John P. Tretbar
Crude prices continue to rise Monday. The benchmark Nymex contract topped $71 per barrel for the first time since October of 2018. Friday's settlement price for July crude was $70.91 per barrel, but by late morning Monday that was up to $71.68.
Kansas crude prices are up a dollar and a half from a week ago and are more than three dollars higher than at the first of the month. Kansas Common crude at CHS in McPherson starts the week at $61.25 per barrel, after gaining seventy-five cents on Friday.
Independent Oil and Gas reports a slight uptick in its weekly Rig Count in Kansas. There are four active drilling rigs in eastern Kansas, which is up one from last week, and 19 west of Wichita, which is also up one. Operators were about to spud a new well on a lease in Ellis County.
There are 23 new drilling permits across Kansas this week, with nine east of Wichita and 14 in Western Kansas including one each in Barton and Russell counties. That's 392 new drilling permits so far this year.
Independent Oil & Gas Service reported 20 newly-completed wells across Kansas for the week. There were five in eastern Kansas and 15 in the western half of the state, including one in Ellis County and two in Stafford County. Twenty percent of the wells completed in Kansas last week were dry holes.
The Kansas Geological Society has recognized and named five new oil fields in Kansas. That brings the total so far this year to ten, including one new field in Ellis county. The "Legacymakers" oil field in the Lansing/Kansas-City pay zone, was tapped by Anchor Bay Petroleum on their number-one D&S Farms lease.
In a Web meeting hosted by the Kansas Independent Oil & Gas Association last week, Harold Hamm of Continental Resources told Kansas operators to "know the story and tell the story" of the oil patch. Hamm says he's bullish on oil and gas despite a concerted effort by what he called "so-called greenies" and others vying for a piece of the energy industry's market share. He pointed out that nearly all of those competitors are subsidized, including the ethanol industry, solar and wind power, and alternate sources of diesel fuel. He says oil and gas aren't going anywhere anytime soon, because its an efficient use of energy. Hamm compared the policies of President Biden unfavorably with those of President Jimmy Carter, but praised President Trump for his strong position during the price war between Russia and Saudi Arabia. Hamm warned the industry to watch the market closely before pushing production back up towards 13 million barrels per day, lest we drop the bottom out of prices again.
U. S. crude-oil production once again topped eleven million barrels per day last week. The Energy Information Administration said domestic output increased more than 200-thousand barrels per day from the week before, and is within 17-thousand barrels per day from the same week a year ago.
Total crude oil inventories dropped more than five million barrels last week to 474 million barrels. EIA said stockpiles are about four percent below the five year average for this time of year. Imports were up one million barrels to 6.6 million barrels per day. The four-week average is nearly two percent below the same four-weeks last year.
Opponents appear to have won their ten-year battle to block expansion of the Keystone Pipeline. Following ten years of protests and shifting presidential politics, operator TC Energy announced Wednesday it is shelving the $9 BILLION Keystone XL expansion.
The Association of American Railroads reports a slight dip in oil-by-rail traffic last week compared to the week before. But that traffic is up four percent from a year ago.
In its latest Monthly Oil Report, the International Energy Agency called on the OPEC-Plus producers to increase output in order to counter higher demand in next year. This is the same agency that earlier this year called for net-zero carbon emissions by 2050 and an end to new investment to reach that end. IEA is also calling clean-energy investment in emerging and developing economies a top priority. The agency claimed that, based on current global economic growth expectations, demand for crude oil and petroleum products will reach pre-COVID levels by the end of the year.
Royal Dutch Shell is considering what could be a $10 billion sale of U.S. shale assets. Reuters cites people familiar with the matter, reporting the sale could be for part of or all of Shell's position in the U.S. Permian Basin, mostly in Texas. Those assets accounted for about six percent of the Anglo-Dutch company’s total oil and gas output last year.
A fiery crude-train derailment north of Seattle late last year was caused by sabotage. That's according to a union official representing the train's conductor speaking with railroad investigators. No one was hurt but 120 townspeople were evacuated last December when seven tanker cars derailed and caught fire in Custer, Washington. According to a report from radio station KUOW, a driver reported seeing two young men emerge from the tracks several minutes before the train derailed. Otherwise, the FBI has not revealed if it has any suspects. The cause won't be formally determined until several federal agencies conclude their investigations. The state is home to five refineries, which receive millions of barrels of crude by rail every week. There is a rising tide of protests involving oil-by-rail, and according to the FBI's Joint Terrorism Task Force, dozens of cases involving sabotage.