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News From The Oil Patch 7/21/2014

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Independent Oil & Gas reports 95 drilling permits issued for new locations in Kansas for the week ending Friday.  That's 4,013 new drilling permits so far this year.  There were 38 east of Wichita, and 57 in the western range, including two in Barton County and two in Ellis County.  There were 66 new well completions across Kansas last week for a year-to-date total of 3,270.  49 of those were in eastern Kansas, and 49 were west of Wichita, including one completion in Ellis County.
 
Baker Hughes reported 1,871 active drilling rigs across the US Friday, that's four lower than a week earlier.  Canada had 57, up two.  One rig dropped off the list of 30 active rigs in Kansas.  Independent Oil & Gas Company reported 122 total drilling rigs across the state on Friday.  That's 38 in eastern Kansas, up one, and 84 west of Wichita, also up one.
 
Land men are buying up real estate in advance of what some are touting as the biggest oil & gas boom in US history.  The latest estimates for the Cline formation in the Texas Permian basin could reach an astounding 3.6 million barrels of recoverable oil per square mile.  That would give the Cline Shale 30 billion recoverable barrels.  So, even though it's smaller in area than the other big plays in Texas, it contains more oil than the top two US producers, the Bakken and Eagle Ford, combined.  The real estate is needed for a potentially huge influx of people.
 
North Dakota's top oil regulator says the state’s oil production rose 3.6 percent in May to a new record, nearly 40-thousand barrels higher than their recent milestone of one million barrels per day.  Lynn Helms, the director of the state's Department of Mineral Resources expects five to six percent production increases each month this year, which would double the increases reported in the last couple of months.
 
Two longtime competitors based in Denver are merging to become North Dakota's largest oil and gas player, producing about ten percent of the state's output at more than 107-thousand barrels per day.  The combined company will have 855,000 net acres and 3,460 drilling sites.  Whiting Petroleum is buying Kodiak Oil & Gas for $3.8 billion and will assume $2.2 billion of Kodiak's debt.
 
Regulators report a big drop in the volumes of oil shipped by rail out of North Dakota.  The North Dakota Pipeline Authority says about 59% of the state's more than one million barrels a day was shipped by rail in May. That’s the lowest rail percentage since November 2012. In April, 63 percent of the oil produced in North Dakota was shipped by rail, down from a peak of 75 percent in April 2013.  New pipelines are picking up that slack with more expected to go online soon. 
 
Supporters of a ballot initiative to give local communities in Colorado the right to ban fracking has hit a roadblock, and now admit the measure will not make the November ballot.  The coalition of volunteer groups now says it will not be able to gather the required signatures needed by the August 4th deadline.  Look for redoubled efforts in two years.  The organizers for two pro-industry initiatives are still working to put those questions to a vote this year.  Iniative 75 was strongly worded, going well beyond a fracking ban.  It would give cities and towns "the power to define or eliminate the rights and powers of corporations or business entities."
 
The City Council in Denton, Texas took eight hours of public testimony before voting down a petition to ban further hydraulic fracturing permits.  The 5-to-2 vote sends the proposal to a public ballot in November.  Tom Phillips, a former chief justice of the Texas Supreme Court, representing the powerful Texas Oil and Gas Association, testified that some of its thousands of members would "undoubtedly sue" if the ban eventually passes.
 
Royal Dutch Shell announced the discovery of roughly 100 million barrels of oil equivalent in the Gulf of Mexico's Norphlet formation.  This marks the company's third discovery in that formation, which is roughly 75 miles off the Louisiana coast.   The company has announced similar findings at two nearby wells in recent years, and the area has the potential to become a major hub for Shell, which is already the biggest player in the Gulf.
 
