Daily Reports

News From The Oil Patch 5/11/2015

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Oil drilling rig counts continue their slide, but the declines may be slowing down.  The nationwide count was down eleven for the week at 894 active drilling rigs.  That's the smallest decline in 22 consecutive weeks of declines, during which more than a thousand rigs have left the patch.  Baker Hughes reported 75 in Canada, down 4, and just ten in Kansas, down one for the week and less than a third of the Baker Hughes count a year ago.  The broader counts were higher than last week, with Independent Oil & Gas Service reporting 14 active rigs east of Wichita, up three, and 33 in western Kansas, up one.  The number of rigs waiting for their next location assignment was down 7 to 52.  The number of rigs listed as shut down, stacked or idle was down one to 122.  That's 44 higher than a year ago.
 
There were just 28 new drilling permits filed across Kansas last week.  That's 886 year-to-date, compared to 2,577 a year ago.  Twelve were east of Wichita, and 16 were in western Kansas, including one in Russell County and two in Stafford County.  
 
We're trailing last year's numbers in completions as well.  Independent Oil & Gas Service reports 103 completions statewide, 1,969 so far this year, compared to 2,270 a year ago at this time.  There were 55 completions in eastern Kansas, just six dry holes among the 48 completions west of Wichita. There were four completions in Barton County last week, one in Ellis County, two in Russell County, and two in Stafford county.
 
The Kansas Corporation Commission reports 200 new intent-to-drill notices filed across Kansas in April of this year, compared to 865 in April of 2014. Just 865 intents in Kansas so far this year compared to 2,552 by April of last year.  There were ten in Barton County, seven in Ellis County, three in Russell  County, and five in Stafford County.
 
Despite all the talk about layoffs in the oilpatch due to slumping oil prices, Alberta, Canada posted job growth to a three-month high in April.  Statistics Canada reported the province's natural resources sector lost about 3,500 positions in April, but they were outnumbered by professional and public service jobs.
 
A train that derailed and caught fire early Wednesday in rural North Dakota was hauling crude from the state's oil patch, raising questions in some quarters about whether new state standards intended to reduce the volatility of such shipments are sufficient.  Residents of Heimdal who were evacuated have returned home. 
 
Texas cities would no longer be able to ban oil and gas companies from drilling inside municipal limits under a bill lawmakers sent to Governor Greg Abbott.  Final passage of the legislation in the state Senate on Monday is a win for the oil and gas industry which considered the bill one of its top priorities of the year.
 
Operators are touting a new refinery in North Dakota, the first of its kind nationwide in nearly 40 years, as a boost for the state's economy.  MDU Resources and Calumet Specialty Products Partners announced the Dakota Prairie refinery started producing diesel fuel primarily for users within the state.  More than two-thirds of North Dakota's diesel fuel is currently imported into the state.  The Dakota Prairie refinery is designed to process 20,000 barrels of oil per day from the state's Bakken shale reserve. Up to 7,000 bpd worth of production in the form of diesel fuel will be sold to in-state customers.
 
Seattle Mayor Ed Murray says the Port of Seattle can't host Royal Dutch Shell's offshore Arctic oil-drilling fleet unless it gets a new land-use permit.  Shell has been hoping to base its fleet at the port's Terminal 5. Environmentalists have already sued over the plan, saying the port broke state law in February when it signed a two-year lease with Foss Maritime, which is working with Shell.  Murray says city planners reviewed the planned use of Terminal 5 as a base for the drilling fleet and found that it would violate the port's land-use permit, which allows a cargo terminal on the site.  Shell has argued that its planned activities at the terminal - such as docking, equipment loading and crew changes - are no more environmentally risky than loading or unloading shipping containers.
 
The ripple effect of last year’s dramatic drop in crude prices continues to spread throughout the industry.  Pioneer Natural Resources lost $78 million during the first-quarter of this year.  One of the largest operators in West Texas, Pioneer reported the financial hit even as it cut capital spending on drilling by 15 percent.  The company has also been able to hedge its finances, selling oil at a premium to the market price. Revenue was down more than 40 percent from a year ago, when the company earned a $123 million profit.  Pioneer announced it will close its Denver office and cut the number of people working out of its Trinidad, Colorado field office by nearly half.
 
