher regulations and reduced revenues are on the way. The incoming Governor and State Land Commissioner plan to limit new leasing on state lands where drillers planned to tap freshwater aquifers. The incoming administration also has pledged to crack down on methane waste by flaring. The new Land Commissioner will oversee nine million acres of state land. She wants to increase the production royalty by at least a third, which would match Texas’ royalty rate and boost revenues for funding schools and hospitals.
An offshore oil platform toppled by Hurricane Ivan in 2004 continues to leak oil into the Gulf of Mexico off the coast of Louisiana. The company that has failed to end the 14-year-old leak is now suing to an order by the Coast Guard to design and install a containment system. A new estimate shows that between 10-thousand and 30-thousand gallons of crude oil are leaking into the ocean each day. Taylor Energy is trying to block an administrative order from October that includes daily civil penalties of up to $40,000 if it fails to comply.
Five conservation groups filed a lawsuit to block oil production from a proposed artificial gravel island in federal Arctic waters off Alaska’s north coast. The groups asked the 9th U.S. Circuit Court of Appeals to review an offshore production plan approved for the Liberty project in the Beaufort Sea that they say violates federal law.
The latest report from North Dakota shows another all-time record for oil and gas production and the number of producing wells. It also shows the state’s average gas-capture rate heading in the wrong direction. Preliminary numbers from the Department of Mineral Resources show total statewide oil production of more than 43 million barrels in October. That’s 1.39 million barrels per day, an increase of more than 32-thousand barrels per day over the month before. But North Dakota operators “flared,” or burned off, more than 20% of the natural gas produced at oil wells in the state, an increase of two percent over the month before. Last month the state announced it was “relaxing” its anti-flaring goals, which haven’t been met in years.
Oil-by-rail traffic continues to increase, as pipeline bottlenecks continue. According to the Association of American Railroads, petroleum and petroleum products filled more than 30-thousand rail cars, an increase of more than 27% over last year at this time. The cumulative total for the year, nearly 584-thousand rail cars, was up more than 17% through December 15, the latest numbers available. Canada filled more than 11-thousand tanker cars, up more than 31%. Canada’s cumulative total is up 22% for the year.
With pipeline and rail tanker-car shortages driving down Canadian crude-oil prices, a new technology has emerged that boosters say will improve safety and increase the country’s distribution options. Canadian National Railways says its scientists are mixing bitumen extracted in Alberta with plastic made from grocery bags, and then encasing it in more plastic. This makes it possible to use grain hopper cars to ship what appear to be little hockey pucks containing oil that fit in the palm of your hand. The pellets float, and are sealed in their protective plastic wrap, so they are not dangerous in an oil spill. They are a bulk commodity that can go in open rail cars and transported like coal or grain. In the event of a spill, they would simply need to be picked up.
The Canadian Government has unveiled a $1.19 billion financial package to support the country’s oil and gas industry, mostly in the form of loans. The government hopes to encourage efforts to find new export markets. Reuters reported Canada reached record output of 4.9 million barrels of oil per day recently, but struggled to move the crude oil to the US due to transportation bottlenecks.
Exxon-Mobil has withdrawn an export project in Canada from an environmental assessment. The move effectively signaling that the project in Canada’s British Columbia has been shelved. It was expected to produce about 15 million tons per year of Liquefied Natural Gas, with plans for further expansion up to 30 million tons per year.