News from the Oil Patch, Feb. 23
By John P. Tretbar
The Supreme Court has agreed to hear an attempt to block climate-change lawsuits from proceeding in state courts. Exxon Mobil and Suncor Energy are appealing a Colorado ruling allowing such a lawsuit. The suit blames the companies for the harms caused by climate change through their marketing, production and sale of fossil fuels. The plaintiffs charge the companies with violations of various state laws, including consumer protection provisions. The companies argue that climate policy is a purely federal issue, in part because pollution crosses state lines and cannot be addressed on a piecemeal basis.
A new wrinkle in Oklahoma over a five year old winter storm that prompted what one regulator called a multi-BILLION-dollar financing fraud. The Attorney General in Oklahoma has moved to join its original lawsuit over Winter Storm Uri with two other filings listing more than a dozen other companies as defendants. The AG says all three lawsuits assert anti-competitive and unlawful conduct that resulted in exorbitant natural gas prices during the storm in February 2021. According to a court filing, litigating the cases separately is "profoundly inefficient," addressing the same factual and legal issues. Joining the cases could also ensure a speedier resolution. Officials accuse the defendants of creating artificial shortages of natural-gas before and during the storm, and then diverting gas from Oklahoma customers to the spot markets for exorbitant profits. The defendants have not yet responded to the motion.
Kansas Common crude at CHS in McPherson starts the week at $56.50 per barrel, after dropping 25 cents on Friday. Kansas prices are up a dollar from the first of the month, up nearly nine dollars from the first of the year, but down more than four dollars from a year ago. US crude futures prices are holding at six month highs. Near-month NYMEX crude was down a few cents on Friday to close at $66.39 per barrel. Offers were a few cents higher Monday with quotes ranging from just over $67 to just over $65 per barrel.
The Rotary Rig Count from Baker Hughes is unchanged nationally at 551 rigs. That's down from 592 rigs a year ago. The weekly tally shows the tally of horizontal rigs is up two from last week, but down 47 rigs from last year. Alaska is up two from last week, Louisiana was down two. Texas and New Mexico each dropped by one rig.
The Kansas Rig Count from Independent Oil and Gas Service is eight rigs statewide, down three at three rigs in eastern Kansas, and down three at five rigs west of Wichita. Drilling was underway on Friday on leases in Rooks and Stafford counties.
Kansas regulators okayed five new drilling locations statewide, with three in Western Kansas, including on Gove County lease, and one in Rooks County. That's 53 new permit so far this year, compared to 101 a year ago.Independent Oil and Gas Service describes Kansas oilfield activity this week as sluggish, with 63 wells drilled from spud to full depth, so far this year. That's down from 111 a year ago. Total-footage-drilled is down 63 percent. There are 23 licensed operators who have drilled a well in Kansas this year, down more than half from a year ago.
Operators completed 13 wells this week, with eight in Western Kansas including one in Barton County, one in Finney County, and two in Gove County. Independent Oil and Gas reports 104 so far this year, down from 192 a year ago.
Commercial crude oil inventories are down nine million barrels this week, after rising nine million barrels last week. Stockpiles are about five percent below the five year average for this time of year. The government reports another 200-thousand barrels in the Strategic Petroleum Reserve, which is up 20 million barrels, or five percent, from a year ago.
US crude production is up slightly at 13,735,000 barrels a day. The Energy Department says cumulative output so far this year averages just over 13.6 million barrels a day, which is up nearly 200-thousand barrels from a year ago.
U.S. crude oil imports average just over six-and-a-half million barrels a day, down more than a quarter-million barrels from a week ago. The four-week average is down 80-thousand barrels a day from last year. Crude exports rose nearly a million daily barrels to just under 4.6 million. Petroleum product exports are up a quarter-million barrels, at just under seven million barrels a day.
The government says total petroleum product exports averaged seven million barrels a day for the month, which is up eight percent over January of last year and very close to an all-time high. The Energy Information Administration reports the increase is fueled mostly by exports of diesel fuel, which increased 19%. EIA says more diesel fuel is heading to Europe, and less to South America, which is historically our biggest customer. Diesel exports to Europe more than doubled.
The Treasury Department issued licenses to five Western oil companies allowing them to operate in Venezuela. Bloomberg says the five companies are BP, Chevron, Shell, Eni and RepSol. The licenses allow contracts with the Venezuelan oil company and limit payments to a US-controlled account. Some of the companies are still dubious. ConocoPhillips is waiting to be repaid after it's assets were seized last time it went to work there. The country’s oil production has fallen by about half since 2017, when Washington first imposed financial sanctions on the country.