The US welcomed a move by China to take that drilling rig out of disputed international waters in the South China Sea, but said the entire problem highlights the need for China and Vietnam to clarify their territorial claims in accordance with international law.  The state-run China National Petroleum Corporation announced Wednesday that the billion-dollar rig HD-981 will be relocated to an area closer to the Chinese mainland in waters that are apparently not in dispute.  The arrival of the drilling rig near the Paracel Islands in early May ramped up tensions with Vietnam, which also claims the waters, and sparked deadly riots in Hanoi. China could return to those disputed waters.  According to a release on World Oil Dot Com, the company locked the exploration targets and identified well locations, and the next phase of the project awaits a comprehensive assessment of what are described as "oil & gas shows."
 
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 approval opens the outer continental shelf from Delaware to Florida to exploration on leases pending in 2018, when the current congressional limits expire.
 
The government will offer another 21 million acres off the Texas coast for oil and gas exploration in a sale next month 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.
 
The dream of pollution-free coal plants is getting a boost from growing demand for carbon dioxide used to revive old oil fields.  Bloomberg reports one of the first major projects to harness CO2 at a coal plant to enhance oil recovery was expected to begin construction Tuesday.  NRG will retrofit its East Texas coal power plant and pump CO2 into a nearby oil field that it partially owns.  They'll spend one billion dollars on the project in hopes of loosining trapped crude deposits, while burying the increasingly regulated greenhouse gas.  They hope to pay for it will increased proceeds from the oil field.
 
Mexico on Friday put into effect an agreement signed in 2012 with the United States to allow companies to exploit deep water oil resources in the Gulf of Mexico that straddle the countries' maritime boundaries.  The deal lifts a moratorium and sets up a framework for companies to jointly develop any trans-boundary reservoirs.  The Mexican national Pemex is opening the country's oil & gas sector to private investment.  The Congress in Mexico is working through a series of bills needed to implement the energy reform.

News From The Oil Patch 7/14/2014

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U.S. crude production is likely next year to hit its highest level since 1972 according to a forecast Tuesday by the Energy Information Administration. U.S. production has already jumped from 5.0 million bpd in 2008 to 7.4 million last year.  The average is expected to surge to 8.5 million  this year and 9.3 million next year
 
Baker Hughes noted 1,875 active drilling rigs nationwide on Friday, July 11, up one from the week before.  Canada gained six rigs at 315, while the count in Kansas was 31 active rigs, up two.  Independent Oil & Gas Service reported 120 total drilling rigs across Kansas, 37 east of Wichita (up one), and 83 in western Kansas, unchanged from last week.
 
Independent Oil & Gas reported 94 new well completions across Kansas last week, which marks 3,204 completions year-to-date.  There were 38 east of Wichita, and 56 in the west, including one in Ellis County last week.  For the month of June there were 417 completions statewide, down 59 from May of this year and 48 lower than a year ago.  There was one completion in Stafford County, and one in Barton County in June.
 
The Kansas Corporation Commission issued 173 permits to drill in new locations, bringing the total for this year to 4,013.  There were 118 in eastern Kansas and 55 west of Wichita, including one new drilling permit in Barton County, four in Ellis County, none in Russell County and three in Stafford County.  For the month of June, there were 470 new drilling permits issued across Kansas, a dramatic drop from the 801 permits issued in May of this year, and more than 100 lower than the 573 issued in June of 2013.  
 
It now appears the state of Oklahoma might reverse course and release details of oil trains crossing the state on their way from North Dakota to the Gulf Coast.  The federal government in May ordered railroads to share with state authorities more information about some oil shipments. Oklahoma's Department of Environmental Quality has worked to keep those shipment details secret, citing concerns over terrorism.  But a spokewoman for the department tells the Daily Oklahoman that could change.  Skylar McElhaney says officials at first acted under guidance from the federal government.  But, now that DOT and the Federal Railroad Administration have affirmed that such details are not security sensitive, the staff at DEQ is looking into the validity of the non-disclosure agreements.
 
