News from the Oil Patch, May 15
John P. Tretbar
Operators of the Keystone oil pipeline say they have completed recovery of thousands of barrels of crude spilled in north central Kansas six months ago. TC Energy announced on its Web site that it continues restoration work in the spill area, with ongoing environmental monitoring and oversight from the federal and state officials. They expect to remain on site at least until June but said the timing could change. Last December, a flawed weld failed and ruptured due to "inadvertent bending stresses over more than a decade." The rupture spewed nearly 13,000 barrels of crude oil into an area around Mill Creek in Washington County. TC Energy said it joined the American Petroleum Institute last week in a technical briefing on pipeline safety with more than 80 companies and agencies.
Kansas regulators last week okayed 26 new drilling permits, 14 in Western Kansas, including one in Ellis County. The statewide tally is 468 new permits so far this year, compared with 549 by this time last year.
Operators in Kansas completed 24 wells last week, with 13 in eastern Kansas and 11 west of Wichita, including two wells in Barton County and one in Ellis County. That's 662 completions so far this year, compared to 582 last year at this time. Independent Oil & Gas Service reports 443 wells spudded in Kansas so far this year, down 62 wells from last year. Total footage is down by nearly 23% from a year ago. The Rig Count in Kansas was down one east of Wichita at 11 active rigs, and down two in Western Kansas at 20 rigs. Drilling was underway Friday on a lease in Ellis County, and was about to begin on a lease in Stafford County.
Baker Hughes reported a big drop in its Rotary Rig Count. The weekly snapshot showed 731 active drilling rigs in the US, down 16 natural gas rigs from the week before. The oil tally was down two rigs. There were declines in eight of the 13 major basins tracked by Baker Hughes. State-by-state, Louisiana and Wyoming were each down four rigs. Oklahoma was down three, while Texas and Pennsylvania were each down two rigs.
US crude production held steady last week at just over 12.3 million barrels per day. The Energy Information Administration says that's about half a million barrels a day more than a year ago at this time. EIA said crude imports were down by 843,000 barrels per day from the week before. The four-week average is about one percent higher than a year ago.
Crude inventories are up, but gasoline and diesel stockpiles are down. US crude inventories increased by three million barrels last week to just over 462 million as of May 5th. Stockpiles are about one percent below the five-year average for this time of year. Diesel and regular gasoline inventories both dropped, with diesel stockpiles falling about 16% below the five year average for this time of year.
According to a report from OPEC, crude-shipping rates took a nosedive last month. In its Monthly Oil Market Report the cartel said rates for crude tankers sailing from the Caribbean to the US East Coast were down as much as 66%. Rates from the US Gulf Coast to Europe were down 36%.
Oil-by-rail shipments in the US were up 13 percent compared to a year ago, but down slightly from a week ago. According to the Association of American Railroads, Canadian traffic was down from a week ago, and nearly eight percent lower than last year at this time.
The State of Oklahoma last week named some heavy hitters to a statewide blacklist. JPMorgan Chase, BlackRock, Wells Fargo, and Bank of America are among 13 financial institutions that the state claims have engaged in a “boycott” of the fossil fuel industry. A state law passed last year spurred government questionnaires about investment policies viewed as hostile to the state's energy industry. The State Treasurer compiled a list of firms that are now barred from state contracts valued at more than $100,000. JP Morgan Chase in a statement said the restrictions are "baseless," pointing to the company's widespread energy investments.
U.S. Energy Secretary Jennifer Granholm told lawmakers her department will soon start buying oil to refill the Strategic Petroleum Reserve. That move could follow soon after the final SPR crude sale mandated by Congress scheduled next month. Sales last year dropped our strategic reserves to 372 million barrels, the lowest total since 1983. The administration will buy oil when prices are consistently at or below $67 to $72 per barrel.
Ellis County continues to hold the top spot for oil production in Kansas. According to the Kansas Geological Survey, Haskell County was second, followed by Barton, Ness and Finney counties rounding out the top five. Russell County was next at number six, followed by Rooks, Barber, Stafford and Graham counties.
The final assessment of oil and gas production across Kansas for 2022 shows output in Barton County averaged 3,958 barrels per day for total output of 1.4 million barrels. In Ellis County operators pumped nearly 2.2 million barrels last year for an average of nearly 6,000 barrels per day. Russell County output totaled 1.3 million, a little over 3,600 barrels per day. Stafford County notched 930-thousand barrels or about 2,500 barrels per day.