News From The Oil Patch 7/27/2015

Baker Hughes reported an increase in its weekly count of active drilling rigs in the US.  There were 876 across the country, up 19 from last week. There were 200 in Canada, up eight, and eleven in Kansas, unchanged.  Independent Oil & Gas Service reported 18 active rigs east of Wichita and 32 in Western Kansas.  Independent listed 120 inactive rigs across Kansas, 12 of them shut down awaiting drilling contracts, and 108 listed as stacked.  There were two rigs actively drilling in Ellis County, two in Barton County and one in Stafford County. One rig is moving into a drilling site in Ellis County, and another was relocating in Barton County.
 
There were 54 drilling permits issued last week for new locations across Kansas, and just 1,410 so far this year.  There were 24 east of Wichita, and 30 in western Kansas, including two in Barton County, two in Ellis County and one in Russell County.
 
Independent Oil & Gas Service reported 24 new well completions statewide.  That 2,655 completions so far this year.  There were two in eastern Kansas, one in Barton County, and out of the 22 completions west of Wichita last week, eight were dry holes.
 
The Kansas Geological Society recognized and named four new oil and gas fields in Kansas, making the total so far this year 62 new fields, down 15 from the same period last year.  They were located in Cheyenne, Logan, Pawnee and Rooks counties.
 
Independent oil and gas ranked to top operators and top drillings in Kansas for the first half of the year.  Sandridge led the top operators list drilling 19 new horizontal wells.  They were followed by Merit Energy, Palomino Petroleum and Murfin Drilling, all using conventional vertial drilling.  Tapstone Energy reported 123 horizontal wells through June. WW Drilling was the top drilliner in the state with 82 wells under its belt during the first two quarters. They were followed by Murfin Drilling, Discovery Drilling, Lariat Services and Duke Drilling.
 
The Kansas Geological Survey reports first-quarter Kansas oil production of 12.1 million barrels.  If that holds up for the year, total production for 2015 would total 48.4 million barrels, less than last year, but more than any other year since at lest 1995. There were just 45,932 active wells, compared to more than 53,000 at the end of last year.  Harper County was the top producer with 946,646 barrels of crude oil produced in the first three months of 2015.  Ellis County had produced more than 774-thousand barrels.  Barton County output was 522-thousand barrels.    Russell County production was nearly 482-thousand barrels, and Stafford County output was just over 320-thousand barrels.
 
Utility regulators in North Dakota say a Texas company appears to have adequately addressed some of the biggest environmental issues facing its $3.8 billion pipeline from western North Dakota to Illinois. North Dakota's Public Service Commission held an informal work session on Dallas-based Energy Transfer Partners' Dakota Access project, the biggest-capacity pipeline proposed to date to move North Dakota crude across South Dakota and Iowa on its way to Illinois, where crude would be shipped to Midwest and Gulf Coast refineries.
 
Nebraska landowners challenging the law that allowed the new route for the Keystone Pipeline expansion get their day in court.  The company says 90% of the landowners in Nebraska have agreed to easements needed to build it.  On Monday, a hearing was scheduled for opponents who challenged the law.  Over the weekend, it came to light that the judge hearing the suit was part of an investment club that bought and sold shares in TransCanada, the company that operates the pipeline.
 
Lawmakers in Stillwater approved new rules this week for oil and gas drilling within the city to the disappointment of industry representatives.  The vice president of regulatory affairs at the Oklahoma Independent Petroleum Association says the city council's approval on Monday of a new ordinance is "essentially a ban" on oil and gas drilling in the city.  The measure applies only to new wells. It imposes a 660-foot setback from the property line of "protected use" properties, which includes homes, churches, parks and schools.  The ordinance also sets noise limits, requiring that ambient noise from drilling operations at the setback boundary be limited to 69 decibels, which is about the same noise level as a vacuum cleaner.  The limits approved by city leaders appears to fall within the restrictions allowed under a new state law.  That law prevents cities and counties from banning specific oil and gas operations, including drilling, fracking, water disposal, recovery operations and pipeline infrastructure.
 
The government gives Royal Dutch Shell a green light to drill for oil in the Chukchi Sea off the coast of Alaska.  For now, the company is only allowed to drill "top holes" to a depth of about 1300 feet.  Shell will need to file new paperwork for drilling to the deeper pay zones in the play once it has a ship cvapable of capping the well within 24 hours.  Shell will need to get permission for deeper drilling once it has a vessel capable of deploying a “capping stack,” a safety device for preventing oil spills.  
 
The oil and gas industry in Oklahoma is on the offensive about the growing regulations of saltwater disposal there.  The Daily Oklahoman quotes industry representatives saying a moratorium on wastewater injection wells could create economic and environmental problems throughout the state. Energy In Depth, a project of the Independent Petroleum Association of America, released a report explaining why "banning wastewater injections is not an effective solution for Oklahoma's earthquakes."  IPAA warns that a moratorium effectively would ban drilling throughout the area, including wells not linked to the earthquakes.
 
Should the government sell oil from the Strategic Petroleum Reserve to fund unrelated programs? Lawmakers are hoping to fund everything from the highway trust fund to government drug approvals and research funding.  But both proposals have drawn opposition. The Senate Energy Committee chairman, the U.S. energy secretary and oil industry analysts all criticize the move as shortsighted. According to the Wall Street Journal, the reserve is close to its 713.5-million-barrel capacity.