Daily Reports

News From The Oil Patch 9/16/2014

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Baker Hughes reported 1,931 active drilling rigs across the US, up six.  The count in Canada dropped nine rigs to 405.  In Kansas there were 25 rigs actively drilling for oil and gas, up two. Independent Oil & Gas reported 123 active rigs across Kansas plus 33 awaiting their next assignment and 78 stacked or idle rigs.  There were 40 active rigs reported east of Wichita, up three, and 83 in western Kansas, unchanged.
 
Independent Oil & Gas reported 157 new drilling permits issued last week in Kansas for a year-to-date total of 5,213.  There were 157 permits for new locations in eastern Kansas, and 50 west of Wichita. There were one each in Barton, Ellis, and Stafford counties, and four in Russell County.  
 
Kansas producers completed 128 oil wells last week, which is 4,121 so far this year.  There were 68 completions reported east of Wichita and 60 in the western range.
 
The monthly completion report from Independent demonstrates fairly vividly the risk producers take when they drill for oil.  In western Kansas last month, operators reported 171 well completions west of Wichita, and more than a third of them were dry holes. 322 total completions reported across Kansas in August.  Barton County had five, Ellis County had seven, there were four in Russell County and five in Stafford County.  There were 574 new drilling permits across Kansas last month.
 
In OPEC's monthly oil-market report, Saudi Arabia revealed it had cut production by about 400,000 barrels per day last month.  The kingdom is beset by competitors, dropping demand, and a US production boom.  But the Wall Street Journal reports a split in OPEC's response to falling prices.  Iran and Nigeria together increased output by more than a third of the Saudi cut in August.  Libya's ports and oil fields are open for business, with production increasing fivefold in three months to about 800,000 barrels per day. Add it up and goes a long way to explain the lowest oil prices in a year and a half.  The international benchmark lost another 55 cents a barrel to $97.49 by midday Thursday.  Nymex futures gained a little ground to $92.15 a barrel, but Wednesday's price at NCRA of $81.50 was the lowest at the McPherson refinery since January. 
 
The Wall Street Journal says a global oil surplus is driving US crude prices down.  Gulf Coast refineries are using less as they slow production ahead of yearly repairs.  More oil is traveling to Cushing after a pipeline was reversed last month.  The amount of crude stored at the Oklahoma hub is up 14% in the last seven weeks after hitting a six-year low.
 
Enterprise Products Partners hopes to build a new pipeline to carry oil from North Dakota to the oil storage and distribution facility in Cushing, Oklahoma.  According to the Denver Business Journal, the company will route the pipeline through Wyoming and Colorado, in hopes of picking up customers in the Power River and Denver-Julesburg basins.  The company says the 30-inch pipeline would carry about 340,000 barrels of oil per day to start, and could expand to more than 700,000 barrels per day.  If Enterprise finds enough customers, the Colorado to Oklahoma section could be operational by the end of 2016.
 
Analysis by Platts indicates that Congress will not likely pass, or even debate, lifting or relaxing oil export restrictions until after the election.  House and Senate aids concede there is growing support in Washington to end the 40-year-old restrictions, the debate to do so is not something they are willing to undertake this year.  Meanwhile, some leaders in Congress, who largely support US energy producers, have declined to speak in favor of such a policy change over fears that it might be linked to an increase in gasoline prices, even though economic studies claim increased exports will actually have the opposite effect.
 
Russia's state-owned energy powerhouse Rosneft is preparing to fire up to one thousand employees, or one-fourth of its workforce.  According to the newspaper Kommersant, the firings could begin next month.  Rosneft has been affected by recent Western sanctions against Russia over the Ukraine incursion, with chief executive Igor Sechin's assets frozen by the United States and potential deals reportedly being shelved amid tensions.  The St Petersburg Times reports the sanctions could hit the company's ability to maintain production levels and move forward with its long-term development plans, including drilling in the Arctic.  Rosneft's production in August dropped to its lowest level in over a year, according to Bloomberg.
 
