News From The Oil Patch 9/17/2013
17 September 2013
Increases in the severance tax in Kansas have had a positive impact on tax collections, but not as large as once expected. The move was thought at the time to be a way to take advantage of what was predicted to be a bonanza of oil discovery from the Mississippian Lime Play. Steve Stotts, the Director of Tax Operations for the Kansas Department of Revenue, says the state has seen an increase in mineral tax collections for oil production of more than $7 million. "We would estimate that has impacted about two million barrels of new production which is now taxable in 2013, and the average price per barrel in 2013 was about $85," Stotts said. "So at the 4.33% tax rate that would mean an additional $7.4 million in tax receipts due to the new pool exemption."
More negative fallout from plans to drill oil in the Delano District immediately west of downtown Wichita. Ruffin Properties’ plans for the roughly 3-acre strip in the area would be idled if oil drilling occurs, according to a report in the Wichita Business Journal. In a letter to the Planning Commission, the company's VP said “If there is an oil well project right directly behind there. I couldn’t in good faith say, ‘Hey, let’s invest millions more dollars into this area.” Trek AEC hopes to drill on city land there, a proposal that has other area neighbors up in arms.
U.S. oil production jumped to the highest level since May 1989, cutting consumption of foreign fuel and putting the U.S. closer to energy independence. Bloomberg reported that the US has become the world's largest exporter of refined fuels. The state of Texas alone produced 2.575 million barrels per day in June, enough to rank it ahead of seven members of OPEC. EIA said total production for the seven days ending September 6th were up 1.6% to 7.745 million barrels per day.
Gas prices reached a milestone on Tuesday, September 17. The national average price for a gallon of regular gasoline has topped $3 per gallon for the 1,000th consecutive day for the first time on record. Triple-A says the streak began on Dec. 23, 2010, and forecasts that the national average will remain about $3 per gallon for at least another 1,000 days, barring a major economic recession.
Richfield Oil & Gas has coughed up $1.3 million in partial settlement of a legal spat with UK junior Nostra Terra Oil & Gas, while also halting the planned sale of US acreage. Earlier this year, Richfield was ordered to pay $1.5 million plus other costs as reimbursement for operating expenses incurred by Nostra while operating leases in Russell County, Kansas.
The oil carried by a freight train that derailed and exploded in Quebec this year had been misclassified as a less dangerous type of crude. The Transportation Safety Board says the cargo was as volatile as gasoline, but was documented as less dangerous crude oil. Canadian officials urged U.S. and Canadian regulators to ensure dangerous goods are accurately labeled. Forty-seven people were killed in the July disaster when the unattended train rolled away and derailed.
A Brazilian television show, citing classified documents provided by former NSA contractor Edward Snowden, reports that the Obama administration has spied on the state-run Petrobras oil company. It was not immediately clear what the government hoped to gain, but a NSA slide presented on Globo TV claimed there could be "economic," diplomatic or political motivations. The documents were part of a presentation used to train new agents about how to breach private computer networks.
Chevron Corp signed an accord Friday that could lead to the end of the largest environmental court action in Brazil's history. Reuters reports the agreement includes about $130 million for compensation for the 36-hundred barrel offshore oil spill that never reached the coast, caused no discernible environmental damage, and injured no one. The accord commits Chevron to unprecedented measures to prevent new incidents and compensations for the spill, and would resolve two lawsuits. Since the spill in 2011, Chevron has reported 15,000 to 16,000 barrels per day of crude production from the field northeast of Rio de Janeiro.
A panel of the World Bank ruled Tuesday that Venezuela failed to fairly compensate ConocoPhillips when it seized three crude oil projects operated by the oil company in 2007. The arbitration panel ruled that Venezuela "breached its obligation to negotiate in good faith." The panel has not yet determined what Venezuela owes to ConocoPhillips.
The Treasury Department is expanding Iran sanctions to target a network allegedly helping the government evade measures aimed at curbing oil exports. The department accused Iran on Friday of using front companies, financial institutions and businessmen "willing to engage in deceptive transactions to conceal the direct involvement" of the Tehran government in global oil transactions.
A study committee is recommending a rule that could force North Carolina home owners to sell natural gas under their homes and farm land. Thousands of property owners could be affected in North Carolina's gas-rich Lee, Moore and Chatham counties. The General Assembly would ultimately have the final say over rules for what's called forced or compulsory pooling.
New York’s top court will hear arguments in a pair of cases that challenge whether towns, cities and villages can ban natural-gas drilling within their borders, the court announced Thursday. The state Court of Appeals agreed to take on cases against the towns of Dryden, Tompkins County, and Middlefield, Otsego County, despite unanimous rulings upholding those towns’ drilling ban by a mid-level appeals court earlier this year.