John P. Tretbar
Crude futures prices settled below sixty dollars
per barrel for five consecutive trading sessions last week. Friday's settlement
price was $59.32 per barrel. Prices on the Nymex briefly topped $60 Monday, but
by lunchtime the benchmark contract was going for $59.67 per barrel.
Kansas Common crude at CHS in McPherson starts the week at $49.50 per barrel
after dropping a quarter per barrel on Friday. Current Kansas prices are about
a dollar lower than at the first of the month, but are nearly $11 higher than
at the beginning of the year.
Triple-A says a jump in demand and tightening supplies prompted major
fluctuations in gasoline prices. The national average on Thursday (4/8) was
down slightly to $2.87 per gallon. That's down slightly from last week, but up
a dime from a month ago, and nearly a dollar more than a year ago. Changes in
weekly statewide average prices ranged from an increase of 15 cents to a
decrease of three cents. The average in Kansas jumped three cents to $2.68 per
gallon Thursday. Your 15-gallon fill-up will cost you nearly $19 more than last
year at this time, but only a dime more than last week.
Oilfield services employment has a long way to go to return to pre-pandemic
levels, but last month's numbers are a good start. According to the Bureau of
Labor Statistics and analysis by the Energy Workforce and Technology Council,
that sector notched upwards of 102,000 pandemic-related job losses. World Oil
dot com reports improvements in the fourth quarter of last year were followed
by cuts in December, January and February. But the government says the sector
added more than 23,000 jobs in March.
Baker Hughes reported 432 active drilling rigs across the country last week, an
increase of two gas rigs. The count in Oklahoma was up one for the week.
Independent Oil & Gas Service reports seven active drilling rigs in eastern
Kansas, up two for the week, and 12 west of Wichita, which is down one. The
inactive count across Kansas reached 145, adding ten more cold-stacked rigs to
that list. Since last year 45 rigs have gone out of state or "gone to
rust." The total number of rigs in Kansas, both available and inactive,
dropped from 238 a year ago to 193 last week.
Of 17 new drilling permits in Kansas last week, 12 are west of Wichita and five
are in the eastern half of the state. Our cumulative tally shows 212 new
drilling permits so far this year. Independent Oil & Gas Service reports
nine newly-completed wells across the state last week, two of them east of
Wichita and seven in Western Kansas. That's 187 completions so far this year.
Domestic crude inventories dropped last week by 3.5 million barrels. The US
Energy Information Administration said stockpiles are just over 498 million
barrels, or about 3% over the five-year seasonal average. Crude production in
the US increased last week by more than 100-thousand barrels per day. EIA says
output for the week ending April 2 averaged nearly 10.9 million barrels per
day. That's down from 12.4 million barrels per day a year ago. The government
reported U.S. crude imports increased more than 100-thousand barrels per day to
6.3 million. EIA said the four-week average is down about five percent from a
year ago.
Weekly oil-by-rail traffic declined last week by 291 carloads from the week
before, to 10,403 tanker cars. The Association of America Railroads reports the
year-over-year decline dropped to one tenth of one percent, the smallest such
comparison in recent memory.
The AAR reports a fourteen percent increase in total monthly rail traffic in
the U.S. in March compared to a year ago. But the trade group cautions that for
some cargo categories, the changes from last year are inflated because of the
widespread shutdowns last year at this time. In March 2021, oil-by-rail
deliveries were down 5,073 carloads, or 8.5 percent.
One of the biggest players in the Bakken is selling a big piece of the play.
Hess Corporation will unload more than 78-thousand acres in North Dakota to
Enerplus Corporation in a deal worth $312 million, which they expect to close
next month. The property is in the southernmost part of the Hess portfolio and
is not connected to the pipeline and processing infrastructure of Hess
Midstream. CEO John Hess says they were not planning any more drilling in the
parcel for at least five years. Net production from this acreage averaged 4,500
barrels of oil equivalent per day in the first quarter of 2021.
Several large oil-patch companies are going Green, even as economists warn of
the impact. North America's biggest oil pipeline company is now seeking
Canadian tax incentives similar to those available in the US, in an effort to
become competitive in hydrogen production and renewable electricity. Enbridge
last year became the first North American industry player to set a goal of
eliminating all net emissions from its operations by the year 2050. Two of
Canada's biggest producers are hyping their new emissions goals. But, Canadian
Natural Resources and Cenovus Energy both said Tuesday they will not pivot away
from their core businesses.
A new report suggests Canada's pursuit of aggressive climate targets could cost
three out of every four Canadian oil-and-gas workers their jobs. The report by
TD Economics estimates that in less than thirty years, up to 450,000 of
Canada’s current 600,000 direct and indirect oil and gas jobs could become
casualties of falling demand, without some kind of worker-transition plan in
place.