Devon Energy on Tuesday posted a first-quarter loss of $3.6 billion, led by a noncash accoun6ting charge from lower oil prices. The Oklahoma City-based oil and natural gas producer recorded a $5.46 billion asset impairment charge because the oil in the ground Devon has yet to produce is worth a little more than half of what it was one year ago. Despite lower prices, Devon reported record oil production of 272,000 barrels per day in the first quarter, up 55 percent from the year-ago quarter and 12,000 barrels per day more than the top of the company’s guidance range.
 
Occidental Petroleum named 33-year company veteran Vicki Hollub to become the first female chief executive officer of a major U.S. oil company. Hollub will assume control of the company’s oil and natural gas business worldwide as an interim step to succeeding current CEO Stephen Chazen. Occidental said in March that Chazen, 68, would step down at the 2016 annual meeting.

News From The Oil Patch 5/4/2015

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Baker Hughes reports 905 active drilling rigs across the US last week, down 27 from last week and less than half the count a year ago at this time.  Baker Hughes' numbers for Kansas were about one-third the year-ago total at 11 rigs, down one for the week.  There were 79 active drilling rigs in Canada unchanged.  The broad count from Independent Oil & Gas Service was 11 rigs east of Wichita, 32 west of Wichita, and 115 rigs listed as stacked or idle.
 
There were just 24 drilling permits for new locations issued across the state last week, 858 for the year, compared to 2,531 at this time last year.  There were just two new permits in eastern Kansas, but west of Wichita there were 22 permits filed, including three in Barton County, two in Ellis County and one in Russell County.  
 
Independent Oil & Gas Service reports 94 new well completions across the state last week, for a year to date total of 1,866--about 400 fewer than a year ago at this time.  There were 45 new well completions east of Wichita and 49 in western Kansas including four dry holes.  There two completions each filed in Barton, Ellis and Stafford counties.
 
At its meeting last week, the Kansas Geological Society's Nomenclature Committee recognized and named 19 new oil and gas fields in Kansas.  Operator F.G.Holl Company's Weber East field in Barton County made the list.  Hess Oil found a new pay source in the Stadelman NE field in Ellis County.
 
Banks in the U.S. are bracing for defaults on loans to the oil and gas sector amid low oil prices this year, according to a Federal Reserve survey.  The banks indicated that their exposures were small, and that they were undertaking a number of actions to mitigate the risk of loan losses, according to the Fed's Senior Loan Officer Opinion Survey. The survey addresses changes in loan terms and standards in the first quarter of the year.  U.S. oil and gas companies went deep into debt during the energy boom as they looked to cash in on new technologies that allowed sizable increases in domestic energy production
 
The phase-out of older rail tank cars carrying crude oil would move more quickly under legislation proposed Monday by Democratic Sen. Charles Schumer, of New York.  Schumer's bill also would expand the number of areas subject to a 40 mph speed limit for freight trains carrying multiple tank cars with crude oil.
 
Enterprise Products Partners plans a new pipeline to transport crude oil and condensate from Midland, Texas, to the Houston area.  The Houston Business Journal reports Enterprise has long-term agreements to support the 416-mile, 24-inch diameter pipeline, which would connect Enterprise’s Midland terminal to its storage facility in Sealy, west of Houston.
 
International energy analysts are abuzz about the Saudi Oil Minister being replaced as the chairman of state-owned Aramco.  Former company CEO Khalid al-Falih will take over for Ali al-Naimi as chairman, and that is viewed as a sign that al-Falih will take over as oil minister in the kingdom when al-Naimi retires.  CNBC reports no expectations of any big changes from the oil ministry, as it has been al-Naimi who led the campaign to let market forces determine the price of crude and not the traditional lever of OPEC output.
 
