Daily Reports

News From The Oil Patch 4/18/2016

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The Kansas Geological Survey has released its year-end estimates for oil production across the state, and as you might expect the numbers are down.  Total oil production for the year 2015 was 45.47 million barrels, a drop of about nine percent from the year before, and the lowest annual production total since 2012. Harper County production continued its rise to the top of the list of counties in Kansas, but that has slowed someone, up to 3.4 million barrels last year.  Ellis County was next at just over three million barrels.  Finney County came in third among countywide oil production totals last year at 2.16 million barrels. Barton County produced 1.97 million, Russell County produced 1.84 million, and then Stafford County with 1.25 million barrels.
 
The national rig count from Baker Hughes dropped by three to 440 active drilling rigs last week.  There were 40 active righs in Canada, down one. Independent Oil & Gas Service reported six active drilling rigs in eastern Kansas last week, up one, and 19 west of Wichita, a gain of seven from the week before. 
 
There were 22 drilling permits issued for new locations across Kansas last week, ten in eastern Kansas and 12 west of Wichita.  Three of those were in Ellis County.
 
Independent Oil & Gas Service reported ten well completions last week, which makes 427 so far this year.  There were two new completions east of Wichita and eight in western Kansas, which included three dry holes.
 
For the month of March, there were 63 new drilling permits issued statewide, thirty in eastern Kansas and 33 west of Wichita.  There was one permit filed in Barton County last month, four in Ellis County, two in Russell County and one in Stafford County.
 
According to the monthly report from Independent Oil & Gas Service, producers completed 121 wells in March, three in Barton County, six in Ellis County and one in Russell County.  Out of 121 completions in March, 21 were dry holes.
 
Independent also report on permits for the first quarter of 2016.  The quarterly total of 200 permits is 391 less than the first quarter of last year, a dip of 66.2%
 
TransCanada has resumed sending oil through the Keystone Pipeline after a weeklong shutdown prompted by a leak and oil spill in southeastern South Dakota. The pipeline came back online Sunday, but with a reduced pressure. The company says it is continuing cleanup and land restoration at the site of the spill. TransCanada estimates about 400 barrels of heavy crude spilled.  The company says there was no significant environmental impact or threat to public safety.  The company has not released estimates on cleanup or repair costs.
 
A number of roadblocks surfaced in Energy Transfer Partners' Dakota Access pipeline proposal.  If completed, the $3.8 billion pipeline would run from the Bakken Shale in western North Dakota through South Dakota, and Iowa to the refining and storage clusters near Patoka, Illinois, carrying half a million barrels of Bakken crude per day.  
***The Standing Rock Sioux has set up a camp in North Dakota to protest the proposed pipeline.  The Bismarck Tribune reports the "spirit camp" at the confluence of the Cannonball and Missouri rivers has been occupied for two weeks.  The tribe opposes the pipeline because it fears a spill could contaminate its drinking water.  The company maintains the pipeline will be a safe and cost-effective way to transport oil, and will create jobs and boost the economy.  
***In Iowa a lawsuit has been filed against the utility regulators for authorizing use of eminent domain to access land for Dakota Access.  The Des Moines Register reports the lawsuit was filed on behalf of the Northwest Iowa Landowners Association and individual landowners.  The lawsuit says Dakota Access does not qualify as a utility and should not have the ability to use eminent domain to build a pipeline.
***The Environmental Protection Agency and two other federal agencies have asked the Army Corps of Engineers to more carefully review and revise its preliminary plan for the project, saying it should pay closer attention to the impact a spill would have on drinking water for Native American tribes as well as the impact on historic sites. 
 
The Washington Post called it the starkest sign yet of the shifting fortunes of the coal industry.  St. Louis-based Peabody Energy, the largest and most storied coal company in the U.S. announced early Wednesday that it was filing for Chapter 11 bankruptcy.  In the filing the company cited an “unprecedented industry downturn,” which it attributed to a range of factors including what it called the “overproduction of domestic shale gas.” Cheap natural gas, driven by the shale boom, has been steadily eating into coal’s share of electricity generation.
 
