Statewide crude production dropped 1.6% in the first
quarter of 2020 compared to a year earlier, to just below eight million
barrels. First-quarter Kansas production averaged 88-thousand barrels per day
according to the latest update from the Kansas Geological Survey. Production in
the first three months of the year increased over last year in several
counties. Barton County output was up about a thousand barrels over last year,
at just short of 400,000 barrels, or 4,386 barrels per day. Ellis County
production topped 629,000 barrels, an increase of about five thousand barrels
year-on-year. That's an average of 6,916 barrels per day. Russell County
production was up about three thousand barrels year on year, to just over four
thousand barrels per day. At about 2,815 barrels per day, Stafford
County's first quarter totals outpaced last year by 2,617 barrels.
Kansas crude-oil prices in June were down nearly four dollars from a month
earlier. Prices at CHS in McPherson were down nearly $20 from a year earlier.
Many operators, and bankers, plan long-term budgets based on the average
monthly price of crude oil. The average for June in Kansas was $28.61 per
barrel, down more than $16 from the average midway through last year.
Independent Oil & Gas Service reports some drilling activity returning to
western Kansas. There are seven active drilling rigs west of Wichita, up
three from last week. There's one active rig in eastern Kansas, unchanged from
a week earlier. Operators are drilling on one lease in Russell County,
and are about to spud a new well in Stafford County.
Rig Counts across the U.S. were down five rigs at 258. Baker Hughes reports the
count in Texas was down five, and New Mexico was up one.
Regulators approved fifteen permits for drilling at new locations last week,
229 so far this year. There were nine in eastern Kansas and six west of
Wichita, including one each in Russell and Stafford counties.
Independent Oil & Gas Service reports nine newly-completed wells during the
week ending July 9. Seven were in Western Kansas, including one in Stafford
County.
The Kansas Corporation Commission reports 29 new intent-to-drill notices filed
in the month of June across Kansas, compared to 39 in May and 115 in June
2019. The total midway through the year 2020 is 268. That's down by about
half from a year earlier. The KCC reported one new intent-to-drill notice filed
in Barton County last month.
For the second week in a row, U.S. crude production increased slightly, but
remained below eleven million barrels per day. The Energy Information
Administration reported U.S. output for the week ending July 3 increased
36-thousand barrels per day, to 10.9 million barrels per day. The government
said U.S. crude-oil imports averaged 7.4 million barrels per day, an increase
of 1.4 million barrels per day from the week before. EIA said over
the past four weeks, imports averaged eight-point-five percent less than the
same period last year. EIA reported a big increase in U.S. crude-oil
inventories, up 5.7 million barrels from the week before. Stockpiles are about
18% above the five-year average for this time of year.
The government says U.S. crude-oil production in the month April dropped nearly
eight percent, down 33 million barrels from the near-record production achieved
the month before just as prices began to plummet. Monthly numbers from the U.S.
Energy Information Administration are more reliable than the weekly reports.
Operators in the U.S. pumped 12.06 million barrels per day in April. That's
despite prices that dropped from over $50 to under $20 a barrel. EIA said
Kansas production in April was down 16% from the month before, and was 20%
lower than a year earlier. According to the federal report, Kansas
operators produced 75,533 barrels per day in April, compared to nearly 90,000 barrels
per day in March and over 94,000 barrels per day in April of last year.
North Dakota regulators rejected the idea of placing limits on the state's oil
production to prevent waste amid the collapse in prices. The state joins Texas
and Oklahoma which both nixed proration measures this year. The Bismarck
Tribune reports the decision by the North Dakota Industrial Commission was
unanimous. During a hearing in May, the state's largest producer, Continental
Resources, argued in favor of the idea, to provide coordination across the
region, as each producer reacted differently to low prices. Slawson Exploration
sought state intervention to ensure companies did not rush to boost production
as prices rise, thus flooding the market and drawing out the price recovery.
But many tribal leaders, producers and the North Dakota Petroleum Council asked
the state to step back and let the market decide.
North Dakota could take a big hit if the closure of the Dakota Access pipeline
survives an appeal. A U.S. district court judge ruled that the pipeline must be
shut down, and drained, by Aug. 5. This marks the first time a major pipeline
in service was ordered shut because of environmental concerns. The court
decided it should remain closed until a proper environmental review is
complete. That process could extend into next year. The system currently
carries more than a third of the region's oil to market. The alternative of
using rail would more than double transportation costs. The ruling is the
latest twist in a long-running legal battle. Tribal leaders have long argued
that a spill under the nearby Missouri River could pollute the water they rely
on for fishing, drinking and religious ceremonies. Without addressing the
environmental concerns, the operator of the pipeline promised a speedy appeal.
The Association of American Railroads reports oil-by-rail year-to-date totals
midway through 2020 are down 11% from a year ago. Total freight traffic is down
13%. For the week ending July 4, there were 9,934 tanker cars moving petroleum
or petroleum products, down a thousand cars from the week before and more than
21% below the weekly total a year ago.