Daily Reports

News From The Oil Patch 7/14/2014

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U.S. crude production is likely next year to hit its highest level since 1972 according to a forecast Tuesday by the Energy Information Administration. U.S. production has already jumped from 5.0 million bpd in 2008 to 7.4 million last year.  The average is expected to surge to 8.5 million  this year and 9.3 million next year
 
Baker Hughes noted 1,875 active drilling rigs nationwide on Friday, July 11, up one from the week before.  Canada gained six rigs at 315, while the count in Kansas was 31 active rigs, up two.  Independent Oil & Gas Service reported 120 total drilling rigs across Kansas, 37 east of Wichita (up one), and 83 in western Kansas, unchanged from last week.
 
Independent Oil & Gas reported 94 new well completions across Kansas last week, which marks 3,204 completions year-to-date.  There were 38 east of Wichita, and 56 in the west, including one in Ellis County last week.  For the month of June there were 417 completions statewide, down 59 from May of this year and 48 lower than a year ago.  There was one completion in Stafford County, and one in Barton County in June.
 
The Kansas Corporation Commission issued 173 permits to drill in new locations, bringing the total for this year to 4,013.  There were 118 in eastern Kansas and 55 west of Wichita, including one new drilling permit in Barton County, four in Ellis County, none in Russell County and three in Stafford County.  For the month of June, there were 470 new drilling permits issued across Kansas, a dramatic drop from the 801 permits issued in May of this year, and more than 100 lower than the 573 issued in June of 2013.  
 
It now appears the state of Oklahoma might reverse course and release details of oil trains crossing the state on their way from North Dakota to the Gulf Coast.  The federal government in May ordered railroads to share with state authorities more information about some oil shipments. Oklahoma's Department of Environmental Quality has worked to keep those shipment details secret, citing concerns over terrorism.  But a spokewoman for the department tells the Daily Oklahoman that could change.  Skylar McElhaney says officials at first acted under guidance from the federal government.  But, now that DOT and the Federal Railroad Administration have affirmed that such details are not security sensitive, the staff at DEQ is looking into the validity of the non-disclosure agreements.
 
Platts Energy Week is coming soon to televisions in Oklahoma.  The statewide public television network OETA becomes the 17th Market to carry the program, joining TV stations in  other key energy-producing states.  By way of introduction to the new audience, Platts Energy Week Host Bill Loveless will interview Oklahoma Secretary of Energy and Environment Michael Teague on the outlook for the state's oil, natural gas and renewable energy development
 
Canada's National Energy Board has agreed to give two big energy companies more clarity over their plans to deal with a potential well blowout in the Beaufort Sea.  Imperial Oil and Chevron Canada asked the board for more certainty before committing huge amounts of money to explore in Arctic waters.  Canada's top energy regulator reviewed its ARctic drilling rules after the Deepwater Horizon blowout in the Gulf of Mexico four years ago.  The companies claim there are more feasible ways to kill a blown out well than the methods required under the new rules.  The NEB requires companies to show they can kill a ruptured oil well in the Arctic offshore with a relief well in the same season it's drilled — a difficult and costly proposition in that harsh environment.  According to the Calgary Herald, the NEB will look at Imperial and Chevron's alternatives before the companies are required to file a full regulatory application.
 
Backers of a proposed crude oil transfer terminal in Vancouver, Wash. are starting a public relations push ahead of a draft environmental impact statement, scheduled to come out in a few months.  Crude oil trains through the state could take a significant jump if the 360,000 barrel a day terminal is built.  The Puget Sound Business Journal cites backers of the $190 million terminal saying they will only use the new safer tank cars built with heavier steel, a standard called CPC-123.  The terminal is a joint venture between Utah-based Savage Companies, and the oil company Tesoro.

News From The Oil Patch 7/8/2014

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Baker Hughes reported 1,874 active drilling rigs last week across the US, one higher than the week before.  In Canada there were 309, up 73, and in Kansas there were 29, down one. Independent Oil & Gas Reported 119 total rigs across Kansas, with 36 east of Wichita, down one, and 83 in the western range, down three.
 
