News from the Oil Patch, 4/8/2024
John P. Tretbar
Spiking crude prices have spiked the Administration's plan to refill the Strategic Petroleum Reserve (SPR). The Department of Energy (DOE) unexpectedly canceled crude purchases aimed at refilling the SPR, citing current prices. DOE announced in March that it was soliciting 3 million barrels of oil, to help refill one of the four major government storage facilities. The announced target for the buybacks is $79 or less, nearly ten dollars below current pricing. The government has bought back about 32.3 million barrels since last year. The reserve, which held some 600 million barrels before the beginning of the Ukraine invasion, remains just over half full, with about 363 million barrels as of April.
Efforts to ban oil and gas exploration in Colorado have failed to find pay dirt. But the industry is bracing for new efforts to limit their efforts. The state's Senate Bill 159 was voted down in committee on March 28. That bill called for a phased-in ban on oil and gas permitting within five years. The industry says that would have killed more than 181,000 jobs, $321 BILLION in economic activity, and $48 BILLION in state and local funding. Colorado is currently the nation's number-four producer of crude oil. Natural gas production ranks eighth. The industry claims to have reduced emissions along Colorado’s Front Range by more than 50% within the last decade, and says ongoing efforts to stymie the permitting process will do little to limit emissions.
Monthly crude oil production in the United States dropped nearly six percent from December to January, as cold temperatures and winter storms gripped a large swath of the oil patch. The Energy Information Administration reports January output of 12.5 million barrels per day nationwide, down nearly six percent from December. The tally is 775,000 barrels a day below the all-time record high set in November. Each of the top producing states saw big declines: Texas and New Mexico were each down more than five percent. North Dakota dropped by nearly 13%. Colorado was down more than eight percent. Crude production in Kansas dropped nearly 14% to 63,000 barrels per day.
EIA's weekly crude production report averages 13,132,000 barrels per day for the second week in a row. Output is up more than a million barrels a day from a year ago.
Domestic crude inventories increased more than three million barrels last week. Government data show supplies total over 451 million barrels including the Strategic Petroleum Reserve. The Energy Information Administration say US Stockpiles are about two percent below the five-year average for this time of year.
The Kansas Corporation Commission reports 82 new intent-to-drill notices on file in March, including one in Barton County and one in Stafford County. That's 226 new intents so far this year, compared to 344 by the end of March last year.
The Rotary Rig Count from Baker Hughes is 620 rigs, up one oil rig but down two gas rigs. The tally in Texas is up seven rigs, New Mexico is down three and Louisiana is down two rigs.
The Kansas Rig Count from Independent Oil & Gas Service is down two at eleven rigs in eastern Kansas, and up one at 20 rigs west of Wichita. The tally is up 35% from a month ago, but down 21% from last year at this time.
Kansas regulators approved 22 new drilling permits last week, with seven in Western Kansas including two in Stafford County. That's 232 new drilling locations so far this year, compared to 314 a year ago.
Operators completed wells in Barton and Russell counties last week, among seven in Western Kansas. Independent Oil & Gas Service reports 23 newly completed wells for the week, and 301 o far this year. Last year at this time operators had completed 493 wells.
Crude oil imports exceeded crude exports by more than two million barrels a day. Total petroleum exports, including refined products, outpaced imports by 1.6 million barrels a day.US crude-oil and petroleum-product exports each declined last week. EIA said crude exports were down 159,000 barrels a day, while product exports were off by 711,000 barrels a day. Four-week average exports for crude and products drops by 781,000 barrels a day.
The government reported average crude imports of 6.6 million barrels a day for the week, down 85-thousand barrels a day from the week before. The four-week average is up slightly from last year.
U.S. exports of Liquefied Natural Gas lead the world, and the Energy Secretary says the pause on new export projects will soon be lifted. The U.S. exported more liquefied natural gas than any other country last year, at just under 12-BILLION cubic feet per day. The government says that's an increase of 12% over the year before. Energy Secretary Jennifer Granholm told a skeptical energy conference in Texas last month that a pause on U.S. liquid natural gas exports from new projects would be lifted within a year. The Department of Energy announced the pause to much alarm in January, as they sought to evaluate the impact of our gas export boom on climate, security and domestic prices.