The budget for the oil boomtown of Williston, North Dakota has increased nearly fivefold in just three years.  The town's population was nearly 15 thousand in the 2010 census, but tens of thousands of people have moved to the area since then, ramping up costs for roads, bridges, water and sewer service.  The city budget was $20 million in 2000, $53 million in 2012.  Next year's city budget, passed Tuesday, tops out at a whopping $250 million.
 
The stage has been set for an appeal of a high profile verdict against a Texas oil and gas company after a judge refused to grant a new trial in the case of a family sickened by noxious air emissions. Judge Mark Greenberg letting stand the $2.9 million jury award to Lisa and Bob Parr who sued the company after more than 100 wells surrounded their once rural ranch south of Dallas.  A spokesman says the company will now take the case to the Texas Court of Appeal. 
 
The final report from a landmark federal study on hydraulic fracturing, or fracking, found no evidence that chemicals or brine water from the gas drilling process moved upward to contaminate drinking water at a site in western Pennsylvania.  The Department of Energy report, released Monday, was the first time an energy company allowed independent monitoring of a drilling site during the fracking process and for 18 months afterward. After those months of monitoring, researchers found that the chemical-laced fluids used to free gas stayed about 5,000 feet below drinking water supplies.

News From The Oil Patch 9/8/2014

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Baker Hughes reported 1,925 active drilling rigs across the US last week, up eleven from the week before. The count in Canada was up five at 414.  In Kansas there were 23 rigs, down two.  Independent Oil & Gas Service reported 120 rigs across Kansas, with 37 in eastern Kansas, up two, and 83 west of Wichita, up one from last week.
 
Independent reported 158 new well completions across Kansas last week for a year-to-date total of 3,993.  There were 66 east of Wichita and 92 in western Kansas.
 
There were 100 new drilling permits issued last week across the state, which is 5,056 so far this year.  There were 57 in eastern Kansas, and 43 west of Wichita, including seven in Barton County, five in Ellis County, and two in Russell County. There were no new permits in Stafford County.
 
The Kansas Corporation Commission reports 588 intent-to-drill notices filed across Kansas during the month of August.  In the last 30 days, there were 19 new intent notices filed in Barton County, nine in Ellis County, 12 in Russell County, and nine in Stafford County.
 
A US judge on ruled that BP was "grossly negligent" in its role in the Gulf oil spill four years ago.  The court concluded that the discharge of oil was the result of gross negligence or willful misconduct by the company.   Under terms of the Clean Water Act, the company could see up to $18 billion in fines.  BP has already shelled out more than $42 in settlements and other costs associated with the spill.  Experts say the companies subsequent asset sales have alrready erased about a fifth of BP's earning power.  The judge is set to assign the actual dollar amounts in a third phase of the civil trial, set to begin next January.  On its Web site, the company said it "strongly disagrees" with the ruling, adding that "it believes an impartial view of the record does not support the erroneous conclusion reached by the court.
 
Reuters reported one possible side effect of that huge civil judgment against BP for the Gulf Oil spill, suggesting the prospect of up to $18 billion in new fines could encourage the company to sell off some of its Russian interests.  Analysts are suggesting the judgment could prompt BP to look at reducing its exposure to Russia, perhaps even selling off or reducing it's 19.75% stake in the BP-Rosneft joint venture.  Assets in Russia currently generate up to one fourth of BP's production worldwide.
 
The British government has filed a friend of the court brief, urging the US Supreme Court to review appeals court rulings against BP requiring the company to pay damages to claimants who was not injured by the Deepwater Horizon oil spill.  The Brits assert that the lower court rulings raise what it called grave international concerns by undermining confidence in the "vigorous and fair resolution of disputes."
 
Halliburton announced it has agreed to pay $1.1 billion to settle most of the lawsuits brought over its role in the Gulf oil spill.  The agreement is subject to court approval.  Halliburton was accused by victims, and by BP, of doing defective cementing work on the Macondo well before it blew out in April of 2010. The company blamed the incident on decisions by BP, which owned the well. 
 
According to a new report from the Brookings Institution, China has passed the US as the world's largest oil importer, and buys more crude from the Middle East than we do.  China currently imports a net 5.6 million barrels of oil per day.  About half of those imports are from the Persian Gulf, including Saudi Arabia, Iran, Oman and Iraq.  The US now imports about five million barrels per day, with about 41% of that coming from the Persian Gulf, and more than 50% from Canada and Mexico. 
 