Chevron Corp. is cutting 655 jobs in Houston as part of previously announced layoffs.  The news comes after a year in which the energy sector lost 95,000 jobs by one estimate. Oil prices have plunged during the last two years because of high supply and weakening global demand.
 
Authorities in Norway say a drilling rig had breached two safety regulations when a huge wave slammed into the offshore platform's living quarters last year, killing one and injuring four.  The agency said Friday "more lives could have been lost" had there been more people in their cabins on Dec. 30 when a huge wave hit the rig.  The Petroleum Safety Authority says its investigation found the "superstructure was not dimensioned to resist horizontal wave loads." 
 
Iran cranked up its pricing competition, hoping to win market share at a time when rival producers are trying to forge a deal on freezing output.  The state run oil company will sell its Forozan Blend crude for May to Asia below the level offered by rival Saudi Aramco for Arab Medium.  This is the third month the Persian Gulf state is giving the discount after setting it at a premium for almost seven years.

News From The Oil Patch 4/4/2016

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Independent Oil & Gas Service reported a 15% drop in the active drilling rig count across Kansas. There were six active rigs east of Wichita, down one, and 11 in western Kansas, down two from last week.  L.D. Drilling is at work at the 1-24 Mull-Heyen site in Stafford County.  Baker Hughes reported just 450 active oil and gas rigs nationwide. The oil-rig count was down ten, while the number of rigs actively drilling for natural gas was down three.  In Canada the rig count droped six to 49 active drilling rigs.
 
There were just six drilling permits issued for new locations across the state last week, two in eastern Kansas and four west of Wichita, for a year-to-date total of 187.  There was one new permit in Russell County last week.
 
Independent Oil & Gas reports just eight new well completions across Kansas last week (all eight were in the western half of the state).  That year to date total is now 392 completions.  There was one new well completed in Barton County. 
 
Texas’ oil and gas regulator has challenged the U.S. Army Corps of Engineers’ authority to ban hydraulic fracturing and limit injection wells near a North Texas dam.  In a letter sent to the corps, Texas Railroad Commission Executive Director Kimberly Corley questioned restrictions the corps announced last week that would ban fracking within 4,000 feet and limit injection wells within five miles of the Joe Pool Lake dam.  The corps cited fears of induced seismicity, or earthquakes triggered by human activity. Corley objected to the corps acting to limit drilling without consulting the Railroad Commission or going through a formal rulemaking process.  Although there is no drilling under way near the dam, Exxon Mobil subsidiary XTO Energy has three existing wells and state permits to drill four more. 
 
International crude futures rose this week as new hopes for agreement among exporters to freeze output propped up crude prices.  But there is still lingering doubt based on persistent global oversupply and Iran's plans to boost production. The oil minister in Kuwait said there were "positive indications" a production agreement would be reached during a meeting scheduled for April 17th.
 
Last week a bearish supply signal from Opec members Saudi Arabia and Kuwait sent prices lower last week.  Reuters reported the two countries would be re-opening the jointly operated 300,000-barrels-per-day Khafji field.  Both are among the largest producers in the Opec cartel and Saudi Arabia is also among a few oil powers that can influence the overall global supply outlook, so the news knocked some analysts' hopes of a deal to rebalance the market
 
Vanguard Natural Resources is shedding some of its Midcontinent assets following an eventful year last year, that saw the Houston company drop about $1.2 billion to acquire two upstream Master Limited Partnerships.  The Web site Oil and Gas Investor dot com notes that the company enterred an agreement to sell assets in Oklahoma's SCOOP and STACK plays to entities managed by Dallas-based Titanium Exploration Partners. The announced purchase price was $280 million.  Last year alone, the region generated about $4 billion in deals, including Devon Energy’s $1.9 billion acquisition in December.
 
The Times of London says that Britain's North Sea oil and gas industry has been a "mainstay of the national economy", since a string of offshore discoveries in 1969 unleashed what they called a "gusher of jobs and investment."  It generates more than $475 billion in taxes and gigantic earnings from exports.  But now, "The Week" reports that with oil prices at historical lows, the industry has been brought to its knees - and some reckon it is in "terminal decline". Despite recent upticks in price, Brent crude, the international benchmark that sets the price for North Sea oil, remains below $40 a barrel. Last year it was estimated that production in the region becomes unprofitable at under $50 a barrel..
 