Independent Oil & Gas Service Inc. has introduced a new database feature on its Web site at www.iogsi.com.  You can now search for the most active operator or drilling contractor in Kansas over a specific period of time. We entered a search for the year ending Monday, and found that SandRidge E&P was the busiest operator drilling 204 wells over the last year.  Next were Murfin Drilling with 143, and R J Enterprises with 139.
 
There were 52 well completions in Kansas last week, which makes 3,110 so far this year.  There were just two in eastern Kansas and 50 reported west of Wichita.  
 
Independent Oil and Gas Service reported 111 new drilling permits in Kansas for the week ending July 3, for a year-to-date total of 3,840. There were 68 drilling permits in new locations in eastern Kansas, and 43 west of Wichita, including three in Russell County.
 
The Kansas Corporation Commission reports 473 new intent to drill notices across the state for June, 14 in Barton County, six in Ellis County, 12 in Russell County, and 10 in Stafford County
 
A lightning strike Monday afternoon caused an explosion, fire and spill at a Saltwater Disposal Well site in western North Dakota.  The spill released 167 barrels of oil, and 2,000 barrels of wastewater.
 
The Enbridge Northern Gateway Pipeline, from the Alberta Oil Sands to the Pacific Coast, is caught in a tug of war, receive final approval from the government, just as the Candian Supreme Court approached a ruling on a native tribe's claim to land along the proposed route.  Prime Minister Stephen Harper officially approved the project just days before justices wrap up deliberations on the claim of sovereignty over the property. 
 
A ruling from the New York State Court of Appeals affirmed a lower court decision that said state oil and gas law does not trump local governments' authority to control land use through zoning.  That effectively allows local governments to ban hydraulic fracturing.  The state already has a moratorium on fracking despite sitting atop the Marcellus Shale formation's natural gas deposits.
 
North Dakota operators that fail to meet the state’s flaring reduction targets may soon be forced to curtail oil production from wells targeting the Bakken and Three Forks formations, according to an order issued July 1 by state regulators.  The order is the enforcement mechanism for the state’s flaring reduction plan, which was approved in March by the North Dakota Industrial Commission.  Beginning Oct. 1, wells in the state could be subject to potential production curtailments if the amount of flared gas exceeds the state’s gas capture target. Speaking to a press conference on July 1, Lynn Helms, director of the state’s Oil and Gas Division, said most Bakken operators are already in compliance with the flaring reduction targets. But, “there’s some, a handful, that are really going to need a lot of wellsite technology.”  
 
We told you two years ago about Chinese hackers who were targeting the computer systems of US energy firms.  Now it appears the Russians are getting into the act.  Private cybersecurity researchers say Russian hackers have been systematically targeting hundreds of Western oil and gas companies, as well as energy investment firms.  The motive behind the attacks appears to be industrial espionage.  The Russian attacks have affected over 1,000 organizations in more than 84 countries.  According to the New York Times, they were first discovered in August 2012 by researchers at the security firm CrowdStrike.  Researchers believe the hackers were backed by the Russian government.  The computer security firm Symantec detailed similar conclusions and added a new element — a worldwide remote control capability, similar to that used by US and Israeli spies to destroy a fifth of Iran's uranium supply five years ago.

News From The Oil Patch 6/17/2014

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The latest U.S. government data show domestic oil production rose to 8.46 million barrels a day last week, up from 7.2 million barrels at the same time last year, and  80 thousand barrels higher than the week before, and 1.26 million barrels higher than a year ago. 
 
