News From The Oil Patch 7/25/2016

Baker Hughes reported a big jump in the US rig count Friday, a total of 462 active rigs, up 15 for the week.  There were 14 more active rigs drilling for oil nationwide.  The count in Canada was up seven to 102 active rigs.  Independent Oil & Gas Service reports 11 active rigs in eastern Kansas, up three, and 16 west of Wichita, up one.  In Barton County, they're moving in rotary tools at one site and moving in completion tools at another.  Crews are also moving in completion tools at one site in Ellis County, one site in Russell County, and at three sites in Stafford County.
 
There were 41 permits issued over the last week for drilling in new locations across Kansas.  Of those, 22 were in eastern Kansas and 19 were west of Wichita, including one new drilling permit in Barton County.
 
Independent Oil & Gas Service reports 20 well completions last week across the state.  15 of those were east of Wichita and five were in western Kansas, including one dry hole completed in Ellis County.
 
Bloomberg reports the number of dormant crude and natural gas wells in the U.S. stopped growing in the first quarter, and may all but disappear should prices hold steady.  As of April 1, there were 4,230 wells left idle after being drilled, a figure little changed from January, according to an analysis by Bloomberg Intelligence. While some explorers have continued to grow their fracklog of drilled but not yet hydraulically fractured wells, the report showed others began tapping them in February as oil prices rose.  One analyst says crude prices in the $40- to $50-a-barrel range may wipe out most of the fracklog in Texas’s Permian Basin and as much as 70 percent of the inventory in its Eagle Ford play by the end of next year.
 
Despite the government's announcement last week, the state of Kansas and others will continue their lawsuit against listing the lesser prairie chicken as a threatened species.  The U.S. Fish and Wildlife Service last week announced it is dropping the effort.  This is good news for the oil patch in Kansas, where the listing would have cost producers a lot of money to protect the bird.  But, Kansas Attorney General Derek Schmidt says his lawsuit continues until Schmidt and other AGs get assurances that the federal government will not change its mind or shift what Schmidt called the agency's regulatory zeal to another species. Schmidt issued a statement calling the announcement "good news for private property rights, the rural Kansas economy and common sense." 
 
The State of North Dakota is suing the EPA over the agency’s rule to reduce methane emissions from oil and natural gas sources. In its petition for review, North Dakota asked the court to determine whether the EPA’s final rule on methane standards for new, reconstructed and modified sources in the oil and gas industry exceeds the agency’s statutory authority.  The petition contends that the rule “goes beyond the bounds established by the United State Constitution and is arbitrary, capricious, an abuse of discretion and not in accordance with law.” North Dakota asked the court to find the rule unlawful and set it aside.
 
Prosecutors dismissed 22 counts of fraud against a Texas lawyer and six co-defendants accused of faking more than 40,000 damage claims after the Gulf oil spill.  That leaves 73 charges against attorney Mikal Watts of San Antonio, two non-attorney members of his law firm and four contract field workers on trial in Mississippi.  Prosecutors say they invented victims or used real people's names without permission to land Watts a spot on the lucrative BP litigation steering committee and inflate legal fees he might collect.  Kenneth Feinberg, the head of the oil spill claims office testified that he was suspicious when Watts told him he was handling claims from 41,000 fishermen.  Feinberg read a letter in which he had told Watts: "It's hard to believe there are even 41,000 fishermen in the Gulf who would even file a claim."  The claims office had paid $1 billion to 50,000 people at that point, and Feinberg was skeptical that Watts alone could nearly double the list.  The trial is expected to last six to ten weeks.
When BP and other companies involved agreed to the class action settlement for the 2010 Deepwater Horizon explosion and oil spill, it included a $600 million cap for attorney fees and expenses. The 107 law firms that make up the Plaintiffs Steering Committee spelled out just how much work they have done in a court petition filed last week.  The New Orleans Times-Picayune reports lawyers logged more than 527,000 work hours...collectively about 60 years...in their efforts to recover damages for 130,000 individuals, businesses and governmental entities that took part.  The 107 firms in the multi-district litigation spent $45 million of their own money on that time, according to the petition. That would leave $555 million for actual fees.
 
The Vancouver, Washington City Council has voted to prohibit new or expanded crude oil storage facilities in the city. But it will likely have little effect on a massive oil shipping terminal planned for the Port of Vancouver.  The city council voted to prohibit the expansion of existing and new crude oil refineries and facilities that average less than 50,000 barrels a day within the city. Two refiners, Tesoro and Savage Services, want to build a rail-to-marine oil transfer terminal along the Columbia River that can handle an average 360,000 barrels of crude per day.
 
Britain's vote to exit the European Union is compounding the impact of the market slump in the North Sea, Bloomberg reports the pace of oil-field shutdowns is picking up.  Projected spending on decommissioning is expected to rise to $22.4 billion by the year 2024. The consulting firm Wood Mackenzie says the rout in crude to less than $50 a barrel has left about 30 percent of fields in the North Sea operating at a loss.  The collapse was pushing more producers to hasten plugging wells on the sea floor even before the U.K. decision to leave the European Union.