Just a few years ago, when oil prices were $100 a barrel, banks were lining up to give international oil explorers access to billions of dollars to finance new drilling projects.  Now the money is drying up, as oil prices stay mired in a prolonged funk.  The Wall Street Journal reports executives have been meeting with their bankers for a twice yearly review of the loans that allow them to keep drilling and building out projects. For many European companies, the Journal reports a "nail-biting experience," as banks grow concerned about the growing pile of debt taken on by oil companies with little or no profits. Several companies said they expect their ability to tap credit lines to be diminished after those reviews.

News From The Oil Patch 3/28/2016

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Baker Hughes reported 464 drilling rigs across the US last week, 12 fewer than the week before.  The oil rig count was off 15, while the number of rigs drilling for natural gas was up three.  There were 55 active rigs in Canada, down 14.  Independent Oil & Gas Service reported seven active rigs east of Wichita, down two, and 13 in western Kansas, which is up one from the week before.   They were preparing to drill at one site in Barton County and moving in rotary tools at a site in Stafford Count
 
Oil prices continued to plunge Monday, with the Nymex benchmark contact giving up 41 cents at $39.05/bbl, and London Brent off 62 cents at $39.82 (at 11am Monday).  Kansas Common Crude ended the week Friday down a quarter at $29.75/bbl at CHS in McPherson.
 
There were 14 drilling permits issued last week for new locations across Kansas.  There were six filed in eastern Kansas and eight west of Wichita, including two in Ellis County and one in Stafford County.
 
Independent Oil & Gas Service reported 34 new well completions last week across the state, including seven east of Wichita and 27 in western Kansas. Out of that 27 total, there were nine dry holes completed in western Kansas last week. There was one new completion in Barton County and three in Ellis County.
 
There were ten dry holes completed across the state last week, including two in Ellis County.
 
CNBC reports investors have suffered losses of at least $150 billion in the value of oil and gas company bonds, as the slump in crude prices since the summer of 2014 has fuelled fears of a wave of defaults in the US and emerging markets.  The Financial Times found that the 300 largest global oil and gas companies have also seen $2.3 trillion sliced from their stock market value over the same period, a 39 per cent slide since oil began its decline.
 
Brazil's state-run oil company Petrobras is reporting a record quarterly loss of more than $10 billion due to a large reduction in the value of some assets amid lower oil prices.  Petrobras has been at the center of a sprawling corruption scandal that has ensnared some of the country's most powerful lawmakers and business executives. Police questioned President da Silva earlier this month as part of the investigation.  The oil giant said Monday that it lost $10.2 billion in the fourth quarter. That brought the company's full-year 2015 result to a $9.6 billion loss. 
 
Protesters opposed to drilling in the Gulf of Mexico disrupted an oil and gas lease sale Wednesday, chanting and waving signs as government officials read bids from companies for the right to explore and develop fossil fuels offshore. Government officials said afterward that the sale raised a total of $156 million in the central region but no bids were made for the eastern region. The $156 million was the fourth lowest total for sales in the central region since sales started back in 1983.
 
A Venezuelan national living in Florida and four other people have pleaded guilty to federal charges for a bribery scheme involving millions of dollars in contracts between U.S.-based energy firms and Venezuela's state-run oil company, prosecutors said Wednesday.  Officials responsible for procurement at the company, known by its initials PDVSA, were wined, dined and treated to swanky hotel stays and a home mortgage in Texas was even paid off, according to court documents.  The case is being closely watched in Venezuela, where the opposition accuses the governing socialists of looting PDVSA and bankrupting the nation. Venezuela has the world's largest proven oil reserves and crude accounts for more than 95 percent of its exports.
 
Oklahoma's governor expressed condolences after the passing of Lew Ward, an oil pioneer she said helped vault the state to a lead production position. Mr Ward, who founded Ward Petroleum Corp. in the 1960s in Enid, Okla., has died at age 85. Since its inception, the company has drilled more than 900 wells in basins across Oklahoma. Gov. Mary Fallin said it was his leadership that's positioned Oklahoma as a lead oil producer in the United States.
 