The State of Kansas produced another 3.55 million barrels of crude oil in February, according to the latest numbers from the Kansas Geological Survey.  That's down from the 4.27 million barrels produced in January of this year, but about 300,000 barrels more than we produced in February of last year.  Barton County produced 162 thousand barrels in February, Ellis County operators produced nearly 251 thousand barrels, Russell County produced more than 153 thousand, and 97 thousand barrels came out of the ground in Stafford County.  The cumulative total production for the State of Kansas: 6.49 BILLION barrels all time.
 
According to the latest BP Statistical Review of Energy, world oil consumption grew faster than production last year. The report released Monday found that around the world, oil consumption grew 1.4%, or 1.4 million barrels per day.  The Wall Street Journal reports that's slightly above the historical average.  But oil production grew by just .6%, or 560,000 barrels per day.  BP officials say oil-price volatility is at its lowest level since the 1970s, because the spike in US production offsetting supply disruptions elsewhere.
 
Oklahoma’s two largest industry groups joined two of the nation’s largest oil and gas trade associations in suing the federal government, arguing they did not consider the best available science in deciding to protect the lesser prairie chicken as a threatened species.  The suit does not challenge Fish & Wildlife’s decision to endorse extensive voluntary conservation efforts.  There are an estimated 34,000 of the birds in five states, including Oklahoma and Kansas.
 
There were 114 well completions noted across Kansas last week.  That makes 2,871 so far this year.  There were 53 in the eastern half of the state, and 61 west of Wichita, including one well completion in Barton County.
 
Baker Hughes reports 1,824 active oil and gas drilling rigs in Kansas on Friday, down six from last week.  There were 244 rigs at work in Canada, up 30.  In Kansas the count was up two at 33 rigs.  Independent Oil & Gas Service reports 129 total rigs across Kansas, 39 east of Wichita, down two, and 90 in western Kansas, up one from last week.
 
Independent Oil & Gas reports a total of 801 new drilling permits in May, for a statewide year-to-date total of 3,332.  That includes 11 new drilling permits in Barton County, 11 in Ellis County, eight in Ellis County, and nine in Stafford County.  There were 476 newly completed wells statewide last month, 1,164 in western Kansas and 1,001 in eastern Kansas.
 
In a monthly report issued Tuesday, the US Energy Information Administration raised its forecasts for average oil and gasoline prices for 2014.  EIA says West Texas Intermediate crude will average $98.67/bbl, up more than two dollars.  The estimate for London Brent crude was up from $106.26 to $107.82/bbl.  The government expects gasoline prices to average $3.50/gallon this year, up two cents from its previous prediction.
 
The FAA announced it has granted BP the first-ever approval to fly drones for commercial purposes over U.S. land.  They launched the first drone flight on Alaska's north slope last week.  The license expires in five years.
 
A Vancouver-based company is planning to build an oil refinery on the north-west coast of British Columbia that could eventually process up to 1 million barrels per day of oil sands bitumen.  It could be up and running in about 7 years. 
 
Nigeria is pushing OPEC to name the country's oil minister as its secretary-general.  She would be the first woman to lead the cartel, but is a polarizing figure in Nigeria because of allegations of corruptuion and oil-wealth mismanagement.

News From The Oil Patch 6/9/2014

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The number of drilling rigs actively exploring for oil and gas in the US is up 5.2 percent year-on-year.  The U.S. rig count for May was 1,859, up 24 from April and up 92 from May 2013.  For the week, Baker Hughes says there were 1,860 active drilling rigs across the US Friday, down six.  There were 214 in Canada, up 16 for the week.  The count in Kansas was unchanged at 31 active drilling rigs.  Independent Oil & Gas Service reports 130 total rigs in Kansas Friday, with 41 east of Wichita, down one, and 89 in western Kansas, down two for the week.
 
There were 149 new drilling permits issued by the Kansas Corporation Commission last week, for a year-to-date, statewide total of 2,406.
 
Independent oil and gas reported 116 new well completions across Kansas last week, to bring this year's total to 2,757 completions.  There were 54 east of Wichita and 62 in western Kansas.
 
The Association of American Railroads reports 110,164 carloads of crude oil were shipped during the first quarter of this year.  That's more than any other quarter in history.
 
