October 22th, 2018
Another 18 Kansas drilling contractors have moved rigs from the active to the pending column. That’s a 26.8% drop in the number of “active” rigs in Kansas. Independent Oil & Gas Service reports nine rigs east of Wichita that are moving in, rigging up, drilling, or relocating, down four for the week. There were just 21 in the active column in Western Kansas, down seven. Operators are moving in rotary drilling tools at one lease in Ellis County and one in Stafford County.
At CHS in McPherson, the price for Kansas Common crude gained a quarter on Friday, to end the week at $59.25/bbl, compared to $61.50 a week ago. But current prices are still $17 a barrel higher than a year ago at this time.
Operators across the state filed for 36 permits for drilling at new locations last week, 1,454 so far this year. There were nine new drilling permits filed in eastern Kansas and 27 west of Wichita, including two in Barton County, four in Russell County and two in Stafford County.
Independent Oil & Gas Service reported just ten well completions for the week, three in eastern Kansas, and seven west of Wichita, including one in Russell County. Of the seven newly completed wells in western Kansas last week, there were four dry holes (in Greeley, Pawnee, Saline and Stanton counties).
August crude output in the nation’s number-two producing state topped 40 million barrels for a record high 1.29 million barrels per day. North Dakota regulators say natural gas production and the number of producing wells also set new records.
U.S. crude inventories increased another 6.5 million barrels last week, and are now about two percent above the fire year average.
According to the U.S. Energy Information Administration, U.S. crude oil production dropped last week, after setting a record the week before. We produced just shy of 10.9 million barrels per day last week. Our four-week average production is over 11 million barrels per day, compared to an average 9.2 million barrels per day a year ago.
A new report from the Energy Information Administration and the Census indicates that the U.S. trade deficit for energy products has narrowed over the last decade. From 2003 to 2007, the value of energy imports was about 10 times greater than the value of exports. By 2017, imports were only about 1.5 times greater than exports. Canada is the largest U.S. trading partner for energy products. Last year the US energy imports from Canada topped $73 billion dollars.
The U.S. Treasury Secretary says the oil market has already anticipated supply reductions due to renewed sanctions against Iran next month. Secretary Steven Mnuchin told Reuters it will be harder for countries to get waivers from these sanctions. Mnuchin said countries will have to reduce their purchases of oil from Iran by more than the roughly 20 percent level required during the Obama Administration.
Iraq surpassed Canada this year as the world’s fourth largest crude oil producer. But the war-torn country is struggling with unsteady electricity supplies and has trouble keeping the lights on. Iraq is producing a record 4.78 million barrels of oil per day, and officials tell Bloomberg that Iraqi output will rise to 5 million barrels a day in 2019 and 7.5 million by 2024. According to the report Iraq has quietly increased shipments to Asia, Europe and the Mediterranean region, to offset missing supplies from Iran.
The oil industry in North Dakota continues to fall well short of the state’s goals to reduce the flaring of natural gas at oil wells. Operators across the state captured just 82% of the natural gas produced at oil wells in August. The industry has never reached the current 85% threshold, which goes up to 88% next month. Department of Mineral Resources Director Lynn Helms says he will make a new gas-capture recommendation to the state Industrial Commission later this month.
A group in Utah wants to build a 150-mile railroad that promoters say could increase oil production in the state five-fold and create 27,000 jobs. The Seven County Infrastructure Coalition is asking for a $28 million slice of state oil royalties to help pay for an environmental impact study. They’re hoping to pay for the construction with federal grants. Previous studies have said transportation constraints are holding back development of some $30 billion worth of oil and gas over the next 30 years. The group says its new studies found practical railroad routes from Myton, Utah, to Craig or Rifle, Colorado.
The Colorado Supreme Court is considering a case that could upend that state’s energy industry, and the competing oil-industry ballot questions being considered in November. The law being challenged involves a push to require energy regulators to give more weight to public health and the environment, instead of weighing those against other interests. There’s no word on when the high court might rule, but if they side with the plaintiffs, it would give local governments, and activists, more power to argue for safety measures, including setbacks, fracking bans, and other restrictions.
Coming soon to a commodity trading board near you: WTI Light. The Houston Chronicle reports producers in the Permian Basin have started selling a new stream of light crude. Sales of West Texas Intermediate Light, or WTI Light, started last month with deliveries into Midland, Texas. The sales began after the construction of enough tanks in West Texas to enable different oil grades to be separated. The newspaper reports the new grade will be shipped by pipeline out of Midland.