September 9th, 2019
It’s been a roller-coaster ride for Kansas crude prices over the last year. Kansas Common Crude at CHS in McPherson dropped $1.75 on Friday to close out the month of August at $45.25 per barrel. That’s a dollar more than the price at the beginning of the month, nearly ten dollars more than at the beginning of the year, but nearly eighteen dollars less than the price at the end of August of last year.
Baker Hughes reported 898 active drilling rigs across the U.S. Friday, down four oil rigs from a week earlier, and down two seeking natural gas. The count in Oklahoma was down five, Texas was down three, and North Dakota was up three. The weekly rig count from Independent Oil & Gas Service shows four active drilling rigs in eastern Kansas, down two from the week before, and 25 west of Wichita, up one. Drilling was underway at one lease in Barton County, one in Ellis County and one in Russell County.
Independent Oil & Gas Service reports 15 newly-completed wells across Kansas last week, 12 of them west of Wichita. Regulators approved 15 new drilling permits across state, eight of them east of Wichita, and seven in Western Kansas, including one in Barton County.
Kansas regulators report 94 new intent-to-drill notices across the state last month, down from 111 the month before and less than half the 236 intents reported in August of last year. The Kansas Corporation Commission reports seven new intents on file in Barton County, six in Ellis County and two in Stafford County. The year-to-date total is just 735 intents, compared to 1,303 intents through August of last year.
The U.S. Energy Information Administration reported domestic crude oil production dropped slightly from last week’s all-time record high. The government says U.S. producers pumped 12.354 million barrels per day for the week ending August 30, the second biggest weekly production total ever. That’s down 146,000 barrels from the record 12.5 million barrels produced the week before.
The government said U.S. commercial crude oil inventories dropped by 4.8 million barrels from the previous week to 423 million barrels, right at the five-year average for the time of year.
EIA reported a big increase in crude-oil imports, which were 976,000 barrels per day higher than last week at 6.9 million barrels per day. The four-week average is about 12.5% less than the same four-week period a year ago.
In its latest monthly crude-oil production report, the Energy Information Administration said U.S. operators produced 12.082 million barrels of crude oil in June, a slight drop from May’s total but more than 13% higher than the figure from June of last year. In Kansas, June production reached 92 million barrels, which is up two percent from the month before but down more than five percent from a year earlier.
Gasoline prices are up to a dime cheaper than last week in all but four states. AAA says two of those states saw rising prices because of Hurricane Dorian. Across Kansas, motorists are paying an average of $2.336 per gallon for regular gasoline, which is more than 12 cents cheaper than a month ago. The national average is $2.573. We spotted $2.21 a gallon at several locations in Hays and $2.17 across Great Bend. Your 15-gallon fill-up will cost nearly two dollars more than a month ago, but six dollars less than last year at this time.
Maturing debts in the Permian Basin are driving a spike in bankruptcy declarations. The Wall Street Journal reports that so far this year we’ve already nearly matched last year’s total of 28 producer bankruptcies. The Journal reports there’s still about nine billion dollars in notes set to mature through the rest of this year. According to S&P, there’s another $137 billion coming due between 2020 and 2022. Defaults are on the rise, as companies struggle to service debt, bring in new financing and refinance existing debt, according to the report.
Oil-by-rail continued to increase last month, despite a continuing decline in monthly numbers for all freight train traffic. The Association of American Railroads said that in August, eight of the 20 commodity categories they track saw increases compared with a year earlier. Leading the way was petroleum and petroleum products, which were up 7.8 percent. AAR Senior Vice President John T. Gray said total U.S. freight carloads have fallen on a year-over-year basis for seven straight months. AAR said petroleum rail traffic gained half a percent in the week ending August 31 compared to a year earlier. Oil-by-rail in Canada was up more than 12 percent.
Adams County, Colorado on Tuesday became that state’s first county to adopt new oil and gas regulations since the state passed a law that bolstered local control over fossil fuel development. Adams County Commissioners on Tuesday doubled the current setback limits, from 500 to 1,000 feet between oil and gas development and occupied buildings and homes. Operators can request exemptions, which would require a public hearing. The state’s largest oil and gas industry group calls the new county rules “unreasonable.” The Colorado Oil and Gas Association says they will hurt the more than 5,000 families who depend on oil and gas development.
The Interstate Oil and Gas Compact Commission, a group of energy-state regulators, has come out very loudly against the so-called “Green New Deal.” Chairman Wayne Christian of the Railroad Commission of Texas said Senator Bernie Sanders’ version of the environmental plan would cost $16.3 trillion and would cripple the Texas economy. Christian said “Over my dead body will I allow out-of-state forces to eliminate jobs, decrease state revenue, and increase the cost of living on the constituents I represent.” The Commission passed a resolution urging the federal government to reject the Green New Deal “…in the spirit of cooperative federalism.” They’re sending copies of the resolution to top administration and congressional officials to encourage them to oppose the Green New Deal and any substantially similar legislation.
Exxon Mobil is poised to drop out of the S&P 500 Index’s 10 biggest companies for the first time since the index’s inception some 90 years ago. According to data compiled by Bloomberg, Visa replaced Exxon as the 10th biggest member of the index Aug. 1 and two weeks later Procter & Gamble overtook the oil giant. The growth of technology giants like Facebook, Amazon and Microsoft over the past decade coincided with an energy slowdown caused by a global glut brought on by the shale revolution.