Nov 20, 2023

News from the Oil Patch: Targeting the shippers and ships

Posted Nov 20, 2023 11:00 PM

News From The Oil Patch, Nov. 20
John P. Tretbar

Government reports were delayed last week because of a systems upgrade at the Energy Information Administration. But the record-setting continued. Production in the week through November 3 reached 13,236,000 barrels per day, the highest weekly average ever. Output in the following week, the week through November 10, was down slightly but still high enough to tie for second-best ever, topping 13.2 million barrels per day for the sixth week in a row.

EIA reported the biggest two-week increase in crude-oil inventories in recent memory. As of November 10th stockpiles were a fraction above 430 million barrels. That's up 3.6 million barrels from last week, which was more than 13 million barrels above the week before. Stockpiles remain about two percent below the five-year seasonal average.

Crude-oil Imports last week dropped to six-point-four (6.4) million barrels per day. The four week average is more than three percent higher than the same four weeks a year ago.

The Rotary Rig Count from Baker Hughes showed 618 active drilling rigs Friday, up six oil rigs while the gas rig count dropped by four. Colorado, New Mexico and North Dakota were each up two rigs from last week.

The Kansas Rig Count is up eight percent from a week ago, up more than two percent from a month ago, but down 25 percent from last year at this time. Independent Oil & Gas Service reports 17 active rigs in eastern Kansas, up one, and 22 west of Wichita, which is up two from last week. Drilling was underway or about to start on three leases in Barton County Friday.

Kansas regulators okayed 31 permits for drilling at new locations last week. So far this year that's 1,171 new permits, down 20% from a year ago.  There are 14 new drilling locations in Western Kansas, including two in Barton County and two in Russell County.

Independent Oil & Gas Service reports 40 new well completions for the week. That's 1,525 so far this year, up 105 wells over last year at this time. Out of 25 completions west of Wichita, operators completed three wells in Barton County and one in Ellis County.

The west’s sanctions on Russian oil exports are failing to deprive the Kremlin of revenue to fund its war in Ukraine, meaning the measures are not succeeding in one of their principal objectives. A study cited by Bloomberg showed that nearly ALL seaborne shipments were for oil priced over the $60 per barrel cap. Government data show revenues from petrodollars nearly doubled between April and October, to more than $13 billion last month.

Western allies are ramping up pressure on the shippers, and the ships, used to violate the sanctions.   The European Union has tasked Denmark with scrutinizing the so-called "ghost ships" Moscow uses to transport crude oil while avoiding Western price caps. According to a Bloomberg report, Russia sold 99% of its crude above the West's price cap of $60 a barrel last month. The Financial Times reported that Denmark will be tasked with inspecting and potentially blocking Russian ships that sail through the Danish straits. Russia sends the equivalent of two million barrels of oil through the straits each day. That's 60% of its total seaborne crude exports.  The U.S. announced penalties against three companies, and three ships were designated "blocked property."

A Reuters report says the EU wants to ban the sale of crude-oil tankers. The measure would outlaw the sale or use in Russia of tankers to haul crude oil. The new sanctions also include efforts to block access to Russia's diamond industry. The US imposed sanctions against three companies involved in transporting sanctioned crude at prices below the cap. Three ships were designated "blocked property."