We're learning from the Des Moines Register that despite the ongoing rout in oil prices, the Dakota Access Pipeline will proceed, with work beginning this spring. Analysts tell the newspaper that ANY pipeline project is a long-term investment, with the economic assessments covering decades.  The pipeline will cross four states to transfer Bakken Crude from North Dakota to the pipeline and refinery cluster in Patoka, Illinois.

News From The Oil Patch 3/21/2016

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Baker Hughes reported 476 active drilling rigs across the US last week, down four.  The oil rig count was up one, but the number seeking natural gas dropped by five rigs.  There were 69 active rigs in Canada , down 29.  The rig counts in Kansas were unchanged according to Independent Oil & Gas Service: nine east of Wichita and 12 in western Kansas, 138 stacked and 165 total inactive rigs.
 
There were just three drilling permits across Kansas last week, all of them west of Wichita.  That makes a total of 167 permits for drilling in new locations across the state issued so far this year.
 
Independent Oil & Gas Service reported 21 new well completions last week across Kansas, bringing the year-to-date total to 350.  There were 17 in eastern Kansas and four west of Wichita, including one dry hole completed in Ellis County.
 
The Wichita Eagle reported that SandRidge Energy is among large Kansas producers negotiating with bondholders to reduce their heavy debt loads. SandRidge was ranked as the top oil producer in Kansas.  In a public filing SandRidge said it is in talks with bondholders to reduce the company’s nearly $4 billion long-term debt.  The company said it expects its auditor to write in the company’s financial report “an explanatory paragraph regarding substantial doubt as to the company’s ability to continue as a going concern.”  The company has delayed filing its annual financial report while it negotiates. 
 
Royal Dutch Shell and the state-owned Saudi Aramco Oil Co. have announced that they'll split the assets of a U.S. venture that includes America's biggest oil refinery.  A statement said a Saudi Aramco affiliate will retain the Motiva Enterprises name and full control of the Port Arthur, Texas, refinery. The U.S. Energy Information Administration says that's America's biggest oil refinery, with a capacity of 603,000 barrels a day. The Saudis also will keep 26 distribution terminals. Shell will get sole ownership of refineries in Norco and Convent, Louisiana, as well as nine distribution terminals.  
 
Bakken crude oil should soon flow through the proposed Dakota Access Pipeline by year's end, moving supplies 1,154-miles through four states. Energy Transfer Partners says that last Thursday's final state regulatory approval in Iowa means construction can now begin.
 
The Interior Department announced it will reverse its earlier proposal to allow oil and gas drilling off the coasts of Virginia, the Carolinas, and Georgia over the next five years. The moratorium will now stay in place through 2022. This is a surprise win for the greens in America, who feared oil platforms could dot the Atlantic Ocean for the first time.
 
Bloomberg surveyed energy-industry analysts and concluded that oil may struggle to rally past $50 a barrel this year because shale drillers in the U.S. will respond to higher prices by boosting activity. The rally in West Texas Intermediate crude faltered at about $60 last year, and Bloomberg says efficiency gains mean shale is profitable at $45 to $55 this year. There’s a cache of suspended wells stretching from south Texas to the Rocky Mountains to North Dakota that can be brought into production as soon as prices rise high enough.
 
A federal judge ruled last week that BP does not have to pay for economic losses other businesses suffered when the federal government shut down deep-water drilling in the wake of the catastrophic oil spill in the Gulf of Mexico.  U.S. District Judge Carl Barbier's ruling came in a lawsuit brought by six companies involved in offshore drilling, but plaintiffs' lawyers said thousands of similar claims worth billions of dollars would be affected by the ruling.  The case centered on whether BP was liable under the Oil Pollution Act for the loss of business caused by the moratorium.