Iraq's oil ministry refiled a complaint in a U.S. court asking authorities to seize a million barrels of Kurdish oil waiting off the coast of Texas.  A previous request was thrown out over questions of jurisdiction, but Baghdad refiled the complaint last week.  The Kurds must respond within 21 days to avoid a default judgment.
 
The Chief Executive Officer at Royal Dutch Shell calls on the US to lift its decades-old ban on crude oil exports.  Ben van Beurden told a conference at Columbia University that oil and natural gas exports would "reinforce the long term future of North American energy production."  Van Beurden also said lifting the ban would help fuel consumers in the US because it would prompt an increase in US oil production, which would, he says, keep prices down. According to Reuters, Van Beurden called for a systematic and gradual opening up of the export ban.

News From The Oil Patch 9/2/2014

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Baker Hughes reported 1,914 active drilling rigs across the US Friday, up 18 from last Friday.  The count in Canada was up four at 409, which in Kansas there were 25 rigs actively drilling for oil and gas, down three.  Independent Oil & Gas reported 117 rigs across the state, including 35 east of Wichita (up four) and 82 in western Kansas unchanged.
 
Independent reported 164 drilling permits fornew locations in Kansas last week, and 4,956 so far this year.  There were 112 new permits in eastern Kansas, and 52 west of Wichita, including two in Barton County, none in Ellis County, five in Russell County, and four in Stafford County.
 
There were 120 new well completions reported across the state last week, or 3,835 for the year.  There were 46 completions in eastern Kansas, including one dry hole, and 74 in the western Kansas region, in cyhidh there were 21 dry holes.
 
A new company based in Hays offers acidization services to Central and Western Kansas.  ESCA Service is located at 1942 Highway 40, and offers oil field chemicals for acid stimulation for oil and gas wells.
 
That ballot initiative to repeal Alaska’s oil-industry tax cuts failed by just 8,443 votes, out of about 172,000 votes cast.  The New York Times reported absentee ballots counted last week sealed the deal, and nixed the repeal.
 
That “ghost ship” oil tanker has reappeared on Satellite imagery near where it disappeared off the US coast last week.  The vessell is carrying approximately $100 million of disputed Iraqi Kurdish crude oil.  The tanker seems not to have offloaded its oil.  According to the US Coast Guard and Reuters, the tanker is still 95 percent full and has not yet unloaded its cargo. The vessel was anchored Monday in the Galveston Offshore Lightering Area, close to its previously known position.
 
A senior U.S. Congressman from Texas has come out in full support of the United States lifting its 40-year old ban on crude oil exports.  Until now, Representative Joe Barton has maintained a relatively neutral public stance on the topic.  The matter has divided Republican members of the House energy and commerce committee.  Barton told Reuters in a statement that the time was right for the US to overhaul its long-standing restrictions on exporting crude oil.
 
The Wall Street Journal says at least ten large oil companies, including Marathon Oil , ConocoPhillips, Hess Corp and Continental Resources, are planning a lobbying effort after the election to loosen the US ban on oil exports.    They say with booming US production, we can afford it.   A majority of voters polled on the subject remain concerned about the impact on gas prices.  Most refineries oppose the move, because a glut of oil here lowers prices, which improves their bottom lines.
 
Occidental Petroleum on Tuesday broke ground on a new 600-employee office complex in Midland, Texas to serve as the center of the company’s oil-and-gas operations in the Permian Basin.
 
The windfall in oil-tax revenue in Texas is a mixed bag, according to reporting in the Houston Chronicle.  The Texas Oil & Gas Association says there are 400,000 people employed in the Texas oil patch with an average salary of $120,000.  That’s $48 billion total in salaries and wages.  The industry is shelling out $11 billion each year in royalties, to about 570,000 landowners.  The state’s Rainy Day Fund for emergency initiatives is on track to reach $12 billion.  
 