Platts Energy Week is coming soon to televisions in Oklahoma.  The statewide public television network OETA becomes the 17th Market to carry the program, joining TV stations in  other key energy-producing states.  By way of introduction to the new audience, Platts Energy Week Host Bill Loveless will interview Oklahoma Secretary of Energy and Environment Michael Teague on the outlook for the state's oil, natural gas and renewable energy development
 
Canada's National Energy Board has agreed to give two big energy companies more clarity over their plans to deal with a potential well blowout in the Beaufort Sea.  Imperial Oil and Chevron Canada asked the board for more certainty before committing huge amounts of money to explore in Arctic waters.  Canada's top energy regulator reviewed its ARctic drilling rules after the Deepwater Horizon blowout in the Gulf of Mexico four years ago.  The companies claim there are more feasible ways to kill a blown out well than the methods required under the new rules.  The NEB requires companies to show they can kill a ruptured oil well in the Arctic offshore with a relief well in the same season it's drilled — a difficult and costly proposition in that harsh environment.  According to the Calgary Herald, the NEB will look at Imperial and Chevron's alternatives before the companies are required to file a full regulatory application.
 
Backers of a proposed crude oil transfer terminal in Vancouver, Wash. are starting a public relations push ahead of a draft environmental impact statement, scheduled to come out in a few months.  Crude oil trains through the state could take a significant jump if the 360,000 barrel a day terminal is built.  The Puget Sound Business Journal cites backers of the $190 million terminal saying they will only use the new safer tank cars built with heavier steel, a standard called CPC-123.  The terminal is a joint venture between Utah-based Savage Companies, and the oil company Tesoro.

News From The Oil Patch 7/8/2014

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Baker Hughes reported 1,874 active drilling rigs last week across the US, one higher than the week before.  In Canada there were 309, up 73, and in Kansas there were 29, down one. Independent Oil & Gas Reported 119 total rigs across Kansas, with 36 east of Wichita, down one, and 83 in the western range, down three.
 
Independent Oil & Gas Service Inc. has introduced a new database feature on its Web site at www.iogsi.com.  You can now search for the most active operator or drilling contractor in Kansas over a specific period of time. We entered a search for the year ending Monday, and found that SandRidge E&P was the busiest operator drilling 204 wells over the last year.  Next were Murfin Drilling with 143, and R J Enterprises with 139.
 
There were 52 well completions in Kansas last week, which makes 3,110 so far this year.  There were just two in eastern Kansas and 50 reported west of Wichita.  
 
Independent Oil and Gas Service reported 111 new drilling permits in Kansas for the week ending July 3, for a year-to-date total of 3,840. There were 68 drilling permits in new locations in eastern Kansas, and 43 west of Wichita, including three in Russell County.
 
The Kansas Corporation Commission reports 473 new intent to drill notices across the state for June, 14 in Barton County, six in Ellis County, 12 in Russell County, and 10 in Stafford County
 
A lightning strike Monday afternoon caused an explosion, fire and spill at a Saltwater Disposal Well site in western North Dakota.  The spill released 167 barrels of oil, and 2,000 barrels of wastewater.
 
The Enbridge Northern Gateway Pipeline, from the Alberta Oil Sands to the Pacific Coast, is caught in a tug of war, receive final approval from the government, just as the Candian Supreme Court approached a ruling on a native tribe's claim to land along the proposed route.  Prime Minister Stephen Harper officially approved the project just days before justices wrap up deliberations on the claim of sovereignty over the property. 
 
A ruling from the New York State Court of Appeals affirmed a lower court decision that said state oil and gas law does not trump local governments' authority to control land use through zoning.  That effectively allows local governments to ban hydraulic fracturing.  The state already has a moratorium on fracking despite sitting atop the Marcellus Shale formation's natural gas deposits.
 
North Dakota operators that fail to meet the state’s flaring reduction targets may soon be forced to curtail oil production from wells targeting the Bakken and Three Forks formations, according to an order issued July 1 by state regulators.  The order is the enforcement mechanism for the state’s flaring reduction plan, which was approved in March by the North Dakota Industrial Commission.  Beginning Oct. 1, wells in the state could be subject to potential production curtailments if the amount of flared gas exceeds the state’s gas capture target. Speaking to a press conference on July 1, Lynn Helms, director of the state’s Oil and Gas Division, said most Bakken operators are already in compliance with the flaring reduction targets. But, “there’s some, a handful, that are really going to need a lot of wellsite technology.”  
 
