News From The Oil Patch 9/30/2014
30 September 2014
Baker Hughes reported 1,931 active drilling rigs across the US on Friday, unchanged from last week. There were 420 in Canada, up one, and 25 in Kansas, unchanged. Independent Oil & Gas Service reported 125 active rigs, 40 in eastern Kansas (up three) and 85 west of Wichita (down one). There were 31 rigs listed as pending their next location assignment and 78 were stacked or idle.
Independent reported 130 drilling permits for new locations in Kansas last week, for a year-to-date total of 5,499. There were 63 in eastern Kansas and 67 west of Wichita, including two in Barton County, two in ellis County, and two in Russell County. There were 153 new well completions reported across the state last week, which is 4,398 so far this year. There were 79 east of Wichita and and 74 in western Kansas, including one new well completion in Barton County.
Booming oil production has produced a record $1.26 billion dollars for K-12 public education in Texas. A spokesman for the Texas General Land Office spokesman said the increase is due to a spike in drilling on state lands. The Permanent School Fund is now valued at more than $34 billion, but they can only spend the interest.
The ever-increasing production numbers out of Texas continue to astound. The Permian basin, now the nation's most productive, is producing 1.7 million barrels of crude per day as of September. 2nd on the list is the nearby Eagle Ford, with 1.5 million barrels per day. The Bakken Shale in North Dakota recently topped one million barrels poer day.
One of Canada's largest producers is moving into the Permian Basin of Texas and New Mexico in a big way. Encana is buying Athlon Energy for $5.9 billion, in a deal that will add 140,000 net acres to the Canadian driller's portfolio. Analysts say the deal will add about 30,000 barrels of crude oil per day to Encana's production capabilities. Behinc the deal is Encana's ongoing efforts to move away from natural gas, with its low prices, and into oil, which is seen as more lucrative.
We've heard a lot of late about the possibility of relaxing decades-old restrictions on the export of US oil. Loren Steffy of Forbes Magazine argues against it. Steffy acknowledges that relaxing the US export ban could give us more leverage in influencing prices in the global market, which he says could be important since we are the world's largest consumer of crude oil. But he points out that the US last year imported slightly more oil than we produced. That's just under 7.5 million barrels per day in production, compared to about 7.7 million barrels imported. He says every barrel we export is one more barrel we're going to have to import.
According to the Wall Street Journal, U.S. oil exports, mostly to Canada, hit a 57-year high in July. U.S. crude shipments averaged 401,000 barrels a day in July, up from 396,000 barrels a day the prior month and nearly quadruple the 104,000 barrels a day exported a year ago at this time. It was the second month in a row that exports were the highest since March 1957, according to data from the Energy Information Administration. Congress prohibited exporting crude oil without a license in 1975. Most licenses are for shipping crude to Canada.
Enbridge Inc on Tuesday announced a delay in its planned Sandpiper oil pipeline taking crude from the Bakken oilfields of North Dakota to its mainline system. They pushed the beginning of operations back until 2017, a year later than originally forecast. Enbridge's chief executive said the delay was caused by the Minnesota regulator's decision to split a review of the need for the line and its routing into two separate hearings.
Tuesday was the dealine set by the Transportation Department for industry response to government oil-by-rail safety proposals. We heard from representatives of the refining and producing sectors Tuesday, and as you might expect, both opposed some of the proposals. According to Reuters, the American Fuel and Petrochemical Manufacturers called a plan to check crude deliveries for esxplosive gas vapor "...unnecessary, unduly proscriptive and burdensome." Industry leaders said a demand to quickly retool or retire the US fleet of tank cars would stifle transit. The American Petroleum Institute said a three-year phase out program could weigh on the economy "because you can't get enough cars to continue moving the product." Transportation Secretary Anthony Foxx has said he hopes to have the proposal done by the end of the year.
The American Petroleum Institute has published new recommendations for testing and classifying crude oil and then loading it into tank cars. The so-called "RP-3000" offers guidance on sampling and testing, determining how often crude should be sampled and tested, documentation, assigning packing groups, and proper quantity measurement to prevent overfilling tank cars. API began publishing standards in 1924, and currently has over 650 standards and technical publications, with over 100 of them already incorporated into US regulations.
Minnesota Gov. Mark Dayton wants added safety measures for oil trains leaving North Dakota. Dayton made the request Tuesday in a letter to North Dakota Gov. Jack Dalrymple. Dayton says Minnesota is “one of the primary routes” for Bakken oil being transported from North Dakota. But Dayton says Minnesotans receive little benefit from the oil trains while experiencing increased risks of a derailment.
North Dakota oil producers told the state’s energy regulators on Tuesday that field practices used to prepare Bakken crude for rail transport are safe and that tougher rules could do more harm than good. The North Dakota Industrial Commission hosted experts ahead of its planned release of new regulations by mid-December.
Canada's largest oil and gas producer, Suncor Energy, is shipping its first ever tanker of Western Canadian heavy crude to Europe, via Canada's East Coast. A spokeswoman confirmed Reuters shipping data showing a tanker was set to pick up the cargo from the port of Sorel-Tracy on the St Lawrence River in Quebec. Reuters says the crude was delivered by rail to a storage facility at the port. The company would not comment on where the cargo is going.
Despite US sanctions, Exxon Mobil and the Russian oil firm Rosneft have continued deepwater drilling operations in the Arctic waters of the Kara Sea. Last week they reported hitting pay dirt, and according to World Oil, they could be sitting on more than one billion barrels of crude. The two companies have been drilling since August of last year at the site.
In the first of its kind that we've seen, Pemex has announced a memorandum of understanding between the state-owned Mexican energy firm with Petronas of Kuala Lumpur. The MOU covers possible joint development of infrastructure, deepwater projects, and work on mature fields.
Pemex claims the country's drug cartels have drilled 2,481 illegal taps into state-owned pipelines, stealing some 7.5 million barrels of crude oil. Most of that "bunkering" is happening in the same area of Mexico that is about to become the center of activity as the country expands it's energy sector to foreign investment.