News From The Oil Patch 12/30/2015
30 December 2015
Another big drop in rig counts reflects a contracting US energy industry. The Independent Oil & Gas Service Red Top Rig Report shows a 23.5% drop in active rigs across Kansas. There were 13 rigs actively drilling in eastern Kansas, down two, and 13 west of Wichita, which is down six. There are now 57 rigs listed as pending their next location assignment. There are 144 rigs listed as shutdown or stacked. Drilling was underway at one well site in Ellis County, and was about to commence at one site in Barton County. Baker Hughes reported 700 active rigs nationwide, which is down nine from the week before. The oil rig count dropped three to 538 rigs, while the number of rigs drilling for natural gas dropped six to 162 active drilling rigs. There were 126 active rigs in Canada, down nine.
The Kansas Geological Survey updated its numbers to reflect just over 35 milllion barrels of total oil production through September. That compares to last year's production of roughly 42 million barrels through September of last year. Harper County led the way with 2.67 million barrels, followed by Ellis County at 2.29 million. Finney County was third with 1.67 million barrels produced. Barton County reported 1.5 million barrels, Russell County weighed in with 1.4 million, and Stafford County reported 955-thousand barrels.
There were just 18 new drilling permits filed statewide last week, for a year-to-date total of 2,222. There were 11 permits filed for new locations in eastern Kansas, and seven west of Wichita.
Independent Oil & Gas Service reports 22 new well-completions across the state of Kansas last week. That's 3,665 so far this year, compared to 5,711 last year at this time. There was one completion reported east of Wichita, and 21 in western Kansas, including one each in Barton, Ellis, Russell and Stafford counties. There were ten dry holes out of 22 total well-completions last week in Kansas. There were nine dry holes completed west of Wichita, out of 21 completions total. Barton, Ellis and Stafford counties each reported one well completed without reaching pay dirt. There were six wildcat wells completed across Kansas, but that included five dry holes. That's 325 total wildcat wells completed so far this year in the Sunflower State.
For the first time in four years, the price of WTI on the Nymex topped the global price briefly last week. Since that time, Brent prices once again exceeded those for light, sweet crude contracts on the Nymex, but the Wall Street Journal says the trend is another sign that a supply glut that originated in the US is now firmly entrenched worldwide. Some analysts tell the Journal that parity between the two benchmarks could also signal the start of a recovery, as demand remains strong while US producers cut output. (On 12/30, Brent Crude was priced at $37.40/bbl, while the Nymex price was $37.20. Both prices were for the near-month contract)
A pair of energy firms began exporting ultra-light US crude earlier this year. Now one of those companies announces plans to ship 600-thousand barrels of light, sweet crude to a trading firm in northern Europe. Enterprise Products Partners will load that shipment into a tanker in Houston beginning next week. This marks the first shipment since the government lifted the US oil export ban earlier this month. It marks the first shipment of West Texas Intermediate crude since the administration of President Gerald Ford.
The free-falling price of crude oil, and its far-reaching impact on the Canadian economy, has once again been voted The Canadian Press Business Story of the Year. A senior editor at the Financial Post suggested that every Canadian business story this year was, in part, driven by tumbling crude prices. Editors and news directors across the country chose the crude collapse in a landslide. It’s the second year in a row that story got top billing in the annual survey.
North Dakota’s Land Board has awarded $5 million to hospitals in the state’s oil-producing region aimed at helping communities deal with the effects of rapid energy development. The Land Board last week also awarded $1 million to enhance services for disabled citizens in the region. The Land Board is headed by Gov. Jack Dalrymple.
Christmas came early at Hilcorp Energy. Forbes magazine reports that despite the depression in the oil and gas sector, employees are each getting a $100,000 bonus. It's a continuing tradition. Five years ago, when Hilcorp achieved its goal of doubling its oil and gas production, billionaire owner Jeffery Hildebrand gave every employee the choice of $35,000 cash or $50,000 towards a new car. This year, despite the downturn, Hilcorp doubled its output again, to more than 150,000 barrels per day. So Hildebrand doubled the bonus — to $100,000.
The population of oil-rich North Dakota has reached an all-time high as people flock to take advantage of a booming economy, even as that economy turns downward due to low oil prices. Data from the U.S. Census Bureau show the state population reached an all-time high of 756,927, a 2.5 percent increase from last year and the largest net increase for any U.S. state.
Budget officials in the State of Oklahoma are coming to grips with sustained low oil prices. Last week officials projected the state will have about $901 million less to spend next year than expected. That means the state won't have enough to fully fund its Fiscal-Year 2016 budget that went into effect July 1st. That has legislative leaders meeting to discuss appropriations months before the legislative session resumes.
The ongoing plunge in crude-oil prices is pressuring some of America's adversaries. The Washington Post reports cheap oil has dovetailed with some of the Administration's foreign policy objectives regarding Russia, Venezuela and Iran. It's also making life easier, and cheaper, here in the homeland.
ConocoPhillips confirms the sale of its stake in a joint venture that produced 4 million barrels a day in northwestern Russia. It launched the project, known as Polar Lights, in 1992 with state-owned Russian energy giant Rosneft. Conoco sold its 50 percent stake to a firm called Trisonnery Asset Limited. The terms were not disclosed.