We told you two years ago about Chinese hackers who were targeting the computer systems of US energy firms.  Now it appears the Russians are getting into the act.  Private cybersecurity researchers say Russian hackers have been systematically targeting hundreds of Western oil and gas companies, as well as energy investment firms.  The motive behind the attacks appears to be industrial espionage.  The Russian attacks have affected over 1,000 organizations in more than 84 countries.  According to the New York Times, they were first discovered in August 2012 by researchers at the security firm CrowdStrike.  Researchers believe the hackers were backed by the Russian government.  The computer security firm Symantec detailed similar conclusions and added a new element — a worldwide remote control capability, similar to that used by US and Israeli spies to destroy a fifth of Iran's uranium supply five years ago.

News From The Oil Patch 6/17/2014

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The latest U.S. government data show domestic oil production rose to 8.46 million barrels a day last week, up from 7.2 million barrels at the same time last year, and  80 thousand barrels higher than the week before, and 1.26 million barrels higher than a year ago. 
 
The State of Kansas produced another 3.55 million barrels of crude oil in February, according to the latest numbers from the Kansas Geological Survey.  That's down from the 4.27 million barrels produced in January of this year, but about 300,000 barrels more than we produced in February of last year.  Barton County produced 162 thousand barrels in February, Ellis County operators produced nearly 251 thousand barrels, Russell County produced more than 153 thousand, and 97 thousand barrels came out of the ground in Stafford County.  The cumulative total production for the State of Kansas: 6.49 BILLION barrels all time.
 
According to the latest BP Statistical Review of Energy, world oil consumption grew faster than production last year. The report released Monday found that around the world, oil consumption grew 1.4%, or 1.4 million barrels per day.  The Wall Street Journal reports that's slightly above the historical average.  But oil production grew by just .6%, or 560,000 barrels per day.  BP officials say oil-price volatility is at its lowest level since the 1970s, because the spike in US production offsetting supply disruptions elsewhere.
 
Oklahoma’s two largest industry groups joined two of the nation’s largest oil and gas trade associations in suing the federal government, arguing they did not consider the best available science in deciding to protect the lesser prairie chicken as a threatened species.  The suit does not challenge Fish & Wildlife’s decision to endorse extensive voluntary conservation efforts.  There are an estimated 34,000 of the birds in five states, including Oklahoma and Kansas.
 
There were 114 well completions noted across Kansas last week.  That makes 2,871 so far this year.  There were 53 in the eastern half of the state, and 61 west of Wichita, including one well completion in Barton County.
 
Baker Hughes reports 1,824 active oil and gas drilling rigs in Kansas on Friday, down six from last week.  There were 244 rigs at work in Canada, up 30.  In Kansas the count was up two at 33 rigs.  Independent Oil & Gas Service reports 129 total rigs across Kansas, 39 east of Wichita, down two, and 90 in western Kansas, up one from last week.
 
Independent Oil & Gas reports a total of 801 new drilling permits in May, for a statewide year-to-date total of 3,332.  That includes 11 new drilling permits in Barton County, 11 in Ellis County, eight in Ellis County, and nine in Stafford County.  There were 476 newly completed wells statewide last month, 1,164 in western Kansas and 1,001 in eastern Kansas.
 
In a monthly report issued Tuesday, the US Energy Information Administration raised its forecasts for average oil and gasoline prices for 2014.  EIA says West Texas Intermediate crude will average $98.67/bbl, up more than two dollars.  The estimate for London Brent crude was up from $106.26 to $107.82/bbl.  The government expects gasoline prices to average $3.50/gallon this year, up two cents from its previous prediction.
 
The FAA announced it has granted BP the first-ever approval to fly drones for commercial purposes over U.S. land.  They launched the first drone flight on Alaska's north slope last week.  The license expires in five years.
 
A Vancouver-based company is planning to build an oil refinery on the north-west coast of British Columbia that could eventually process up to 1 million barrels per day of oil sands bitumen.  It could be up and running in about 7 years. 
 
