By: John P. Tretbar
The Kansas Independent Oil & Gas Association announces details of this year's Convention and Trade Show in Wichita, August 15 through the 17. The event will feature former U.S. Secretary of State Mike Pompeo as keynote speaker. You can still sign up for specific events, and register for a booth at www.kioga.org.
Crude prices remain at 32-month highs. Monday's settlement price for the benchmark Nymex crude futures contract was $73.66 per barrel. Kansas Common crude at CHS in McPherson started the week at $62 per barrel after gaining 75 cents on Friday. Prices jumped another two dollars on Monday, with Kansas Common fetching $64 a barrel for the first time since October 8, 2018.
The Rig Count in Kansas was up 13% last week, with 22 active drilling rigs in Western Kansas, up three from the week before. Independent Oil & Gas Service says the count east of Wichita was unchanged at four active rigs. Kansas regulators approved 24 new drilling permits across the state last week, 11 east of Wichita and 13 in Western Kansas, including one in Ellis County. That's 416 new permits so far this year. Independent Oil and Gas Service reports just ten newly completed wells last week across Kansas. That's 351 completions so far this year.
Baker Hughes reported 470 active drilling rigs across the U.S. Friday, a net increase of eight oil rigs and one gas rig. The weekly Rotary Rig Count shows an increase of three active rigs in Wyoming. Texas and Pennsylvania were each up two, Colorado and Utah were each up one.
The price gap between the world’s two most actively traded oil contracts narrowed to its lowest in more than seven months. North Sea Brent futures traded at a premium of $1.89 to WTI on Friday, the narrowest such spread since Nov. 11.
The government reported a drop of more than seven million barrels in U.S. crude inventories last week. The Energy Information Administration said stockpiles are about five percent below the five-year average. Imports were up 108-thousand barrels per day last week to 6.7 million. Four-week average imports are down nearly six percent from the same period last year.
U.S. crude production continued to rise last week, topping eleven million barrels per day for the second week in a row. The Energy Information Administration reports domestic output reached 11.246 million barrels per day for the week ending June 11. That's up 203-thousand barrels per day from the week before, and more than 785-thousand barrels higher than a year earlier. The last time U.S. output topped eleven million barrels per day for two weeks in a row was in late January.
One barometer of oilfield activity is showing signs of improvement. The government's monthly Drilling Productivity Report shows the number of new wells drilled but uncompleted is going down in all of the major shale plays in the U.S. The nationwide total was down 3.6% from April to May, dropping by 247 drilled, and now completed, wells. Nearly half of those were in the Permian basin of Texas and New Mexico. The Energy Information Administration says Permian production will increase by 56-thousand barrels per day in July, while the other six major shale regions will all show slight declines.
U.S. oil-by-rail traffic was down from a week ago, but is up nearly 13% from a year ago. The Association of American Railroads reports 10,638 tanker cars hauling petroleum across the country during the week ending June 12, down 525 tankers from the prior week. Canadian oil-by-rail traffic was up 669 cars week-over-week, and marked an increase of more than 25% from a year ago.
A U.S. judge ordered the Biden Administration to immediately restart its oil and gas leasing program. The court sided with 13 states asking for an injunction against an executive order issued in January that stopped the leasing of public lands for oil and gas exploration. According to the judge, there are two existing laws that require the Interior Department to hold lease sales.
AAA says crude prices are up 32% from the first of the year, and that has pumped up gasoline prices. Motorists are paying an average of 37% more to fill up their gas tanks than they did on January first. The auto club predicts higher prices for the rest of the month, but says we could get some relief later this summer if crude production increases. Pump prices are slightly higher on the week. Triple-A says the national average is $3.07 per gallon. The Kansas average is just over $2.
The State of Colorado is considering new rules that could cost the state's energy industry billions. The Colorado Sun newspaper reports regulators are hoping to avoid paying to plug abandoned wells, by increasing the financial guarantees required of operators for each of their wells. Draft regulations released by the Oil and Gas Conservation Commission would require a financial guarantee of the full cost of plugging each well, at $78,000 each. The rules would cover all 50,000 of the states oil and gas wells. That comes out to $3.9 BILLION statewide.
Production in North Dakota rose slightly in April, while the state's gas-capture rate fell back from it's best-ever performance the month before. Regulators in the number-two crude producing state say output averaged over 1.12 million barrels per day, up about 13-thousand barrels per day from March. The statewide gas-capture tally was 93 percent, meaning just seven percent of the natural gas produced at the state's oil wells was burned off or vented. That's well within the state's voluntary caps on flaring.