Jan 19, 2021 2:54 PM

News From the Oil Patch (1/19)

Posted Jan 19, 2021 2:54 PM

John P. Tretbar

Oil prices remain at eleven-month highs. Crude futures were slightly lower by midday Monday, with the benchmark Nymex contract going for $52.22 per barrel.  WTI has settled above $52 per barrel for the last week or so, topping $53 twice during that period.

Kansas Common crude at CHS in McPherson starts the week at $42.50  per barrel, unchanged from a week ago and four dollars higher than at the first of the year.

Baker Hughes reports a big increase in its weekly Rotary Rig Count. There are 373 active rigs across the U.S., an increase of 12 oil rigs and one gas rig. The count in Texas was up eight, while Louisiana was up four rigs. Canada reported 161 active rigs, up 44 rigs for the week.

Independent Oil & Gas Service reports five active rigs in eastern Kansas, which is up two for the week, and eight in the western half of the state, which is down two.

Kansas regulators approved ten new drilling permits last week, ten in the eastern half of the state, and two in Western Kansas. There are 18 new drilling permits across the state so far this year.

Independent Oil & Gas Service reports 15 newly completed wells last week, eleven in eastern Kansas and four west of Wichita. That's 21 completions so far this year.

The government reported a sizable drawdown in U.S. crude oil supplies. For the week ending January 8, the Energy Information Administration reports total stockpiles of 482.2 million barrels, down more than three million barrels on the week. EIA says inventories are about eight percent above the five-year seasonal average.

U.S. crude-oil production dropped slightly according to the latest weekly numbers from the government. The Energy Information Administration says weekly output through January 8th dropped by 103 thousand barrels per day, but remain above eleven million barrels per day.

Imports were up by nearly a million barrels per day to 6.2 million. Over the past four weeks, crude imports averaged nearly 15% less than the same four-week period last year.

Crude storage usage at Cushing ticked up slightly for the week ending January 1st.  EIA reports the Oklahoma storage facilities are now at 75% of capacity.

The nation’s highest court will address the controversial Renewable Fuels Standard of the Clean Air Act, which requires the use of renewable fuels at refineries.  At issue are the waiver extensions granted to small refineries in Oklahoma, Wyoming and Utah that have now been rejected by a federal appeals court. The U.S. Supreme Court will review the appeals court ruling.

The State of New Mexico is getting better at its energy audits. The State Land Office reported its 2020 audits of oil and gas royalty collections turned up an additional $2.3 million. The agency said that's a nearly 48% increase over the previous year and a 120% increase over what was recouped in 2018. About 85% of all royalty revenue collected by the land management agency is audited every five years. Money generated by business on state trust land is deposited into the Land Grant Permanent Fund, which is then invested by the State Investment Council. The funds help to support public schools and other beneficiaries.

Crude oil production in the North Dakota dropped a million barrels per day in November, the latest numbers available. The Department of Mineral Resources reported November output of 1.22 million barrels per day. The state continues to exceed its gas-capture goals. The number-two crude-oil producing state was able to capture 93% of the natural gas produced at oil wells, reducing the amount flared or vented to just seven percent. During the spike in production in North Dakota starting in 2014, the state's operators were unable to reach much more modest gas-capture goals.

North Dakota’s oil industry is seeking to reduce the amount of interest and penalties the state can charge companies for unpaid oil and gas royalties. The Bismarck Tribune reports a trade group is asking lawmakers for a break on late royalty payments, which currently include penalties up to 30%. The President of the North Dakota Petroleum Council, called that "unnecessary punitive."

The Russian state oil company is courting a new list of investors to help develop the Vostok Oil project in the Arctic, one of the world's biggest oil deposits. They're negotiating with at least three major global trading houses, which generally avoid investing directly in production. Reuters reports the new deal would give those trading houses a long-term source of supply for the Asian market. Company officials say the field has enough crude to supply the world for more than a year, but will require vast investments in new pipelines, roads and other infrastructure.