Oil-by-rail to California skyrocketed last year, and now lawmakers there are scrambling to enact safety measures.  Governor Jerry Brown wants to expand an existing prevention-and-response program for ocean oil spills to cover inland areas. He wants to pay for that with a 6.5-cent-per-barrel fee on all crude oil delivered by rail.  There are two measures making their way through the legislative process that seek to improve communications and transparency.  Railroads are eager to cooperate but question the need for new state regs that might conflict with federal oversight.  
 
The state of Oklahoma is currently the fifth-biggest oil producer in the US, but that could change. Quoting Harold Hamm of Continental Resources, the Daily Oklahoman notes that tax incentives in the Sooner State ARE increasing oil production, and could raise Oklahoma to #3, passing Alaska and California along the way.
 
North Dakota oil companies must now submit a gas capturing plan with their drilling permits under new rules aimed at cutting down the amount of natural gas burned off and wasted as a byproduct of oil production.  The state  is requiring a signed affidavit to show that gas-gathering companies have been consulted so that they may plan to meet the demand.
 
Federal regulators have come to the conclusion that the blowout preventer on the Macondo Well in the Gulf of Mexico actually caused the massive spill that followed the explosion that killed 11 crew members back in 2010.  The report by the Chemical Safety Board raises new questions about the effectiveness of those giant valves designed to seal off an oil well in an emergency. Investigators warned that this is not unique to the Deepwater Horizon rig and could occur at other drilling sites.  TransOcean, the owner of the Deepwater Horizon drilling rig, is still fighting the board's subpoenas in court.
 
Governor Jack Dalrymple will once again meet with industry leaders to push for more oil and gas pipelines in North Dakota.  The summit is slated for June 24.  North Dakota produces about 1 million barrels a day but about 70 percent of that is being moved by rail.  Dalrymple said more pipelines will reduce truck traffic, curb natural gas flaring and create more markets for the state’s oil and natural gas.
 
Canada is enjoying an unexpected boom in production of ultra-light crude known as condensate, and that's good news for current and planned oil sands production.  Some companies in the oil sands business are paying premiums, up to $25/bbl, for the condensate, which is used as a diluent to dilute their product for shipment in pipelines.  Next week, the Canadian Association of Petroleum Producers is expected to announce dramatic growth in condensate production after earlier predictions expecting a decline. In April, Canada's National Energy Board said it expected output to rise 13 percent this year to 172,000 bpd.
 
Enbridge faces resistance to the end point for its proposed Northern Gateway oil pipeline from the Alberta oil sands to the Pacific Coast.  But the company could pursue another option thanks to its December purchase of a parcel of land close to the British Columbia port of Prince Rupert.  Analysts say the new location provides a shorter route to and from the shipping lanes, and doesn't present the narrow sections and other navigation hazards found on the way to the port at Kitimat.

News From The Oil Patch 6/2/2014

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There were 806 intent-to-drill notices filed with the Kansas Corporation Commission last month, down from 865 in April but well ahead of the 560 filed in May of last year.  There were nine filed last month in Barton County, 15 in Ellis County, nine in Russell County, and eight in Stafford County.
 
There were 77 new well completions across Kansas last week for a year to date total of 2,641.  There were 31 new completions in eastern Kansas and 46 west of Wichita.  There was one new well completion in Stafford County last week.
 
Independent Oil & Gas reported 174 drilling permits issued in new locations in Kansas last week for total of 3,257 so far this year.  There was one new drilling permit last week in Barton County, four in Ellis County, none in Russell County and two in Stafford County.
 
There were 112 new well completions reported for a year-to-date total of 2,564.  Independent reports four completed wells in Barton County, two in Ellis County, one in Russell County and none in Stafford County.
 
The Kansas Geological Survey and the KCC recognized and named 12 new oil and gas fields and six new pay sources in existing fields in Kansas.  During a meeting May 20th, they named the Kelly North field in Stafford County, operated by Hutchinson Oil Company on the #1 KD lease.
 
