News from the Oil Patch, Jan. 13
John P. Tretbar
New sanctions targeting Russia's shadow fleet spiked oil prices around the world Friday. The Russians shrugged. The Treasury Department announced sweeping sanctions focused on more than 180 crude-oil tankers and more than a dozen Russian energy officials and executives. Russia's biggest oil producer shrugged off the impact. Reuters cited claims by Russia's largest insurance company that the sanctions would benefit less reputable players, and in fact endanger maritime safety. Prices jumped three percent or more on Friday, with the benchmarks rising above $76 a barrel in New York and over $79 in London. Offers rose another two percent on Monday.
Kansas prices start the week at a three-month high after gaining more than two dollars on Friday. Kansas Common rose to $66.75 per barrel at CHS in McPherson.
Weekly crude production in the United States dipped slightly but remained over 13.5 million barrels a day for the third week in a row and only the eighth time ever. Weekly output is the fourth best ever reported by the Energy Information Administration. The four-week average is up more than two percent, rising to its highest level ever at just under 13.6 million barrels a day. Output for all of last year averaged a best-ever 13,262,000 barrels per day according to EIA. That's a five percent increase over the year before.
Independent Oil and Gas Service reports 18 new well completions for the week through January 9. There's one in Ellis County and one in Russell County, out of just three in Western Kansas. Kansas regulators okayed 24 new drilling locations last week. Out of eight in Western Kansas, one new permit in Ellis County joins three in Finney County.
At 18 active drilling rigs, the current Kansas Rig Count started the new year down 25% from the end of the old one. It's nearly 42% lower than a month ago, and almost 58% lower than a year ago. Drilling was underway on a lease in Ellis County Friday, out of ten active rigs in Western Kansas.
The US Rotary Rig Count from Baker Hughes was down three oil rigs and another two gas rigs for a total of 584. The breakout for horizontal rigs was down five rigs. The statewide tally in Texas was down three rigs. Colorado and Utah were each down one.
The government reported a million-barrel drop in commercial crude inventories. Stockpiles are about six percent below the five-year seasonal average. DOE took delivery on another 200,000 barrels of crude for the Strategic Petroleum Reserves. That's nearly 30 million refill barrels since April at prices roughly $15 cheaper than what we sold it for.
The US imports more crude than we export by more than 3.3 million barrels a day. Product exports top product imports by more than five million daily barrels. Crude imports averaged 6.4 million barrels a day, down nearly half a million barrels a day from a week ago, but well above the same week last year and two years ago. The four-week average is up 1.4 percent from a year ago. Weekly domestic crude exports dropped nearly 600,000 barrels a day to just over three million. That's down 300,000 from a year ago, but up nearly a million from two years ago. The four week average is rose 1.3 percent from a year ago.
Another US export facility for Liquefied Natural Gas shipped its first cargo last month. Plaquemines LNG is the eighth LNG export terminal to go into business in the United States, one of two that started liquefaction operations last year.
The energy regulator in Texas reports hundreds of weatherization inspections, and plans hundreds more, in hopes of preventing another public relations disaster like Winter Storm Uri three years ago. The Railroad Commission of Texas came under fire when the state's power grid and its natural gas supply chain failed to measure up during that storm. The commission says its team has conducted more than 1,200 inspections of critical natural gas facilities in the state's electricity supply chain, including all of the so-called "tier one" installations. They're inspecting large-scale gas production facilities, along with processing plants, underground storage facilities and pipelines. The commission says those inspections will continue through March.
The Texas Oil and Gas Association (TXOGA) reported overall conditions have been stable even with recent colder temperatures, and insists personnel are in place to maintain operations. In what they call a Winter Weather Situation Report, TXOGA noted operators and pipeline firms preparing assets and cold weather contingencies. Texas was not the only state to see problems during Winter Storm Uri in 2021. Lawsuits are pending in Kansas, Oklahoma and New Mexico in which regulators are accused of everything from malfeasance to fraud.