Authorities in Nigeria say that country has lost about $243 million to bunkering, the puncturing of oil pipelines by vandals and thieves.  There were more than 3,500 cases last year, compared to just 2,230 cases the year before.
 
Royal Dutch Shell has taken the first steps toward restarting its efforts to drill for oil in Arctic waters off the coast of Alaska.  The company on Thursday submitted a plan that consists of two drilling rigs working at the same time in the Chukchi Sea.  Shell has not made a final decision on whether to drill next summer, according to the New York Times.  If Shell received government approval, it could likely see another round of court challenges to the effort.
 
 
 

News From The Oil Patch 8/25/2014

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Baker Hughes reported 1,896 active drilling rigs across the US on Friday, down 17 for the week.  The count in Canada was 405, up four.  There were 28 in Kansas, up two.  Independent Oil & Gas Service reported 123 total rigs in Kansas.  That's 39 east of Wichita, up one, and 85 in western Kansas, down two.


Independent Oil & Gas reported 138 new drilling permits issued last week across Kansas, for a year-to-date total of 4,792.  There were 76 drilling permits issued for new locations in eastern Kansas, and 62 west of Wichita, including four in Barton County, one in Ellis County, two in Russell County, and three in Stafford County.


There were 68 new well completions reported last week statewide, which is 3,715 so far this year.  That includes 21 east of Wichita, and 47 in western Kansas, including one in Barton County.


The gap between crude oil prices in the major trading centers of Midland, Tx and Cushing, Ok ballooned to nearly $20 ast week, the widest point this year and second-highest on record.  This is due at least in part to the skyrocketing production in the West Texas Permian Basin, which has grown pipeline and rail capacity in the region. The resulting supply backlog is forcing prices down.


BP was the apparent high bidder on 27 of 32 bids it submitted at that Western Gulf of Mexico lease sale.  That's an 84% success rate, on total bids accepted of more than $22.8 million.  Shell won the bidding on one block.  The total amount of high bids on all 81 tracts was nearly $110 million.


Plains All American Pipeline announces on its Web site its plan to construct a 440-mile pipeline connecting the storage hub at Cushing with the Valero refinery in Memphis, Tennessee.  The $900 million project should be completed in a couple of years and will move about 200,000 barrels per day of domestic sweet crude oil from Cushing to Memphis.


Libya said Wednesday it was resuming oil exports from its largest terminal after a year-long stoppage, as its oil industry manages to recover despite intense fighting in large cities.  But new uncertainty emerged later in the day as Libya's de facto oil minister said he was being replaced.  An Italian super tanker was set to leave later Wednesday from the terminal with about 600,000 barrels on board.

A 15-mile section of the Ohio River was reopened for limited traffic on Wednesday as clean-up of a 5,000-gallon fuel oil spill continued, the U.S. Coast Guard said on Wednesday.  The Coast Guard closed a stretch of the river between Cincinnati, Ohio and Dayton,  Kentucky on Tuesday after a spill during a "routine transfer of fuel oil" at a 60-year-old  power plant owned by Duke Energy, 20 miles east of Cincinnati.

News From The Oil Patch 8/18/2014

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Oil production from Permian Basin of West Texas is outpacing pipelines' ability to it to the Gulf Coast, causing coastal refiners to pay an additional premium to acquire oil.  On Monday, that bottleneck caused oil for delivery at Midland, Texas to trade at nearly $20 a barrel less than the Gulf Coast benchmark, the deepest discount in 17 months. 
 
The EPA has extended the deadline for public comment on the agency's proposal to limit air pollution at oil refineries by 60 days, to October 28th.  The new standards would require the monitoring of benzene for the first time, along with new emission control standards for storage tanks and restrictions on flaring during malfunctions. Eighteen members of Congress joined industry groups and large refiners who petitioned for the extension of the comment period.
 
Oil production from Permian Basin of West Texas is outpacing pipelines' ability to it to the Gulf Coast, causing coastal refiners to pay an additional premium to acquire oil.  On Monday, that bottleneck caused oil for delivery at Midland, Texas to trade at nearly $20 a barrel less than the Gulf Coast benchmark, the deepest discount in 17 months. 
 