Baker Hughes reports 1,866 drilling rigs actively seeking oil and gas across the US, up nine for the week.  The count in Canada Friday was 198 rigs, up 44, and in Kansas there were 31, down one.  Independent Oil & Gas reports 133 total drilling rigs across Kansas.  The 42 reported east of Wichita was down one for the week.  There were 91 in western Kansas, also down one.
 
At least one oil company is pulling out of western Kansas because of new federal rules protecting the lesser prairie chicken.  Mike Vess of Vess Oil Corp told Fox News that his company is established enough to survive, but smaller ones might not.  Vess said hourly workers and subcontracters such as geologists and water haulers will be hit hard.  Producers say they had too little time to digest new regulations and figure out how to avoid potential criminal and civil penalties. Vess is asking federal officials to suspend the enforcement of the new regulations for six months so both sides can talk about best practices.
 
An eastern New Mexico county is suing the federal government in an effort to stop the listing.  The Roosevelt County Commission was expected to meet in special session to give notice of intent to file suit against the Fish and Wildlife Service.  In addition to threats to the ranching and energy industries, the county is claiming an impact on its road budget.
 
A new report by the research firm IHS asserts that lifting the ban on US oil exports would add $750 billion in new investment, create more than a million new jobs in the next three years, and lower gasoline prices by an average eight cents per gallon starting in 2016.
 
The North Dakota Petroleum Council is planning a celebration June 25th to mark state oil production over one million barrels per day in April, even before the formal release of the April numbers.  The total for March was an average of about 977,000 barrels per day.  
 
Oklahoma Gov. Mary Fallin on Wednesday signed legislation making permanent the state’s oil and natural gas gross production tax at 2 percent for the first 36 months of production.  The measure faces a likely constitutional challenge from attorney Jerry Fent of OKC.  Fent says it was passed during the last week of the legislative session in violation of a constitutional requirement, and did not get the required 3/4 majorities in the House and Senate.
 
BP must resume paying claims while it asks the U.S. Supreme Court to review its settlement with businesses over the 2010 Gulf of Mexico oil spill.  That's the word on Wednesday from a federal appeals court panel.  The 2-1 judgment said the 5th U.S. Circuit Court of Appeals will not put a stop to payments while BP appeals the court's earlier ruling that businesses, under the settlement, don't have to prove they were directly harmed by the spill to collect money.
 
Residents are hoping to derail plans for what would be the Pacific Northwest's largest crude oil train terminal, the  proposed destination for at least four mile-long trains a day, each more than a mile long.  The trains would each carry tens of thousands of barrels of crude from the Bakken oil fields in North Dakota.  Supporters say their proposed terminal will create at least 80 permanent jobs and will bring an economic windfall to the region.

News From The Oil Patch 5/27/2014

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Baker Hughes reported 1,857 active drilling rigs in the US last week, down four from the week before.  The count in Canada was up one at 154 rigs, while in Kansas there were 32 active drilling rigs, down two.  Independent oil and gas reports 135 total rigs last week in Kansas, with 43 east of Wichita, up eight, and 92 in western Kansas, down one for the week.
 
There were 151 drilling permits issued at new locations across Kansas last week for a total thus far this year of 3,083.  There was one new drilling permit in Barton County, none in Ellis County, three in Russell County, and four in Stafford County.
 
There were 112 new well completions reported for a year to date total of 2,564.  Independent reports four completed wells in Barton County, two in Ellis County, one in Russell County and none in Stafford County. 
 
Chesapeake Energy is spinning off its drilling-rig business in a move that affects roughly half its workforce.  The new company will be named Seventy Seven Energy Inc.  The unit current employes 5,200 of the the Chesapeake's 10,800 employees.  Also announced last week were $3.1 billion in new asset sales from Pennsulvania to Wyoming.  That brings the total to more than $4 billion in asset sales since Doug Lawler took over as CEO. 
 