Meanwhile, Reuters reports OPEC oil productioin jumped to its highest level in more than two years, boosted by record or near-record supplies from Iraq and Saudi Arabia.  Based on Reuters surveys, the cartel's supply rose in April to 31.04 million barrels per day, which would be its highest since November 2012.
 
North Dakota's Republican Gov. Jack Dalrymple late Wednesday signed a tax-overhaul bill that was passed in the final days of the legislative session, as concern grew that the state could miss out further on oil-tax collections because of a provision that drops a tax rate to zero for most wells when prices stay below a certain threshold.  The clock is still ticking on the suspension of ND's Oil Extraction Tax, which will likely happen if May prices average below the $52.59/bbl threshold.  The suspension continues through November.   After that, the extraction tax returns, but the new law lowered the overral permanent tax rate.  The state continues to support development in the oil and gas producing region in western North Dakota.  The state's Land Board has awarded more than 130 land grants totaling more than $12 million to fund developments.
 
The Energy Information Administration's new ranking names the Eagleville field just south of San Antonio as the number one oil field in the US, based on 2013 proved reserves.  Eagleville is in the Eagle Ford shale formation.  Actual production from the Eagleville in 2013 was over 238 million barrels, far outpacing the #2 field, the Spraberry Trend, which had 99 million barrels produced in 2013.  Twenty-six of the top 100 fields are in Texas.  None of the top 100 is in Kansas.  There are one each in Oklahoma and Colorado.
 

News From The Oil Patch 4/28/2015

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State geologists and regulators are increasingly outspoken about earthquakes and oil and gas production activity.  This week the Oklahoma Geological Survey joined Kansas regulators in blaming wastewater injection, and not fracking, for the spike in "induced seismicity" in our area. Oklahoma geologists have documented strong links between increased seismic activity and the injection into the ground of wastewater from oil and gas production.  Oklahoma is recording 2-1/2 earthquakes every day of a magnitude 3 or greater, a seismicity rate 600 times greater than observed before 2008, according to a report Tuesday by the OGS.  The report goes on to say that the majority of those quakes are "very likely" triggered by wastewater injection activities tied to the oil and gas industry.  It warned residents should be prepared for a "significant earthquake."
 
As we've told you, the Kansas Corporation Commission issued an order March 19th that marks the first such linkage in Kansas.  The order noted increasing seismic activity in Harper and Sumner counties "correlating with increasing volumes of saltwater injected in those counties."  The commission concluded that its regulatory powers "must be exercised to protect the public from immediate danger to health, safety and welfare."  In Harper County in 2014, the 109.4 million barrels of injected wastewater nearly tripled the total in that county the year before.
 
Baker Hughes reported another steep drop in the number of active drilling rigs across the US, 932 of them on Friday, down 22 rigs from the week before. There were just 79 active rigs in Canada, down one. And 12 rigs actively drilling for oil and gas in Kansas, up one.  The broader count from the Independent Oil & Gas Service shows 44 active rigs statewide, 11 east of Wichita, down three, and 33 in western Kansas, unchanged.  There were 60 rigs listed as pending their next location assignment and 115 were listed as stacked or idle.
 
The state of Kansas last week issued 62 permits to drill for oil and gas in new locations, including one permit in Ellis County.  There were 30 permits east of Wichita and 32 in western Kansas, for a year-to-date statewide total of 834 new drilling permits.
 
Independent Oil & Gas Service reports 64 new well completions across Kansas last week, for a year-to-date todal of 1,772.  There were 42 in eastern Kansas and 22 west of Wichita including three that were dry holes.  There were four completions reported in Barton County, one in Ellis County, one in Russell County and two in Stafford County.
 
Both houses of North Dakota’s state legislature have passed a bill to lower the state’s extraction tax on oil and to eliminate the current practice of tying the tax to the price of crude oil. The legislation is now on the governor’s desk for signature.
 
State regulators say oil production in Texas increased 5 percent from January.  The Railroad Commission said preliminary data from February show crude oil production averaged 2.34 million barrels per day. That's an increase of 5.2 percent from January and 17 percent higher than February 2014.
 