New rules go into effect September 12th in Oklahoma that are a direct results of the unprecedented earthquake activity there.  The rules require well operators to make daily reports on volume and pressure of wastewater injection instead of the current monthly requirement. Many wells must have seismic monitoring equipment, and testing of certain large disposal wells now must take place each year, instead of every five years. Regulators also can require testing of any well, large or small, at any given time.  So far this year, regulators temporarily shut down at least 10 wells. One remains closed.
 
With 59 trains a day carrying millions of barrels of North Dakota crude crossing his state every week, Minnesota's governor is concerned about disaster responses.  Minnesota emergency services personnel will be trained and equipped in a few years to deal with oil train disasters, but the governor worries about what could happen before then.  Governor Mark Dayton held the first in a series of safety roundtable meetings Monday.
 
Cargill has agreed pay a civil penalty of more than $187,000 to settle allegations that it violated the Clean Water Act at two different large oil storage facilities located in Blair, Nebraska and Eddyville, Iowa. Each produces and stores more than 1 million gallons of oil. Combined, the two facilities have a total estimated storage capacity of more than 7 million gallons.  This was a preventative measure, as no spills occured.
 
The Wall Street Journal reports on a slow shift in politics, as Democrats are increasingly lining up behind the oil and gas industry.  The newspaper cites a vote in the US House to speed up the government's reviews of applications to export natural gas in which  47 Democrats voted yes.  The energy boom is shaping a new kind of Democrat in national politics, lawmakers who are giving greater support to the oil and gas industry even at the risk of alienating environmental groups
 
Baker Hughes reported 1,913 active drilling rigs across the US Friday, up five.  Canada had 401 active rigs, up 14.  The count in Kansas was unchanged at 26.  Independent Oil and Gas Service reports 125 active rigs across Kansas, 38 east of Wichita (down 2) and 87 in western Kansas (one lower that last week).  There were 32 awaiting their next location assignment, and 78 stacked or idle, for a total of 235 total rigs.
 
Independent reported 82 new well completions across Kansas last week for a year-to-date total of 3,647.  That's 47 east of Wichita and 35 in western Kansas, including one each in Barton and Stafford counties.
 
There were 155 new drilling permits issued across the state of Kansas last week, which is 4,654 so far this year.  There were 95 in eastern Kansas, and 60 west of Wichita, including three drilling permits in new locations in Barton County, one in Ellis County, two in Russell County and two in Stafford County.
 
The Kansas Geological Survey recognized and named ten near oil and gas fields in Kansas at its meeting August 5th, including the Laud South field in Barton County operated by Shelby Resources. The total number of new fields  recognized this year is 77, about 36 fewer than last year.
 
 

News From The Oil Patch 8/11/2014

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A fire July 29th was expected to keep the CVR refinery in Coffeyville, Kansas shut down for four weeks.  Market analysts blamed the shutdown for a continuing downward trend in crude oil prices.   The 115,000 barrel per day facility buys light, sweet crude oil from Cushing, which is about 100 miles away.  Analysts expected reduced demand for the product as a result.  Four people were hurt in the fire in the facility’s isomerization unit.
 
Tulsa-based Casillas Petroleum joins G-E Energy Financial Services in the purchase of some 500 producing oil wells spread across 14 counties in southwest Kansas.  Terms of that deal were not disclosed.  The oil and gas sector of the General Electric subsidiary has 25 partnership investments in more than 3,000 wells, producing about 11,000 barrels of oil equivalent per day. Casillas will operate the properties and serve as the general partner.
 
Baker Hughes reported 1,909 active drilling rigs across the US Friday, 19 higher than last week.  That's above 19-hundred for the first time in two years.  Canada: down five at 387.  In Kansas there were 26 rigs actively drilling for oil and gas, down one from last week.  Independent Oil & Gas reported 124 total rigs across Kansas, 36 east of Wichita, down three, and 88 in western Kansas, up three.
 
Kansas operators completed 52 wells last week, 3,565 so far this year.  Independent Oil & Gas reports 11 of the 15 completions in western Kansas were dry holes.  37 new well completions were reported east of Wichita last week, and of those four were dry holes.
 
