Great Bend Post
Mar 02, 2020

News From the Oil Patch (3/2

Posted Mar 02, 2020 6:50 PM
<br>

<br>

John P. Tretbar

U.S. crude production is at record highs, even as production in Kansas reached a record low. U.S. crude-oil production last year reached a record 12.23 million barrels per day (bpd, an 11% increase over the year before. But 2019 will be listed as the worst year ever recorded for oil production in Kansas. The Energy Information Administration reports Kansas production of just over 2.7 million barrels in December, bringing the annual total for last year to 32.98 million barrels, or a little over 90-thousand barrels per day. That's the lowest annual total in 70 years of state record-keeping, according to online data. Records posted on the KGS Web site show that last year's annual total was about a million barrels less than the previous low posted in 2002.

Crude prices posted three percent gains Monday morning on the heels of the biggest weekly loss in over ten years last week. Analysts appear to be betting on economic stimulus from the world's banks and additional production cuts later this week from the "OPEC+" exporters.

Kansas Common crude at CHS in McPherson closed out the month of February last week at $35 a barrel. The average price for the month was a fraction below $41 a barrel, which is over seven dollars less than the average in January.

Independent Oil & Gas Service reported a 23% drop in its weekly Rig Count in Kansas. There are still four active rigs in the eastern half of the state, down two, and 13 west of Wichita, down three. Drilling was underway on one lease in Barton County, one in Ellis County and one in Stafford County.

Baker Hughes reports 790 active rigs nationwide, a decline of one oil rig. The count in Texas was up four. Oklahoma was down three.

There are just five new drilling permits filed across Kansas last week, two east of Wichita and three in Western Kansas, including one in Russell County. Regulators have okayed 114 permits for drilling at new locations so far this year.

Operators completed 26 wells last week across the state, 217 so far this year. Independent Oil & Gas Service reports nine new completions in eastern Kansas and 17 west of Wichita, including one in Barton County and one in Ellis County.

The Energy Information Administration reported a half-million barrel increase in U.S. crude-oil inventories for the week ending February 21. Stockpiles are three percent below the five-year seasonal average at 443.3 million barrels.

Average domestic crude production for the week ending February 21 was 12.974 million barrels per day, which is down about seven thousand barrels per day from the week before, but nearly a million barrels per day above the weekly total a year ago at this time.

The government reported another decline in U.S. crude oil imports last week, dropping 330,000 barrels to an average of 6.2 million barrels per day (bpd). EIA said the four week average is 6.6 million bpd, down 1.6% percent from the same four-week period last year.

Regulators in Oklahoma have proposed new rules to allocate ownership of so-called "marginal," or brackish groundwater to surface owners, thus allowing for its production and use by, among others, the oil and gas industry. The Daily Oklahoman reports the intent primarily is to provide the patch with an additional source of water for horizontal drilling operations. But it also opens up the water’s use for other agricultural and commercial purposes. Marginal water is not water produced as part of oil and gas operations. It does include underground formations of brackish water. The rules must be accepted by Oklahoma’s legislature and governor.