Another glut signals another probable dip in oil prices.  Reuters reports the oil storage facility in Midland, Texas is beset with pipeline interruptions that force producers in the nearby Permian basin to move oil to Cushing, Oklahoma, itself already setting storage records.  The Permian basin accounts for about one-fifth of total US production.
 
Oil and gas companies are continuing to pile up debt and the Wall Street Journal reports that could extend the slump in energy prices and hit economies reliant on the sector for growth and tax revenue.  Both independent and state-owned companies are involved, issuing $86.8 billion worth of bonds around the world this year.  That's up 10% from the same period in 2014, according to Dealogic, a data-tracking company. 
 
The general manager of China's largest oil refiner, Sinopec, has been placed under criminal investigation amid an ongoing crackdown on corruption.  China's state-dominated energy sector has come under special scrutiny amid a wide-ranging anti-graft crackdown. Those arrested include the former head of China's biggest petroleum company and the party's former security chief, who made the energy sector his power base.
 
The Justice Department says two subsidiaries of Exxon Mobil have agreed to pay almost $5 million in government penalties for a 2013 oil spill in central Arkansas.  As part of a consent decree set to be filed in a Little Rock federal court Wednesday, the companies would pay about $3.2 million in federal civil penalties in addition to addressing pipeline safety issues and oil-response capacity. They would pay $1 million in state civil penalties, $600,000 for a project to improve water quality at Lake Conway and $280,000 for the state's legal costs.  The Pegasus pipeline ruptured in March 2013, spilling thousands of gallons of oil into a neighborhood in Mayflower, Arkansas. 

News From The Oil Patch 4/20/2015

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The Kansas Corporation Commission says most of the documentation has been received from operators of disposal wells in Harper and Sumner Counties that are now reporting daily volumes and pressures.  Staff has sent notification letters to those operators who have not submitted the data.  The commission plans to monitor injection volumes and any possible related seismicity for at least the next six months.  A total of 23 disposal wells are close enough to the five "areas of heightened seismic concern" in Harper and Sumner County to place them under the strictest new limits set forth last month by state regulators.  Those wells are operated by SandRidge Exploration & Production, Tapstone Energy (a startup by the former CEO of SandRidge), and Chesapeake Operating.  The KCC ordered 16,000 bpd limits at these wells within ten days of its March 19th order.  Data from year-end reports show just one of the 23 wells in the areas of concern exceeded that level last year, and one more was within nine barrels of the limit, based on average daily injection volumes.  In about a month, that limit will be reduced to 12,000 barrels per day.  Just two wells exceeded that average daily limit last year.
 
The number of active drilling rigs across the country has dropped by more than half since December. For the 17th consecutive week, Baker Hughes reported a drop in its weekly rig count, with 954 active oil and gas rigs across the US Friday, down 34 from last week.  The count in Canada was 32 rigs, up one.  And the company reported 11 rigs actively drilling in Kansas, down two.  The broad count from Independent Oil & Gas is unchanged from last week with 14 east of Wichita, and 33 in western Kansas, and 115 rigs listed as stacked or idle.
 
There were just 43 permits issued last week to drill in new locations in Kansas, for a year-to-date total of 729. There were 22 new permits east of Wichita, and 18 in western Kansas, including one in Barton County, one in Ellis County, one in Russell County and two in Stafford County.
 
Independent Oil & Gas Service reported 112 well completions last week.  That's 1,708 so far this year. There were 59 completions reported in eastern Kansas.  Ellis Coun6ty had three new well completions last week, Russell County had one and there were two in Stafford County.   Out of 53 completions west of Wichita last week, nine were dry holes.
 
Twenty-five major oil companies, oil-producing nations, and other institutions agreed to put an end to the flaring of natural gas at oil production sites around the world.  The Wall Street Journal reports no US-based companies have signed on, but among the list of those who have are Royal Dutch Shell, Statoil, Kuwait Oil Co, Russia, Norway and the Asian Development Bank.
 