Independent reported 95 new permits across the state last week, which is 4,499 drilling permits so far this year.  There were 45 permits in new locations in eastern Kansas, and 50 west of Wichita, including 6 in Barton County, two in Ellis County, one in Russell County, and one new drilling permit in Stafford County.
 
Another company now wants to export lightly processed oil.  Plains All American Pipeline CEO Greg Armstrong said the only thing that might get in their way is "political arbitrariness.”  
 
Venezuela confirmed that it is considering the sale of its US refining and distribution network Citgo.  Oil Minister Rafael Ramirez said Venezuela will sell Citgo for $10 billion, but says the government is not in a hurry to make a deal.
 
The SEC accuses a Texas oil and gas company of making fraudulent claims about oil reserves in Columbia, asserting they "lacked any reasonable basis."  Houston American Energy Corp. raised about $13 million in a public offering and saw its stock price jump from $5 per share to $20.  At last check that share price was about 40 cents.
 
North Dakota Tribal leaders in the heart of the Bakken boom are now demanding producers pay royalties for lost revenue, for the huge amounts of natural gas being burned off at oil well sites.  The Three Affiliated Tribes outlined the plan in a six-page document sent to oil companies, and obtained by the AP.
 
North Dakota officials are considering requiring energy companies to treat the crude they pump from the Bakken Shale to make it less volatile before it is loaded onto trains.  The Industrial Commission plans to hold a public hearing in the coming weeks on possible steps to reduce volatility at a well site before oil is stored or transported, according to a spokeswoman for North Dakota Gov. Jack Dalrymple. The commission, the state's chief energy regulator, is considering issuing new standards for treating crude as well as monitoring requirements.
 
A U.S. oil industry group is recommending that all crude shipped by rail from North Dakota's Bakken fields be labeled as the most-dangerous type of oil cargo, a designation that could hasten the use of new or upgraded tank cars.  That, despie the final report on a study that showed Bakken crude was little different from other forms of light, sweet U.S. crude, and poses no greater threat than the other fuels when transported by rail. 
 
Oklahoma regulators reversed course and are now posting information about oil-by-rail shipments through the state, despite earlier efforts to block access to the information. The Oklahoma Hazardous Materials Emergency Response Commission is posting weekly, general reports, including how many trains carrying a million gallons of crude or more are passing through each county in the state.
 
EPA holds its second and final hearing on proposed new emission standards at oil refineries in a market that has eight of them.  The hearing Tuesday in suburban Houston is the result of a consent decree that resolved a lawsuit which argued the agency was more than a decade late in reviewing and updating toxic air standards at refineries.  Any new rules could be widely felt in Texas, where there are 27 oil refineries. 
 
Both sides claimed victory on last week after Colorado energy companies and environmentalists agreed to a truce brokered by the governor.  Instead of fighting it out at the ballot box, activists from both sides will form an 18-member task force to recommend solutions to the state legislature.  The Washington Post points out that the deal saves the state's Democrats a difficult choice between the two powerful Colorado interest groups, and the two groups' campaign contributions. 
 
Natural gas production from the Marcellus Shale hit another record: more than 15 billion cubic feet per day through July, according to the US EIA.  The shale formation in and around Pennsylvania and West Virginia now accounts for almost 40 percent of U.S. shale gas production.
 
Mexican lawmakers gave final approval to rules for awarding private oil contracts in the country for the first time since 1938.  The next step in the opening will come from the Energy Ministry, which will announce Sept. 17 the fields that the state-owned monopoly Pemex will retain. 
 
Kinder Morgan Energy Partners is expanding its plans for that crude oil rail terminal in Alberta, Canada. The terminal is now almost a year into construction. The Edmonton Rail Terminal capacity will increase at startup next year to over 210,000 barrels per day and potentially up to a quarter-million.
 
"Exploring for hydrocarbons in the Barents Sea takes time and stamina."  So says Statoil, after drilling three dry holes off their Arctic coast.  The Noregian government-controlled energy firm drilled three exploration wells more than 185 miles north of the mainland, the farthest north they've ever ventured.  A company statement said this summer's exploration campaign ended without any commercial oil or gas discoveries.