Kansas political leaders along with the energy and agriculture industries are worried about something that U.S. Rep. Tim Huelskamp said could be a "death knell" for growth in western Kansas — the lesser prairie chicken is now listed as a "threatened" species. The listing comes with certain protections and requires industries that operate on the prairie chicken's habitat to follow new regulations.  At least one oil company is pulling out of western Kansas because of the new regulations.  Mike Vess of Vess Oil Corp told Fox News that his company is established enough to survive, but smaller ones might not and hourly workers and subcontracters such as geologists and water haulers will be hit hard.  Producers say they had too little time to digest new regulations and figure out how to avoid potential criminal and civil penalties. Vess is asking federal officials to suspend the enforcement of the new regulations for six months so both sides can talk about best practices.
 
The EPA proposed new rules that would force about 150 refineries in 30 states to rein in air pollution.  Among the new standards will be fenceline monitoring for benzene instead of directly out of the stack, increased flare management, and new emission standards for the "cokers" used to heat up the raw petroleum.
 
The panel that regulates the Texas oil and gas industry is waiting for more information before it will accept that there are any links between increased seismic activity and drilling activity. Executive Director Milton Rister told lawmakers the Texas Railroad Commission is reviewing how it regulates wells used for storing wastewater from drilling.  But he declined to offer specifics and warned lawmakers against any knee-jerk reactions that could have a negative impact on the industry.  The Commission's staff seismologist testified he hopes to have a "definitive statement" within a year, but he warned there may never been any definitive answers.
 
The full 5th Circuit Court of Appeals will not revisit BP's failed bid to block businesses without proof of damage from recovering money from the Gulf Oil Spill settlement.  A court panel in March authorized resumption of the so-called "business economic loss" claims, and the full court has now voted to let that ruling stand.  The oil company is considering its options.
 
A federal judge has dismissed lawsuits from several people in North Dakota who claimed they are owed millions of dollars from oil drilling companies that burned and wasted natural gas instead of capturing it.  U.S. District Judge Daniel Hovland's ruling says the federal government lacks jurisdiction in the cases because the mineral owners did not "exhaust administrative remedies" with state regulators.  Derrick Braaten, a Bismarck lawyer representing mineral rights owners, says the loss in royalties amounts to more than $200 million to the dozen or so clients.  Braaten says he's disappointed with Hovland's ruling and may appeal.
 
A tornado ripped across North Dakota Monday evening (5/26) south of Watford City, injuring nine people and destroying at least a dozen RVs at an oilfield camp.   
 
A Chinese fishing vessel rammed and sank a Vietnamese fishing boat near a deepwater oil drilling rig placed in disputed waters off the coast of Vietnam.  Ten fishermen were rescued.  The collision Monday afternoon (5/26) could escalate the already high tensions between China and Vietnam over that oil rig.
 
Houston may be far from the huge oil plays busting out all over Texas, but it's the energy capital, and the local economy is shining.  An economist for the Greater Houston Partnership tells the local Fox affiliate that anybody in Houston is somehow being touched by the boom that's doubled year-over-year drilling activity and ten-thousand new wells so far this year.  Unemployment is plummeting to pre-downturn levels and an actual labor shortage could be on the horizon.  At better than 3 million barrels every day, thousands of new jobs get created and plenty of royalty cash starts hitting bank accounts.  And that has Main Street booming.
 
It wasn't the fracking, so much as it was the low-flying helicopters that scared those bunnies in Pennsylvania.  But that didn't stop the Lehigh Valley Morning Call from offering one of the best and worst headlines ever:  "Rabbits terrorized by fracking company's tactics, lawsuit claims."  The exploration company uses choppers equipped with seismic gear as they search the Marcellus Shale.  Plaintiff Susan Knowlden says her "teeth rattled in her head" and it "scared the you-know-what" out of her prized show rabbits.