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.