News From The Oil Patch 11/9/2015
09 November 2015
President Barack Obama rejected TransCanada's request to expand the Keystone oil pipeline with a second international crossing. The move has been a flash point for critics from the right and left. Mr. Obama’s denial of the proposed pipeline comes as he is seeking to build an ambitious legacy on climate change and comes just ahead of a major UN summit meeting on climate change in Paris in December. President Obama asserted the pipeline would not make a meaningful long-term contribution to the economy, would not lower gas prices, and would not enhance energy security.
Two environmental groups have warned Oklahoma oil and gas companies of their intent to file a federal lawsuit over the links between wastewater disposal wells and the state's sharp rise in earthquake activity. The public interest law firm Public Justice served a "notice of intent to sue" on behalf of the Oklahoma Sierra Club. They plan to bring a lawsuit under a 1976 law which allows citizen lawsuits over hazardous waste. They want the companies to reduce the volumes of wastewater injected into disposal wells. They also want to establish an "independent forecasting body" that will investigate, analyze and predict the cumulative effect of injecting production wastewater.
Independent Oil and Gas Service reports a small spike in the number of inactive drilling rigs in Kansas. An additional ten rigs are reported stacked. Add another three drilling rigs shutdown awaiting contracts for a total of 134 total inactive rigs. The broad count east of Wichita was 19 active rigs, down one, and 25 active rigs in western Kansas, up one. They were about to start drilling at two sites in Barton County Friday.
Across the US there were 771 active drilling rigs according to Baker Hughes, down four. There were 185 in Canada, down six.
There were just 36 new drilling permits issued across Kansas last week, for a year-to-date total of 2,032. Last year at this time we had more than six-thousand new permits on file. There were 13 new permits issued east of Wichita, 23 in western Kansas, including two in Barton County.
As to completions last week, Independent Oil & Gas Service reports 65 statewide, 3,395 so far this year, which is down from 4,881 at this time last year. Ellis County had three completions including one dry hole last week. Russell report one completion, which was also a dry hole. Stafford County reports one new well completion. There were 25 completions reported in eastern Kansas last week, and 40 west of Wichita, of which 11 were dry holes.
The Kansas Corporation Commission reported just 216 intent-to-drill notices filed for the month of October across the state of Kansas. That's up from the 154 filed in September but dramatically lower than the 662 filed in October of last year. So far this year the count is 2,078. There are seven new intents on file in Barton County, six in Ellis County, two in Russell County and six in Stafford County.
The attorney general of New York has begun an investigation of Exxon Mobil, seeking to find out what the oil giant knew about the possible risks of carbon-induced climate change and when. This move is drawing a lot of flak. Forbes magazine hit the nail on the head, tweeting it's like "blaming your cavities on the corn farmer who sold syrup to Coca-Cola. Pundits on the left admit successful prosecutions are not likely but say the investigation could well expand to include other oil companies.
The Wall Street Journal reports the Organization of the Petroleum Exporting Countries is moving to rein in costs as its members struggle to pay their dues amid a lengthy price slump. The cartel has delayed new hires, reduced training sessions for staff and scaled back travel. OPEC has also ruled out for now an increase in the $2.4 million annual fee that each member pays to be part of the group.
In September, the U.S. recorded its biggest-ever monthly surplus of goods with members of OPEC: $1.4 billion. The U.S. is also on track to post its first annual goods surplus with OPEC since the government began keeping records in 1985. Just a few years back the U.S. posted a $126.7 billion DEFICIT in goods with OPEC that was mainly about oil.
Enbridge Inc. of Canada plans to spend $5 billion building three oil storage facilities in the Gulf of Mexico region. According to the Wall Street Journal, a company official says it's part of a “full frontal assault” aimed at fortifying the company's strategic position in the U.S. market. If the national oil-export ban is lifted, the terminals would position Enbridge, one of the world’s largest oil logistics companies, at the forefront of a huge new industry. Enbridge’s Gulf Coast plan calls for three terminals between Houston and New Orleans. Each could have crude storage tanks, ship docks, pipelines and other infrastructure to allow for both the import and export of U.S. and Canadian crude as well as processed condensate and refined products.
An auction for the rights to drill for oil on North Dakota state lands raised $8.4 million. The state Department of Trust Lands auctioned exploration rights to more than 10,500 acres in nine western North Dakota counties. The average payment ranged from just more than $1 per acre in Sioux County to more than $10,700 per acre in Mountrail County. The money goes into trust funds that benefit education.
Marathon Oil has signed an agreement for the sale many of its operated producing properties in the Gulf of Mexico for $205 million. The buyer will assume all future abandonment obligations for the assets, which represent a majority of the company's properties in the Gulf. Closing is expected before year-end. Marathon retains interests in other assets and acreage in the Gulf.
Chevron is planning to lay off up to 1,000 employees working in area between Saudi Arabia and Kuwait, as a dispute between those countries has halted all work on oil fields for several months.
Last week a former BP engineer accused of deleting text messages after the Gulf oil spill pleaded guilty to lesser charges and avoided prison time. Kurt Mix insists he's done nothing wrong, and on Sunday we read his in a first-person commentary posted on the Wall Street Journal website entitled “I was an oil spill scapegoat.”