News From the Oil Patch, Sept. 30

By JOHN P. TRETBAR

Kansas Common crude at CHS in McPherson starts the week at $46.25 per barrel, after dropping fifty cents on Friday.

Independent Oil & Gas Service reports thirty new well-completions for the week. Eight of those were in eastern Kansas and 22 west of Wichita, including one in Barton County. So far this year, operators in Kansas have completed 1,028 wells. That’s down from the 1,141 reported at the end of the third quarter last year.

Operators have 16 new drilling permits across Kansas this week, 741 so far this year. That’s a little over half of the third-quarter total last year. There are eight new permits east of Wichita, and eight in Western Kansas, including one each in Ellis, Russell and Stafford counties.

The oil-patch in the U.S. continues its record-level production. On Wednesday, The Energy Information Administration reported the second-largest weekly production total ever, 12.472 million barrels per day for the week ending September 20. That’s up from the week before by nearly 50,000 barrels per day. The record of 12.5 million barrels per day was set August 23.

The Kansas Geological Survey has released updated production figures through June of this year, with a statewide total of 16.68 million barrels, or just over 92,000 barrels per day. Barton County operators pumped more than 816,000 barrels through June, while Ellis County produced 1.26 million barrels. In Russell County, total oil production through June was over 754,000 barrels. The total in Stafford County was nearly 437,000.

Activity in the Texas patch declined in the third quarter, according to a survey of energy executives by the Federal Reserve Bank of Dallas. The Houston Chronicle reports abundant crude supplies and slowing global demand led energy companies to pull rigs out of service and cut jobs.

Refineries imported about 6.4 million barrels per day of crude oil last week, down more than 600,000 barrels per day. The four-week average for U.S. imports is 13.1 percent less than the same four week period a year ago.

U.S. crude oil stockpiles increased last week by 2.4 million barrels. The government said that at 419.5 million barrels, inventories are rising but remain at the five-year average.

Independent Oil & Gas Service reports a slight increase in its weekly Kansas rig report. There are ten active rigs in the eastern half of the state, up one, and 29 west of Wichita, also up one. Drilling is underway at two wells in Barton County and one in Ellis County. Operators are preparing to spud new wells at one lease in Ellis County, one in Russell County and one in Stafford County.

Baker Hughes reported a big drop in its weekly Rotary Rig Count Friday. Across the U.S. there were 860 active rigs, down six oil rigs and down two seeking natural gas. The count in Texas dropped by five rigs.

Oil-by-rail traffic dropped nearly ten percent in the latest weekly tally from the Association of American Railroads. Operators filled 11,862 rail tanker cars with petroleum and petroleum products during the week that ended September 21. As total freight-train traffic continues to decline, the oil-by-rail weekly total is down 9.7% from a year ago, marking the first such decline in recent memory. The cumulative, year-to-date total remains 17% above the same figure a year ago. Amid the railroad industry’s broad decline, only one freight category, chemicals, showed an increase over a year ago.

Another huge acquisition for Texas-based Energy Transfer is expected to dramatically increase the pipeline and processing company’s scale and connectivity. The company will buy SemGroup of Tulsa in a stock-cash-and debt deal valued at over five billion dollars. The announcement last week said both firms will continue to operate separately until early next year when the transaction closes.

A federal judge has blocked enforcement of some new laws in South Dakota that were passed with the aim of preventing disruptive demonstrations against the Keystone pipeline expansion. A lawsuit alleges that the law chills protected speech. In issuing a preliminary injunction halting several provisions of the legislation, U.S. District Judge Lawrence Piersol said the plaintiffs are likely to win most of their challenges.

Saudi Arabia has a new energy minister, and for the first time he’s a member of the royal family. Prince Abdulaziz bin Salman is the half-brother of Crown Prince Mohammed bin Salman and is the first member of the royal family to hold the job. In his first public appearance as minister, the prince signaled no radical change in Saudi oil policy.