News From The Oil Patch 7/28/2014

Baker Hughes said on Friday the list of active drilling rigs nationwide increased by 12 to 1,883. The count in Canada was 395, up 14 rigs for the week.  In Kansas, there were 30 rigs actively drilling for oil and gas, unchanged from last week. Independent Oil & Gas reported 125 total rigs across Kansas, with 40 east of Wichita, up two, and 85 in the western range, one higher than last week.
 
Independent Oil & Gas Service reported 142 new well completions last week across Kansas.  That's 3,412 so far this year.  There were 57 completions noted in eastern Kansas, and 85 west of Wichita.
 
There were 133 new drilling permits issued in Kansas last week, for a year-to-date total of 4,241. There were 77 new permits listed east of Wichita, and 47 in the west, including five in Barton County, three in Ellis County, none in Russell County, and three new drilling permits in Stafford County. 
 
A milestone is coming this week: the first US oil shipments to another country that's not Canada. An undisclosed amount of ultra-light condensate could ship to South Korea's GS Caltex, and another shipment is set for October delivery to Cosmo Oil in Japan.  They are the first companies to purchase oil produced in the U.S. since Congress enacted the ban on exports in 1975.
 
The Obama administration is reopening the Eastern Seaboard to offshore oil and gas exploration, announcing final approval Friday of the controversial sonic cannons that can pinpoint energy deposits deep beneath the ocean floor. The cannons fill waters shared by whales and turtles with sound waves 100 times louder than a jet engine. Saving endangered species was best hope of environmental groups to extend the ban. The approval opens the outer continental shelf from Delaware to Florida to exploration by energy companies preparing to apply for drilling leases in 2018, when the current congressional limits are set to expire.
 
The government will offer another 21 million acres off the Texas coast for oil and gas exploration in a sale in August in New Orleans.  The more than 4,000 lease blocks covering roughly 21.6 million acres in the western Gulf of Mexico could produce up to 200 million barrels of oil and up to 938 billion cubic feet of natural gas.
 
Kansas oil production through April of this year totalled 15.96 million barrels, according to the latest figures from the Kansas Geological Society. The state produced 4.06 million barrels in April from more than 47-thousand wells.  That's nearly 13,000 barrels less than last month, but 61,000 barrels more than the production in April of last year.  Barton County increased production to 197,000 barrels plus in April, Ellis County production was down from last month to just under 281,000 barrels.  Production was down from last month in Russell County at nearly 174,000, and Stafford County production was up to just over 117,000 barrels in April.
 
At a luncheon  for the Oklahoma City Geological Society last week, one of the biggest producers in the patch presented it's slant on the recent string of earthquakes in Oklahoma.   Continental Resources VP of Geology Glen Brown made several points, according to local television reports, among them, that "there's a remote chance that fracking creates seismic activity."  But Brown also pointed out that most of the wells in Oklahoma are not located near any recorded earthquakes and asserted there is nearly 10-thousand feet in depth between the oil wells and the quakes.  He noted that during the same period Mexico has seen a doubling of seismic activity in areas without any oil and gas production.
 
Inter Pipeline Ltd has completed a $1.03 billion conduit serving two northern Alberta oil sands projects.  Inter Pipe said the new line will deliver as much as 350,000 barrels per day of diluent from the hub in Alberta to the Foster Creek and Christina Lake projects co-owned by Cenovus and ConocoPhillips.  Diluent is the ultra light form of crude oil blended into the bitumen from the oil sands so it can flow on pipelines.
 
The U.S. Department of Transportation formally proposed those new rules governing the increased movement of flammable crude oil and other dangerous liquids by rail.  The regs seek to phase out older tanker cars, require carriers to notify states that crude oil is coming through, lower speed limits, and enforce new testing and classification efforts.  Officials earlier this year asked carriers to stop using the older DOT-111 tank cars and signed an emergency order on state notifications because of explosive derailments in Virginia, North Dakota, Quebec and elsewhere.
 
Two railroad companies are suing in Maryland to block national media organizations from learning about crude oil shipments by rail through the state.  Regulators are ramping up their scrutiny of oil-by-rail, and the feds have ordred such information be released to individual states.  Rail companies have asked state officials to sign confidentiality agreements, arguing that sharing the data with the public could threaten security and market share. The DOT found that no federal law protects the information from public disclosure, and several states – including California, Washington, Illinois and Florida – have fulfilled open records requests, according to reporting by the McClatchy News Service.
 
The US has signaled that it may stop actively discouraging potential buyers of Iraqi/Kurdish oil. Over the weekend, the oil-patch press exploded with coverage of a tanker filled with Kurdish crude on it's way to Galveston.  If the trend continues, the market could see a fresh supply of 500,000 barrels of oil a day by the end of 2014 and double that volume a year later. Kurdistan already operates under relative autonomy but such new oil money could accelerate its advance toward independence from Iraq.
 
Oil and gas production provides a LOT of money for the University of Texas and Texas A&M systems. The executive director of University Lands, which manages 2.1 million acres, says energy production has generated $968 million for the schools thus far this fiscal year with two months to go.  Jim Benson predicts they'll break one billion dollars for the year for the first time ever.  The San Antonio Express-News reports a lot of that real estate is situated in West Texas, an area booming with production activity right now.  The newspaper reports energy production on University Lands property nearly doubled in the last two years.