News From The Oil Patch 6/13/2016
13 June 2016
Oil prices have retreated somewhat from last week's eight-month highs. By mid-morning Monday (6/13) the Nymex near-month contract for light sweet crude was down another 29 cents to $48.78 per barrel. London Brent was down 27 cents to $50.27. Kansas Common Crude at CHS in McPherson starts the week at $39.25, the same price posted June 1. The price of oil has nearly doubled since January, when it hit its lowest since late 2003. Analysts credit unplanned outages and dropping U.S. production for the price increases since then.
Baker Hughes reported increases in both oil and gas drilling rigs on its weekly active list. There 414 total active rigs in the US, up six ( a gain of three gas rigs and three oil rigs). Canada reports 65 active drilling rigs, up 24 for the week. Independent Oil & Gas Service reported four active rigs in eastern Kansas last week, unchanged, and 13 west of Wichita, down one from the week before. They're drilling at one site in Barton County. And they're moving in completion tools at one site in Barton County, one site in Ellis County, one site in Russell County and three sites in Stafford County.
Independent Oil & Gas Service reported 23 new well completions across Kansas last week, or 588 so far this year. There were two new completions in Barton County and one in Ellis County. For the month of May, Independent reports 81 well completions, including five in Barton County, one in Ellis County, and two each in Russell and Stafford counties.
The monthly dry hole report includes eight dry holes across Kansas last month, out of 81 completions, just less than ten percent.
There were just 24 new permits filed last week for drilling in new locations in Kansas, bringing the total so far this year to 369. Two of those were in Ellis County. There were 72 permits filed during the month of May, two in Barton County, four in Ellis County, five in Russell County and three in Stafford County.
The Nomenclature Committee of the Geological Society recognized and named four new oil and gas fields in Kansas during its meeting June first, including one in Barton County (the Schneider SE field, on the Shirer lease in Barton County. American Oil is the operator of record) That's just 11 new fields recognized so far this year, down 75% from the 34 recorded last year at this time.
Texas crude output was nearly 3.08 million barrels per day in March (3079 kb/d), about 29 thousand bpd higher than the 3.05 million barrels per day produced in February. Kansas total production through February was 6.55 million barrels. There are currently only 40,730 producing oil wells in Kansas, the lowest number in recent memory.
Work is underway in Iowa on an oil pipeline from North Dakota despite repeated attempts by landowners and environmental groups to stop it. The Iowa Utilities Board signed a final order last Wednesday allowing construction, and work began shortly after that, according to a spokeswoman for Dakota Access. Iowa was the last state to approve construction on the pipeline, which will carry oil from the Bakken oil fields in North Dakota across South Dakota and Iowa before ending at a storage facility in Illinois. Work began last month in the other three states. Opposition groups plan non-violent protests to stop the work as soon as next month. The Corps of Engineers has not yet granted permits for river crossings and other federal land in Iowa, and the project still faces as least five lawsuits challenging the builder's use of eminent domain.
The timing of Oklahoma oil man Aubrey McClendon's death by car crash was suspicious, but it doesn't appear to be suicide. Oklahoma City police had been investigating the deadly March 2 wreck that killed the founder and former CEO of Chesapeake Energy just a day after he was indicted by a federal grand jury for allegedly trying to rig oil prices. Police said they can't rule out suicide as a cause of the crash, but that they've found no evidence which would lead them to believe it was a suicide.
Russia's mostly state-owned oil giant Rosneft posted a whopping 75 percent drop in first-quarter net profit, raising questions over how much money the government will be able to glean from its crude producers as commodity prices remain low. Rosneft missed analyst forecasts, reporting 14 billion rubles ($216.8 million) in net profit, against Reuters consensus polls predicting 33 billion roubles in net income.
County leaders in western North Dakota have once again delayed a decision on whether to approve an $850 million oil refinery. Houston-based Meridian Energy Group Inc. said the delay could prevent construction from starting this summer. On Tuesday, the Billings County Commission decided to wait until its July 6 meeting, to allow for a public meeting with refinery developers and state regulators.
The Wall Street Journal calls them vultures, investors hoping for a bargain, buying up oil and gas wells from cash-strapped operators in the North Dakota’s Bakken Shale. The Journal cites state figures showing hundreds of wells changing or in the process of being sold. The newspaper describes the buyers as fortune seekers ranging from industry experts to first-time wildcatters. They are picking up properties as more established producers scale back or shed assets to pay creditors. Among the sellers cited in the Journal were Occidental Petroleum and Whiting Petroleum, which together account for the sale of nearly four hundred North Dakota wells.
Oklahoma oil and gas companies are asking a federal judge to dismiss a lawsuit filed by members of an environmental group that seeks to reduce production waste that could be fueling a spike in earthquakes. In separate legal filings, Chesapeake Energy, Devon Energy and New Dominion said the Oklahoma Corporation Commission is already taking action to reduce the volumes of wastewater in disposal wells. While the companies were responsible for about two-thirds of the wastewater injected in 2014, they said any injunction against them wouldn’t cover other operators who might also be contributing to induced seismicity.
The 40-year ban on exporting U.S. crude was lifted last December. Since then, there's been a sevenfold increase in America's oil exports to destinations other than Canada, which was excluded from the ban. The frenzy of export activity, while still relatively small, is noteworthy given the depressed environment in the oil patch these days. Not only is the U.S. pumping less oil, but there remains a lingering glut of oil around that world that earlier this year caused crude to crash to 13-year lows. U.S. oil exports hit an important milestone in March, the latest month that statistics are available for. For the first time since 2000, the majority of U.S. crude exports were to destinations other than Canada, according to JBC Energy.