News from the Oil Patch, Oct. 14
John P. Tretbar
Last week crude-oil prices ranged from over $77 to lease than $74 per barrel. The near-month contract for light sweet NYMEX crude landed at $75.56 per barrel at the close of trading on Friday. That's a weekly gain of more than a dollar. By midday on Monday, traders gave it all back, with prices dropping two percent or more. NYMEX crude dropped below $72 and London Brent slipped below $78.Monday's price for Kansas Common crude at CHS in McPherson was down $1.75 from Friday at $64 per barrel. That's four dollars higher than at the first of the month, two dollars higher than at the first of the year, but $14 less than a year ago.
The government reports record high crude production, and a big increase in stockpiles. The Energy Information Administration reports weekly crude-oil production over 13.4 million barrels per day for the first time ever. Output for the week through October 4 averaged 13,432,000 barrels per day. Four-week average production nationwide is up more than two percent over a year ago. Cumulative production so far this year is up nearly one million barrels per day over last year at this time.
Commercial crude inventories increased nearly six million barrels to 422.7 million as of October 4. EIA reports stockpiles are about four percent below the five year seasonal average.
The Energy Department last week took delivery on another 400,000 barrels of crude oil for the Strategic Petroleum Reserves, at prices roughly $22 less than what we sold it for two years ago.
The US is a net importer of crude oil, importing more than we export by nearly 2.5 million barrels per day. Crude imports are down nearly 400,000 barrels from last week, at just over 6.2 million barrels per day. The four week average is down more than 230,000 barrels a day or about two percent over the same four weeks a year ago. US exports drop 80-thousand daily barrels to just under 3.8 million barrels per day. Four week average exports are down from last year by more than 200,000 barrels a day.
The Rotary Rig Count from Baker Hughes shows 586 active drilling rigs nationwide as of Friday, an increase of two oil rigs and a decline of one seeking natural gas. The tally in Texas was up six rigs. Oklahoma was up one while Louisiana, New Mexico and Pennsylvania were each down two rigs.
The Kansas Rig Count from Independent Oil and Gas Service is up one at 12 rigs in the eastern half of the state, and unchanged at 17 active rigs in Western Kansas. The statewide total is up more than 20% from a month ago, but down 27 percent from last year at this time. Crews are moving in and rigging up drilling tools for new wells in Barton and Ellis counties. Operators on Friday were about to spud a new well Friday in Stafford County.
Kansas geologists met last week to recognize and name three new oil fields in Kansas. Independent Oil and Gas Service reports those fields are located in Gove, Logan and Thomas counties.
Kansas regulators okayed 26 new drilling locations in the week through October 10. That's 839 so far this year. Out of 13 permits in Western Kansas, three are in Barton County and one is on a lease in Stafford County.
Operators completed 19 wells, ten east of Wichita and nine in Western Kansas. Independent Oil and Gas Service places one in Barton County, one in Ellis County and two in Stafford County. That's 1,044 new well completions so far this year, down nearly 300 wells from a year ago.
Attacks on crude tankers in the Middle East last year prompted some dramatic, and expensive changes to the way the region brings oil to market. According to the US Energy Information Administration the amount of crude oil and oil products flowing through the southern choke point at the mouth of the Red Sea dropped by more than half during the first eight months of this year. Some vessels are now taking longer, more costly routes around the Cape of Good Hope at the southern tip of Africa. Citing data from the freight analytics firm Vortexa, EIA says crude shipments along the Red Sea route dropped from 8.7 million barrels per day for all of last year to about four million barrels per day so far his year.
Chevron has agreed to sell its remaining stake in Alberta, Canada's oil sands to Calgary-based Canadian Natural Resources for $6.5 BILLION. The all-cash deal is expected to close by the end of the year. The company is refocusing on the Permian basin of Texas and New Mexico, its new assets in central Asia, and a deal for offshore assets in South America.