News From The Oil Patch 3/14/2016

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The drilling rig count in Kansas increased 23% last week.  Independent Oil & Gas Service reports nine active rigs east of Wichita, up two, and 12 in western Kansas, two higher than last week.  130 rigs are listed as stacked for a total of 165 inactive rigs across Kansas.  Baker Hughes reported 480 active rigs national wide, 386 drilling for oil, down six, and 94 gas rigs, down three.  There were just 98 active rigs in Canada, down 31.
 
Drilling was expected soon at two locations in Barton County, where another team is preparing to resume operations. Drilling and evaluation continue at one site in Ellis County.  
 
There were 21 drilling permits issued last week for new locations across Kansas, 164 so far this year. There were 10 new permits issued in eastern Kansas, and 11 in the western half of the state. That includes one new permit in Russell County.
 
Independent Oil & Gas Service reports just 12 new well completions last week across Kansas, for a total of 329 so far this year. There were two in eastern Kansas and ten west of Wichita, including one dry hole completed in Barton County.  There were four dry holes completed in western Kansas last week, and one east of Wichita.
 
Following a six-year period of intensifying earthquakes, the Oklahoma House votes to approve that proposal for the state’s oil and gas industry to limit its underground wastewater disposal that has led to a growing number of quakes across the state.  The proposal released by the Oklahoma Corporation Commission spans over 400 wells across an area of 6,000 square miles. The commission's plan was released just a few weeks after a similar proposal covering almost 250 wells in northwestern Oklahoma was implemented. OCC spokesman Matt Skinner says current disposal volumes are at nearly 1 million barrels of saltwater disposal per day, but the commission is aiming to reduce that number to about 724,000 barrels a day.  Skinner tells the Weather Channel the effects of the change will take time.  He says researchers have made it very clear that there is no off switch to seismic activity.
 
The head of the state agency that oversees the petroleum industry in Texas warned lawmakers Monday that his office could be hamstrung by a drop in drilling fees.  Texas Railroad Commission Chairman David Porter told members of the Texas House Energy Resources Committee that his agency might not be able to achieve its mission if it doesn’t get more money.  According to the Web site [My Statesman dot com] the problem raises the spectre of a federal takeover of state oil and gas regulation.  
 
The Houston Chronicle reports on another spectre in Texas.  Moody's Investors Service has placed the ratings of 11 local governments in Texas, including the cities of Midland and Odessa, under review for a possible downgrade.  Moody’s said it expects oil and gas industry conditions “will remain weak” and that local governments with a significant tax base exposure to the industry may face ratings pressure. The ratings review affects around $477 million of debt outstanding for all of the issuers.
 
ABC handed out a slew of renewals for its returning shows, but North Dakota oil-patch soap opera was not among them.  According to Variety, "Blood and Oil," had its episode orders trimmed during the early running.
 
Oil and natural gas producer Chevron said Tuesday it will slash its budget by at least 17 percent for the next two years to save cash as crude prices sit near 10-year lows.  The outlook from one of the world's largest oil companies highlights the unease permeating the energy industry as executives try to contend with what many are forecasting to be a longterm problem, perhaps continuing through the end of the decade.  

News From The Oil Patch 3/7/2016

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Independent Oil & Gas reported a 26% drop in the Kansas rig count last week.  There were just seven east of Wichita, down three, and 10 west of Wichita, also down three.  There were 130 rigs listed as stacked and another 37 that were shutdown, awaiting drilling contracts.  Drilling was about to get started at one site in Barton County, they're drilling at one site in Ellis County, one site in Russell County, and one site in Stafford County.  Baker Hughes reported 489 active drilling rigs across the US last week.  The oil rig count was down eight, and the natural gas rig count was down five from the week before.  There were a total of 129 active rigs across Canada, down 46.
 
There were 17 drilling permits issued last week for new locations across Kansas, for a year-to-date total of 143.  There were 14 permits issued east of Wichita, and just three in western Kansas, one in Barton County, one in Ellis County, and one in Stafford County.  
 
Independent Oil & Gas Service reported 46 well completions across Kansas last week.  That's 317 so far this year.  There were 31 east of Wichita and 15 in western Kansas, including two in Ellis County and one in Russell County.
 