Nigeria is pushing OPEC to name the country's oil minister as its secretary-general.  She would be the first woman to lead the cartel, but is a polarizing figure in Nigeria because of allegations of corruptuion and oil-wealth mismanagement.

News From The Oil Patch 6/9/2014

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The number of drilling rigs actively exploring for oil and gas in the US is up 5.2 percent year-on-year.  The U.S. rig count for May was 1,859, up 24 from April and up 92 from May 2013.  For the week, Baker Hughes says there were 1,860 active drilling rigs across the US Friday, down six.  There were 214 in Canada, up 16 for the week.  The count in Kansas was unchanged at 31 active drilling rigs.  Independent Oil & Gas Service reports 130 total rigs in Kansas Friday, with 41 east of Wichita, down one, and 89 in western Kansas, down two for the week.
 
There were 149 new drilling permits issued by the Kansas Corporation Commission last week, for a year-to-date, statewide total of 2,406.
 
Independent oil and gas reported 116 new well completions across Kansas last week, to bring this year's total to 2,757 completions.  There were 54 east of Wichita and 62 in western Kansas.
 
The Association of American Railroads reports 110,164 carloads of crude oil were shipped during the first quarter of this year.  That's more than any other quarter in history.
 
Oil-by-rail to California skyrocketed last year, and now lawmakers there are scrambling to enact safety measures.  Governor Jerry Brown wants to expand an existing prevention-and-response program for ocean oil spills to cover inland areas. He wants to pay for that with a 6.5-cent-per-barrel fee on all crude oil delivered by rail.  There are two measures making their way through the legislative process that seek to improve communications and transparency.  Railroads are eager to cooperate but question the need for new state regs that might conflict with federal oversight.  
 
The state of Oklahoma is currently the fifth-biggest oil producer in the US, but that could change. Quoting Harold Hamm of Continental Resources, the Daily Oklahoman notes that tax incentives in the Sooner State ARE increasing oil production, and could raise Oklahoma to #3, passing Alaska and California along the way.
 
North Dakota oil companies must now submit a gas capturing plan with their drilling permits under new rules aimed at cutting down the amount of natural gas burned off and wasted as a byproduct of oil production.  The state  is requiring a signed affidavit to show that gas-gathering companies have been consulted so that they may plan to meet the demand.
 
Federal regulators have come to the conclusion that the blowout preventer on the Macondo Well in the Gulf of Mexico actually caused the massive spill that followed the explosion that killed 11 crew members back in 2010.  The report by the Chemical Safety Board raises new questions about the effectiveness of those giant valves designed to seal off an oil well in an emergency. Investigators warned that this is not unique to the Deepwater Horizon rig and could occur at other drilling sites.  TransOcean, the owner of the Deepwater Horizon drilling rig, is still fighting the board's subpoenas in court.
 
Governor Jack Dalrymple will once again meet with industry leaders to push for more oil and gas pipelines in North Dakota.  The summit is slated for June 24.  North Dakota produces about 1 million barrels a day but about 70 percent of that is being moved by rail.  Dalrymple said more pipelines will reduce truck traffic, curb natural gas flaring and create more markets for the state’s oil and natural gas.
 
Canada is enjoying an unexpected boom in production of ultra-light crude known as condensate, and that's good news for current and planned oil sands production.  Some companies in the oil sands business are paying premiums, up to $25/bbl, for the condensate, which is used as a diluent to dilute their product for shipment in pipelines.  Next week, the Canadian Association of Petroleum Producers is expected to announce dramatic growth in condensate production after earlier predictions expecting a decline. In April, Canada's National Energy Board said it expected output to rise 13 percent this year to 172,000 bpd.
 
Enbridge faces resistance to the end point for its proposed Northern Gateway oil pipeline from the Alberta oil sands to the Pacific Coast.  But the company could pursue another option thanks to its December purchase of a parcel of land close to the British Columbia port of Prince Rupert.  Analysts say the new location provides a shorter route to and from the shipping lanes, and doesn't present the narrow sections and other navigation hazards found on the way to the port at Kitimat.

