January 7, 2017
Independent Oil & Gas Service reported 32 new well completions for the week ending December 22, which brings the annual total to 1,231 completions. There were 20 completions east of Wichita, and another 12 in western Kansas, including one dry hole completed in Russell County.
There were eight new drilling permits filed across Kansas for the week ending December 22, 1,074 for the year. There were five permits filed for drilling in new locations in eastern Kansas, and three west of Wichita, including one new drilling permit in Ellis County.
Two Texas firms announced a deal involving about 53 producing, permitted, proposed and/or shut-in wells in Labette County. A subsidiary of Rangeford Resources has acquired about 800 gross acres from Dog Day Inc, in an agreement completed last week. Rangeford’s geological and geophysical analysis estimated the ultimate recovery of up to 2 million barrels, upon completion of a development plan.
Half a dozen U.S. Senators want to know about Oklahoma Attorney General Scott Pruitt’s ties to the oil industry, especially Devon Energy. The New York Times reported two years ago that Pruitt’s ties to the firm directly influenced decisions he made while in office. According to KFOR-TV in Oklahoma City, the AG responded that he is working diligently to fight what was called unlawful overreach of the EPA and other agencies. The Senators are concerned because Pruitt has been named by incoming president Donald Trump to lead the EPA, a company he’s been fighting for years. Republican Senator Jim Inhofe says the letter is not part of the process for vetting nominees.
A high-tech solution using low-tech materials have researchers hoping they can more quickly sop up and burn off oil spilled in the frigid waters of the Arctic Ocean. Researchers at the Department of Energy’s Pacific Northwest National Laboratory are testing chemically modified wood flour, sawdust, to determine whether it can enhance the burning of crude oil after a spill. Experts saythe material is bouyant, and repels ice and water, but it absorbs at least five times its weight in oil. It grabs onto crude oil and helps keep it near the surface. Researchers at the lab are focused on burning and bioremediation. Mechanical recovery has not proven effective because ice can jam skimmers.
One of the new policies being considered by the incoming admnistration has been percolating in Congress for some time, a tax-reform proposal that would effectively tax imports and encourage domestic production. One potential outcome is that domestic fuel prices could rise as refiners and wholesalers pass on their increased costs for the five million barrels of crude oil we import every day. Philip Verleger of the Brattle Group estimates that with $50 Brent crude and the proposed 20 percent oil import tax, the border adjustment could add 30 cents to the cost of a gallon of gasoline. While the border adjustment is potentially a boon to domestic exploration and production companies, some refiners could take a hit, especially in the eastern US, where they depend more on imports.
One of the big losers during the oil price plunge of the last two years was the Canadian oil sands industry. Even with oil prices on the rebound after OPEC’s recent meeting, Canada’s sands are losing out to cheaper U.S. shale oil. According to the Wall Street Journal, Canada’s oil-sands industry as a whole is on track to post a loss of $7.6 billion US in 2016, marking the first time it has lost money for two consecutive years. Canadian Natural Resources, one of the big players in Alberta, has lost money in all but one of the past seven quarters. In the third quarter of this year the company lost $248 million. Canadian Natural’s chairman, billionaire oil man N.Murray Edwards, predicted the plunge in crude prices two years ago. Edwards cited personal circumstances for his recent move to London. Among other things, he said he wanted to “step back” from his day-to-day role in Calgary. CNRL officials recently said his role at the company is unchanged.
Government data show Russia produced 2.5 percent more oil in 2016 than the year before. Russian crude production increased 2.5 percent in December to 347.4 million barrels, up 3.5 percent from December 2015. Russia is a big part of the oil output cuts announced last month. Those cuts went into effect on Monday.