The Kansas Geological Survey updated its statewide and county oil production figures. Through November of 2015, Kansas operators produced 41.8 million barrels of crude according to KGS numbers added March 1.  There were 53,144 active wells in the state through November.  Harper County led the way with 3.18 million barrels produced through November.  Ellis County followed with 2.75 million barrels.  They were followed by Finney County with 1.99 million, Barton County with 1.8 million, Russell County with 1.67 million, and in Stafford County they reported 1.1 million barrels produced last year through November.
 
A lawyer for a flood protection agency is trying to revive a closely-watched lawsuit alleging oil and natural gas companies are responsible for destroying Louisiana's coast.  The hearing centered on whether the case belonged in federal or state court.
 
Aubrey McClendon, a founder and former chief executive of Chesapeake Energy, died in a fiery single-car crash last week, a day after he was charged with conspiring to rig bids for oil and natural gas leases.  Just hours before his death, energy tycoon Aubrey McClendon issued a statement fiercely denying allegations that he orchestrated a scheme between two large energy companies. The 56-year-old was facing antitrust charges.  He was charged with rigging bids in order to buy leases for oil and natural gas in northwest Oklahoma. McClendon was 56 years old.  The feds attention must now focus on his co-defendant in the indictment.  People familiar with the indictment say the co-conspirator in the indictment is Tom Ward, the former head of SandRidge Energy and founder of Tapstone Energy, two big players in Harper County, Kansas. Ward co-founded Chesapeake Energy alongside McClendon in 1989. He left Chesapeake and founded SandRidge in 2006.  He was eventually fired amid questions concerning transactions he and his  family made with the company.  
 
Apache Corp., an independent oil company based in Houston, Texas, said in a statement on Thursday it was closing its office in Alaska, but asserted the impact on the area’s economy will be “minimal” because it had already been cutting back. According to the Alaska Dispatch News, the company7 did not provide information about the number of Alaska jobs lost in the shutdown, but said some would be relocated to other Apache offices. A company official says their spending plans for this year will be about 60% of spending last year.
 
Russia now acknowledges what's been the subject of rumors for months.  Russian President Vladimir Putin says it is close to an international deal with OPEC countries and others to cap oil production, and that a final decision will be made at a meeting this month.  The deal was agreed to by 15 countries which together accounted for 73 percent of global production including Saudi Arabia, Russia, Venezuela and Qatar. Iran has so far not agreed because it wants to increase output after years of sanctions on its oil sector. 
 
Oil giant Shell is being sued again by two Nigerian communities over multiple spills in the oil-rich Niger Delta with claims that could run into the tens of millions of dollars. The two communities' livelihoods are mainly based around fishing and farming.  They say they have not had clean drinking water since 1989 because of oil spills. In a statement given to CNBC, Shell said it is at an "early stage" of reviewing the claims and that the case should be heard in Nigeria. It said it believes that many spills in those communities are caused by oil theft which damages pipelines and illegal refining.
 
Nigeria’s state-run oil firm is to be broken up into 30 smaller companies in a bid to reverse losses of millions of dollars per month.  The West African country is the continent’s largest oil producer and was at one time the #7 exporter to the United States.  Petroleum makes up almost 92 percent of the total value of Nigerian exports.  Nigeria’s Minister of State for Petroleum says the Nigerian National Petroleum Corporation would be “unbundled” into “30 profit-making companies.” The minister said that the corporation should be profit-making by the end of 2016.
 
The Monte Toledo oil tanker on Sunday became the first to deliver crude from Iran to Europe in four years, when Brussels imposed an oil embargo in an attempt to force the Middle Eastern nation to negotiate the end of its nuclear program. The ban was lifted in January as part of a broader deal that ended a decade of sanctions.
 
Iraq's Oil Ministry says crude exports averaged 3.225 million barrels a day in February, far below levels planned to provide the nation with badly needed cash for ongoing military operations against Islamic State extremists.  Exports grossed about $2.2 billion, based on an average price of about $23 per barrel. Iraq's 2016 budget is based on an expected price of $45 per barrel with a daily export capacity of 3.6 million.  Iraq holds the world's fourth largest oil reserves, and oil revenues make up nearly 95 percent of its budget.