The Wall Street Journal reported worldwide layoff announcements of more than 100,000 workers since oil prices fell off a cliff last June.  Of the 91,000 that have since come to pass, most are in oilfield services and drilling companies.  Federal data show 3,000 direct oil & gas extraction job losses since the October peak, and some 12,000 jobs lost from the larger category of energy support.
 
Schlumberger said last week it would lay off an additional 11,000 employees, on top of the 9,000 layoffs already announced (corrected).  That takes the total number of pink slips this year to 20,000 at the world's #1 oilfield services provider.  On Monday, Halliburton announced it had cut 9,000 jobs in the fourth quarter of last year and the first quarter of this year.  The company expects to lay off even more by the end of June.
 
A Texas bill supported by energy companies would prevent cities and counties from banning the practice of fracking on their land.  It's on course to become law after passing the Texas House last week.  The Senate and Governor are expected to give their approval as well. 
 
OPEC joins a chorus of prognosticators predicting an end to the boom in US oil production later this year.  The Energy Department predicts a decline in production in seven key regions by this May. OPEC's monthly market report predicted US supplies would grow to about 13.65 million barrels a day in the second quarter, and begin to decline during the second half of this year.
 
Saudi Arabia boosted crude production to the highest level in three decades in March, an additional 658,000 barrels per day.  Bloomberg observes the surge is roughly equal to half the daily output of the Bakken formation in North Dakota. 
 
BP CEO Bob Dudley appeared to have the early shareholder support needed to approve a 25% pay raise worth $12.7 million in salary and bonus for 2014.  
 
North Dakota oil production fell 1.2 percent in February.  The Grand Forks Herald calls this the first time since 2011 that the state has seen back-to-back drops in monthly production.  Preliminary numbers show just under 1.18 million barrels of oil per day in February in North Dakota.  Low oil prices have prompted operators to postpone bringing new wells online, a trend that’s expected to continue until June, when the $5.3 billion "large trigger" industry tax break could kick in.  Reuters reported as many as a thousand wells could be put on hold by next month.

News From The Oil Patch 4/14/2015

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The Kansas Corporation Commission last month implemented new limits on how much saltwater Kansas oil & gas producers can inject into disposal wells in Harper and Sumner County, linking increases in wastewater injection to an increase in earthquakes in the area.  Based on year-end data we requested via the Kansas Open Records Act from the KCC, there was a dramatic increase in wastewater injections last year across Kansas, in Harper and Sumner Counties, and by one company in particular.  The KCC reports a total of 983.5 million barrels of Saltwater Disposal in Kansas last year, compared to 798.6 million barrels the year before.  That's an increase of 18% over 2013 totals.
 
SandRidge Exploration & Production LLC last year disposed of more wastewater than any other operator in Kansas, injecting about the same amount of produced brine as the next three leading operators combined: more than 125 million barrels. That's 12.7% of the Kansas total, or one out of every eight barrels statewide. SandRidge is currently the tenth leading cumulative wastewater injector of all time in Kansas.  They're just getting started. Through the end of 2013, they weren't in the top fifty.  If their growth continues, they'll be sixth next year, all time.
 
In Harper County, where Saltwater Disposal wells were placed under strict new limits by the KCC last month, disposal of wastewater from oil and gas production last year more than doubled to a whopping 109.4 million barrels.  That's 11% of the statewide total.  18.5 million barrels of that can be attributed to SandRidge E&P.
 
There were 56 drilling permits filed for new locations in Kansas last week, raising the total so far this year to 729.  There were 31 east of Wichita and 25 in western Kansas, including one in Barton County, two in Ellis County, one in Russell County, and one in Stafford County.  For the month of March there were 259 new permits filed.
 
Independent Oil & Gas Service reports 96 new well completions across Kansas, for a year-to-date total of 1,596.  There were 486 completions recording during the month of March.  Last week's total includeds 65 completions in eastern Kansas and 31 west of Wichita, including three in Barton County, one in Ellis County and three in Stafford County.  Out of 31 completions in western Kansas last week, six were dry holes.
 
