By JOHN P. TRETBAR
Crude prices dropped more than four percent on Tuesday. At lunchtime, light sweet Nymex crude for July delivery has dropped below $70 per barrel for the first time in three weeks. London Brent was also lower, trading below $74 per barrel by midday.
Kansas Common crude at CHS in McPherson starts the week at $63 per barrel, after gaining a dollar on Friday. Prices are down three dollars from the first of the month and more seven dollars from the first of the year.
TC Energy moves from recovery to restoration in Washington County. The U.S. Army Corps of Engineers has given its green light to operators of the Keystone Pipeline to begin restoration work on Mill Creek in north central Kansas. The special waterway permit comes just five months after the pipeline ruptured and spilled 13-thousand barrels of heavy crude oil into the creek and surrounding area. A government investigation confirmed the company's determination that the spill was caused by a weld that was flawed at installation, and failed after years of bending stresses. A government news release indicates the company continues disposal efforts for the tainted soil and other waste. TC Energy now begins restoration of Mill Creek to its original condition, form and functions, plus some unnamed aquatic enhancements.
The government reported US crude production increased by more than 100-thousand barrels per day last week. Output topped 12.3 million barrels per day, up from 11.8 million barrels a year ago. Domestic crude-oil inventories dropped by 12-and-a-half million barrels from last week to 455.2 million barrels as of May 19th. The Energy Information Administration says that's three percent below the five-year average for this time of year. US crude imports dropped by more than a million barrels per day to 5.9 million. Average imports over the past four weeks are nearly four percent below the same four weeks last year.
The weekly Rotary Rig Count from Baker Hughes reports 711 active drilling rigs in the US on Friday, down nine from a week ago and down 16 from a year ago. The oil tally was down five rigs. The breakout for horizontal drilling was down by eight rigs. The state count in Oklahoma was down five rigs. Texas was up two.
The Kansas Rig Count from Independent Oil & Gas Service is up six percent from last week but still nearly twenty rigs behind last year at this time. There are 12 active rigs in eastern Kansas, up two, and 23 in Western Kansas, which is unchanged. Drilling was underway Friday on one lease in Barton County, and they're moving in rotary drilling tools preparing to spud a new well in Ellis County.
Operators have spudded 494 new wells so far this year in Kansas. That's down 89 wells from the tally a year ago. Total footage is down 24% compared to last year. Independent Oil & Gas Service reports 15 completed wells across Kansas last week. Seven of those are in eastern Kansas, eight are west of Wichita, including one each in Barton, Ellis and Stafford counties. Kansas regulators okayed 41 new drilling locations across the state last week. This year's running total is 529 new permits, compared to 592 a year ago. There are 13 new permits in the western half of the state, including one in Ellis County.
A federal oil-lease auction last week included tracts northwestern Kansas. The Interior Department on May 25 auctioned off 19 parcels in the Permian Basin in New Mexico, which garnered 99.9% of the bid total of more than $78 million. The government also offered 26 parcels in Cheyenne County, Kansas. Just 18 of those attracted bids, most went for the minimum price of $10 an acre, and all but one went to Murfin Drilling Company of Wichita. The remaining lease was sold to Red Oak Energy.
Chevron is dramatically increasing its holdings in two major oil basins in the US. The oil major announced it's buying PDC Energy in an all-stock deal valued at $6.3 BILLION. Chevron will add some 275-thousand acres in the Denver-Julesberg Basin in Colorado and Wyoming, and increases it's holding by 25-thousand acres in the Permian Basin of Texas and New Mexico. The deal is expected to close by the end of the year.