News From The Oil Patch 9/8/2015
08 September 2015
(UPDATE) The Kansas Corporation Commission plans to reconsider its new limits on saltwater disposal in Harper and Sumner counties. Commission staff says more study is needed on the subject of earthquakes in the patch. On Tuesday they told the Harper County Commission that the number of "felt" earthquakes is going down since the KCC ordered reductions in saltwater disposal in sensitive areas of the two counties. According to the preliminary data, the number of "un-felt" earthquakes in the area has increased even as the number of quakes that are felt is going down. Staff is recommending that the limits be continued. The Corporation Commission is expected to formally review the matter in the next couple of weeks.
The transition is complete in McPherson: the former NCRA refinery is now, officially, the "CHS refinery at McPherson, Kansas." CHS has been a part-owner since the organization was founded in 1943. In 2011 the company announced it would buy out the 26% share of the two minority partners, Growmark Inc and MFA Oil Company, for $350 million. The 85,000 bpd facility had about 650 employees at last check. They now work for CHS. The company also owns a 56,000 bpd refinery in Laurel, Montana.
A judge in Texas vacated the Fish & Wildlife Service’s listing of the lesser prairie chicken as a threatened species. The judge found that the agency failed to follow its own evaluation procedures for conservation efforts that already were under way. It remains to be seen how this will affect a similar listing decision, expected soon, for the greater sage grouse. Both birds dwell, and get very special attention, in the patch.
A U.S. House subcommittee has scheduled a vote Thursday on a bill that would eliminate the US oil export ban. The vote would clear the way for the bill to move forward. It was introduced by Rep. Joe Barton, R-Texas, and has 13 Democratic co-sponsors. Barton said he hopes to get a bill on President Obama's desk before the end of the year.
A judge ordered the Securities and Exchange Commission to pick up the pace for revamping a rule requiring oil companies to disclose the payments they make to governments around the world. The 2010 Dodd-Frank Act requires "resource extraction issuers" to report on payments made to governments. In 2012 the SEC issued a final rule to implement the statute language, requiring companies to report on a project by project basis what they pay governments to develop oil and gas resources. The oil patch opposed the rule, warning it would jeopardize investment in countries where such disclosures are illegal. A US judge in 2013 struck down the rule, but progress has been slow on the rewrite. On Wednesday, US district court judge Denise Casper directed the SEC within 30 days to provide an expedited schedule for issuing a new, final rule designed to provide new transparency for oil payments.
The average price last month for Kansas Common crude in McPherson was just over $33.17 cents per barrel. We started the month at $37 and ended the month on Monday at $39.25 We haven't seen a new price report from McPherson since CHS took full ownership Tuesday, but CVR in Coffeyville posted a big drop, down $3.75 to $35.50/bbl. The price in Coffeyville typically mirrors the price in McPherson.
ConocoPhillips announced it's cutting 10 percent of its workforce, around 1,810 jobs, following the ongoing price plunge in the patch. The company says most of the job cuts will be in North America, including more than 500 jobs at its headquarters in Houston. Most of those affected workers will receive layoff notifications next month.
Baker Hughes reported a drop in the active drilling rig count to its lowest level since July 10th, off 13 rigs at 864 across the US. The oil rig count accounted for all thirteen, marking the first drop in the oil rig count in seven weeks*. There were 187 active rigs in Canada, down nine, and eleven rigs actively drilling in Kansas, down two. The Independent Oil & Gas Service Red Top Rig Report shows 18 active rigs east of Wichita, down six, and 31 in western Kansas, up five for the week. There were 58 rigs listed as pending their next location assignment and a total of 120 rigs that were shutdown or stacked. We spotted three Barton County wells and three Ellis County wells that were either drilling or about to start. They're moving in completion tools at seven wells in our area.
The Kansas Corporation Commission reports just 166 new intent-to-drill notices across the state last month. That's down from 257 in July, and less than a third of the figure posted a year ago. There were five intents filed in Barton County, five in Ellis County and one in Russell County.
There were 38 drilling permits for new locations in Kansas last week, 1,675 so far this year. There were 27 new permits east of Wichita and 11 in western Kansas.
Independent Oil & Gas Service reports 21 completions statewide last week, 2,908 so far this year. There were 38 east of Wichita and just three in western Kansas. There were no dry holes completed last week.
The Nigerian National Petroleum Corporation will deploy drones across territorial waters as part of a series of new efforts to help curb rampant oil theft. The corporation is launching an "armada of approaches" aimed at ending theft within Africa's largest oil producer. At last count there were about 4,000 theft attempts at pipelines across the country per year, and a quarter-million barrels of oil per day lost to oil thieves.