Average Kansas per-gallon price up 4 cents to $2.70; regional refinery maintenance blamed

AAA

TOPEKA – Despite a majority of states across America experiencing falling or flat gas prices, Kansas was part of a regional trend that saw prices at the pump rise over the past week. The average cost of a gallon of regular gas in Kansas rose four cents this week to $2.70. Several Great Lakes and Central states experienced increased gas prices due to shutdowns of a half dozen refineries in the region because of maintenance issues.

“Generally this time of year, we see gas prices that trend downward, and that is the case in much of the country,” said Shawn Steward, AAA Kansas spokesman. “The refinery issues in our part of the country just go to show you that retail fuel prices are always evolving, sometimes impacted by unexpected factors and, overall, hard to predict. Kansas does still fare very well, though, with gas prices 15 cents below the national average and 12th cheapest in the nation.”

Of the 10 Kansas cities regularly highlighted by AAA Kansas (see chart below), seven saw their gas prices increase, led by Salina (+10 cents), Garden City (+6) and Wichita (+5). Hays, Kansas City, Kan. and Lawrence all saw a 1-cent decline at the pumps.

According to AAA Kansas, this week’s Kansas gas price extremes are:
HIGH: Kensington (Smith County) – $3.01
LOW: Newton (Harvey County) – $2.56

National Perspective
Motorists in 32 states are welcoming cheaper or stable gas prices at the start of the workweek. Today’s national gas price average is $2.85, which is the same price as last Monday, one-cent more than last month and 27-cents more expensive than this time last year.

The latest Energy Information Administration (EIA) data reports that both U.S. gasoline demand and stocks declined signaling supply and demand are in sync post the summer. This is true for most regions, except in the Great Lakes and Central region where prices are increasing due to maintenance at a handful of refineries.

While the national gas price has remained stable throughout September, the price of crude oil started to increase in the last week.

“Crude oil prices pushed past $70/bbl for three days last week,” said AAA Kansas’ Steward. “If they trend above this level for a sustained amount of time, we could see a national trend reversal in pump prices meaning it may cost more to fill-up as we get closer to the end of the year.”

Today’s national gas price extremes:
High: Hawaii – $3.78
Low: Alabama and Mississippi – $2.53

By JOHN P. TRETBAR

The Kansas Geological Survey reports Kansas producers pumped just shy of three million barrels of crude in June, bringing the mid-year total statewide to 17.558 million barrels. The state is about half a million barrels behind the running total at this time last year, which was the worst year for Kansas oil production since 2005.

Ellis County leads the way through June of this year with 1.31 million barrels produced, adding about 218,000 barrels for the month. Haskell County was next with 1.25 million barrels through June. Finney County’s six-month total was just over 875,000 barrels, beating out Barton County with 855,000. Rounding out the top five was Russell County with 792,000 barrels produced through June. Stafford County weighs in with more than 520,000 barrels for the first six months of the year.

Total oil production through June of 2018:
State total: 17,558,505 bbl
Ellis County: 1.315M bbl
Haskell County: 1.253M bbl
Finney County: 875K bbl
Barton County: 855K bbl
Russell County: 792K bbl
Stafford County: 520K bbl

Out of just nine completed wells reported across Kansas last week, four were dry holes, including all three completions in western Kansas (in Rooks, Finney and Ness counties). Weekly reports from Independent Oil & Gas Service show six newly-completed wells in eastern Kansas, including five producing oil wells and one dry hole in Bourbon County. So far this year, Kansas operators have completed 1,117 wells, including 230 dry holes (about 20%). By this date five years ago, operators had completed more than 4,500 wells. Out of those, 829 were dry holes (that’s about 18%).

Operators filed 39 new drilling permits across Kansas last week, 15 in Western Kansas and 24 east of Wichita. There are two new permits in Barton County and one in Stafford County.

In Kansas the active rig count was up nearly seven percent. Independent Oil & Gas Service reports 13 rigs in eastern Kansas, and 34 rigs west of Wichita that are drilling or preparing to, which is up three for the week. Operators are preparing to spud one well in Barton County, three in Ellis County and one in Stafford County. Baker Hughes reported 1,053 active drilling rigs across the U.S. Friday, down two for the week. Texas reported an increase of six rigs, Oklahoma was down three. Canada reports 197 active rigs, down 29 for the week.

Weekly crude-oil inventories continue to drop. The U.S. Energy Information Administration on Wednesday reported the fifth straight weekly decline, a drop of more than two million barrels for the week ending September 14. U.S. stockpiles are about 3% below the five-year average for this time of year. Imports are on the rise, averaging nearly 7% more than a year ago.

The government reported a slight increase in U.S. crude production, reaching 10.97 million barrels per day last week.

Russia is once again setting post-Soviet records for crude oil production, between 11.29 and 11.36 million barrels per day. Those numbers top their record set in October 2016 just before Russia’s production cut deal with OPEC began.

At least one Russian oil firm is bracing for possible new U.S. sanctions. Traders who deal with the firm told Reuters that Russian oil producer Surgutneftegaz is pushing buyers to agree to pay for oil in euros instead of dollars if the need arises. Russian firms inclusion on a Treasury Department blacklist effectively cuts them off from conducting any deals in dollars, which is the lifeblood of the global oil industry. The company’s chief executive is already on that blacklist.

One of the largest oil and gas drillers in West Texas has bought an interest in a sand mine there, as the market value for frack sand more than triples. Pioneer Natural Resources announced an agreement with U.S. Silica Holdings to buy a 15-year interest in the LaMesa sand mine north of Midland, Texas. The mine is expected to provide Pioneer at least 2 million tons of sand a year by 2020, and could cut their sand costs in half. Pioneer continues its sale of assets in the Eagle Ford play and elsewhere to become a Permian Basin “pure play.”

Pipeline capacity shortages and higher prices continue to drive up the amount of oil being transported by rail. According to the Association of American Railroads, the U.S. moved 11,649 petroleum tanker cars during the week ending September 8. That’s up 47% from the same week a year ago. So far this year, we’re averaging more than 10,000 oil by rail cars per week, an increase of 12.7% from a year earlier. In Canada, the average is more than 8,000 rail cars of crude per day, up nearly 17% from last year.