News From The Oil Patch 6/2/2014

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There were 806 intent-to-drill notices filed with the Kansas Corporation Commission last month, down from 865 in April but well ahead of the 560 filed in May of last year.  There were nine filed last month in Barton County, 15 in Ellis County, nine in Russell County, and eight in Stafford County.
 
There were 77 new well completions across Kansas last week for a year to date total of 2,641.  There were 31 new completions in eastern Kansas and 46 west of Wichita.  There was one new well completion in Stafford County last week.
 
Independent Oil & Gas reported 174 drilling permits issued in new locations in Kansas last week for total of 3,257 so far this year.  There was one new drilling permit last week in Barton County, four in Ellis County, none in Russell County and two in Stafford County.
 
There were 112 new well completions reported for a year-to-date total of 2,564.  Independent reports four completed wells in Barton County, two in Ellis County, one in Russell County and none in Stafford County.
 
The Kansas Geological Survey and the KCC recognized and named 12 new oil and gas fields and six new pay sources in existing fields in Kansas.  During a meeting May 20th, they named the Kelly North field in Stafford County, operated by Hutchinson Oil Company on the #1 KD lease.
 
Baker Hughes reports 1,866 drilling rigs actively seeking oil and gas across the US, up nine for the week.  The count in Canada Friday was 198 rigs, up 44, and in Kansas there were 31, down one.  Independent Oil & Gas reports 133 total drilling rigs across Kansas.  The 42 reported east of Wichita was down one for the week.  There were 91 in western Kansas, also down one.
 
At least one oil company is pulling out of western Kansas because of new federal rules protecting the lesser prairie chicken.  Mike Vess of Vess Oil Corp told Fox News that his company is established enough to survive, but smaller ones might not.  Vess said hourly workers and subcontracters such as geologists and water haulers will be hit hard.  Producers say they had too little time to digest new regulations and figure out how to avoid potential criminal and civil penalties. Vess is asking federal officials to suspend the enforcement of the new regulations for six months so both sides can talk about best practices.
 
An eastern New Mexico county is suing the federal government in an effort to stop the listing.  The Roosevelt County Commission was expected to meet in special session to give notice of intent to file suit against the Fish and Wildlife Service.  In addition to threats to the ranching and energy industries, the county is claiming an impact on its road budget.
 
A new report by the research firm IHS asserts that lifting the ban on US oil exports would add $750 billion in new investment, create more than a million new jobs in the next three years, and lower gasoline prices by an average eight cents per gallon starting in 2016.
 
The North Dakota Petroleum Council is planning a celebration June 25th to mark state oil production over one million barrels per day in April, even before the formal release of the April numbers.  The total for March was an average of about 977,000 barrels per day.  
 
Oklahoma Gov. Mary Fallin on Wednesday signed legislation making permanent the state’s oil and natural gas gross production tax at 2 percent for the first 36 months of production.  The measure faces a likely constitutional challenge from attorney Jerry Fent of OKC.  Fent says it was passed during the last week of the legislative session in violation of a constitutional requirement, and did not get the required 3/4 majorities in the House and Senate.
 
BP must resume paying claims while it asks the U.S. Supreme Court to review its settlement with businesses over the 2010 Gulf of Mexico oil spill.  That's the word on Wednesday from a federal appeals court panel.  The 2-1 judgment said the 5th U.S. Circuit Court of Appeals will not put a stop to payments while BP appeals the court's earlier ruling that businesses, under the settlement, don't have to prove they were directly harmed by the spill to collect money.
 
Residents are hoping to derail plans for what would be the Pacific Northwest's largest crude oil train terminal, the  proposed destination for at least four mile-long trains a day, each more than a mile long.  The trains would each carry tens of thousands of barrels of crude from the Bakken oil fields in North Dakota.  Supporters say their proposed terminal will create at least 80 permanent jobs and will bring an economic windfall to the region.