By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson gained half a dollar Friday to end the week at $59.25/bbl. That’s up $1.25 from a week ago, up $3 from a month ago, and up $19 from a year ago.
Nearly one third of the completed wells in Western Kansas so far this year have been dry holes. Independent Oil & Gas Service reports 26 new well completions in eastern Kansas last week. West of Wichita there were 18, but eight of those came up dry. For the year, Western Kansas has notched 601 well completions, with 193 dry holes…about 32%. There were two new completions in Ellis County last week, and one dry hole completed in Barton County.
Operators filed 44 new drilling permits last week, including one in Stafford County. So far this year, there are 1,270 permits for drilling at new locations across the state. Looking back, there were more than five thousand new permits in Kansas by this point in September of 2014, when Kansas Common was fetching $81 a barrel.
In it’s weekly active rotary rig count, Baker Hughes reported an increase of seven oil rigs for the week for a total of 1,055. Texas dropped three rigs, New Mexico was down one, while Oklahoma and Colorado were each up two. Canada gained 22 rigs for the week at 226. Independent Oil and Gas Service reported a slight drop in the number of oil and gas rigs moving in, rigging up or drilling across Kansas: 13 east of Wichita (down one) and 31 in the western half of the state (down two). One rig was added to the inactive list, and is now shut down awaiting drilling contracts. Operators are moving in completion tools at sites in Barton, Ellis and Stafford counties, and they’re about to spud a new well in Russell County.
The Trump administration proposed relaxing another series of Obama-era environmental mandates, this time scaling back efforts to block rogue methane leaks from oil and gas wells. EPA says this proposal would lessen the frequency of required inspections, remove a requirement that professional engineers certify some equipment designs, and make it easier for energy companies to use emerging technologies. The agency says if approved next year the changes would save an estimated $75 million a year in regulatory costs.
Reuters reports South Korea and Japan will import record amounts of US crude this month. Both need to replace imports from Iran, and both are taking advantage of our $10 discount to international prices.
The government reports US inventories dropped another 5.3 million barrels last week, and stand about 3% below the five-year average for this time of year. Gasoline stockpiles were up another 1.3 million barrels last week, and are about eight percent above the five-year average. Imports were down another 123,000 barrels per day. The U.S. Energy Information Administration reports a slight decline in US crude production, which was down about 194,000 barrels to 10.85 million barrels per day.
The government said Wednesday U.S. crude production will average 10.7 million barrels per day this year, up from 9.4 million last year. The forecast from the U.S. Energy Information Administration predicts an increase to 11.5 million barrels per day next year, which would lead the world, but is about 200,000 barrels lower than forecast earlier. EIA said the lower expected crude oil production reflects more severe constraints in pipeline takeaway capacity than previously expected in Permian region. However, EIA still expects Permian crude oil production to drive total U.S. production growth next year.
Oil and natural gas production in North Dakota both reached all time highs in July. Oil production reached 1,269,366 barrels/day. The state also set a record for the most producing wells, just shy of 15-thousand.
The Director of North Dakota’s Department of Mineral Resources said “gas capture” is among three big drivers of the state’s active drilling rig counts. The state’s oil producers do not appear poised to meet the deadline Nov.1 for reducing the amount of natural gas burned off at oil well sites. Lynn Helms, in his monthly “Director’s Cut” report, said operators have shifted from running the minimum number of rigs “…to incremental increases and decreases based on gas capture, completion crew availability, and oil price.”
The oil trading firm Trafigura is getting some blow back from Corpus Christi for the company’s proposal to build a loading and export terminal 13 miles off shore. The Houston Chronicle reports that if built the new terminal could cost the Port of Corpus Christi 12% of its annual operating revenue, or about $11.8 million per year. Port officials are hitting back hard in two appeals, including one that points to Trafigura’s federal conviction 17 years ago for violating sanctions in Iraq.
As proposed the facility would be able to fill some of the largest crude oil tankers, called Very Large Crude Carriers or VLCCs, at a rate of 500,000 barrels a day. The company tells the newspaper U.S. exports could surge to 4.8 million barrels per day in the next four years. The spokesperson insists the Trafigura facility would handle about 10% of that, and would complement and not replace exports from the Port of Corpus Christi.