Baker Hughes reported another big drop in the number of active drilling rigs last week.  There were just 988 nationwide, down 40.  The count in Canada was off one at 99 rigs.  The company reported 13 in Kansas, which was up one from last week.  The broad count from Independent Oil & Gas Service was 47 active rigs in Kansas, 14 east of Wichita (down three), and 33 in western Kansas (down one).  58 rigs were listed as pending their next location assignment and 112 were stacked or idle.
 
According to the latest data from the Kansas Geological Survey, Ellis County produced 3.25 million barrels of crude oil last year, down from 3.53 million bbl in 2013.  The figure in Barton County was 2.19 million barrels last year, compared to 2.2 million the year before.  In Russell County, operators pumped 2.05 million barrels in 2014, which is an increase over the previous years 2.044 million barrels.  Stafford County production also increased, from 1.325 million barrels in 2013, to 1.329 million barrels last year.
 
If officials in Washington state wind up not allowing Shell to base its Arctic drilling fleet in Seattle because of environmental concerns, members of the Alaska Legislature suggest another business decision for its neighbor to the south.  A resolution, from Alaska House Speaker Mike Chenault, suggests public officials in Washington consider closing the Boeing production plant if they are truly concerned with carbon dioxide emissions from commercial activity.  As you might expect, the resolution also invites Shell to put its home port in Alaska if the Seattle lease is terminated.  Environmental groups say the Port of Seattle broke state law signing a lease for one of its terminals as a home port for an Arctic oil-drilling fleet.

News from the Oil Patch 4/6/2015

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The Kansas Corporation Commission reports 263 intent-to-drill notices filed across Kansas in March. There were four intents filed in Barton County last month (23 so far this year), one in Ellis County (five so far this year),  three in Russell County (five so far this year), and five in Stafford County (12 so far this year).
 
Independent Oil & Gas Service reports 106 well completions in Kansas last week for a year-to-date total of 1,500.  There were 64 completions east of Wichita and 42 in western Kansas.  That includes three dry holes.  There was one new well completion in Barton County and three in Stafford County last week.
 
There were just 52 drilling permits issued for new locations in Kansas last week, which marks 673 so far this year.  There were 36 new permits issued in eastern Kansas, and 16 west of Wichita including one each in Ellis and Russell counties. 
 
There were 1,028 active drilling rigs nationwide over the last week, down 20.  The count in Canada dropped by 20 rigs to 100.  Baker Hughes reports 12 rigs actively drilling for oil and gas across Kansas, down one.  The Independent Oil & Gas Service count was 52 active rigs across Kansas, 17 east of Wichita, down one, and 35 in western Kansas, which is unchanged from last week.  There were 54 drilling rigs listed as pending their next location assignment.  There are now 114 rigs listed as stacked or idle, up one. 
 
The North Dakota Oil and Gas Division has ordered five oil companies to reduce their production at 30 wells in the state as a penalty for flaring more gas than allowed.  That's the largest number of companies and wells the state has sanctioned since new restrictions took effect on Jan. 1. The new rules require companies to capture at least 77 percent of natural gas produced during oil production.  The five companies were ordered this month to reduce production to 100 barrels per day at certain wells or risk facing daily penalties.  *
 
Officials at Mexico's state-run oil company say they are searching for three missing workers from a platform fire that killed four others, and are beginning to restore production at the damaged gulf facility.  Exploration and production director Gustavo Hernandez says Pemex has help from the Navy in the search and rescue, and expects to restore 80 percent of production over the next week.  Hernandez said Sunday the estimated production of 646,000 barrels of crude a day and 1.4 billion cubic feet of gas in the region won't be affected by the fireball that hit the processing platform Wednesday.  Some 301 workers were evacuated and 45 sought medical attention.  There was no significant oil spill because the feeder lines could be turned off. Pemex is still investigating the cause.
 
North Dakota will join Wyoming in a lawsuit challenging new federal rules about hydraulic fracturing on US government land.  The states are challenging rules that, among other things, require disclosure of the chemicals used.  The lawsuit alleges that the Bureau of Land Management oversepped its jurisdiction.  It also asserts that the new rules are in conflict with state regulations and with the Federal Safe Drinking Water Act.