By JOHN P. TRETBAR
Crude prices are on the rise despite rising inventories. Crude prices in New York gained $1.28 in afternoon trading Tuesday to $92.35 per barrel. London Brent gained 91 cents to $96.30 per barrel.
U.S. crude inventories jumped more than a million barrels, according to the latest weekly tally from the Energy Information Administration. Stockpiles on February 11th reached 411.5 million barrels, about ten percent below the five-year average for this time of year. Gasoline inventories dropped by 1.3 million barrels, and are about three percent below the five-year seasonal average.
US crude-oil production increased slightly last week. EIA reports output of 11.561 million barrels per day in the week through February 11th. That's up about 5,000 barrels per day from the week before.
The government reported another dip in US crude imports, down 600,000 barrels per day to 5.8 million. Over the last four weeks, average imports are more than nine percent higher than the same four-week period last year.
The Rig Count in Kansas was unchanged from the week before, with fourteen active rigs east of Wichita and 25 in Western Kansas. Independent Oil & Gas Service said operators were about to spud two wells in Barton County and one in Ellis County. Drilling activity so far this year roughly doubles that of last year to this point. Independent Oil & Gas Service reports 128 spuds in 2022, up from 58 a year ago, and 53 active operators compared to 37 a year ago.
Regulators in Kansas okayed 15 new drilling locations last week, with five in eastern Kansas, and ten in the western half of the state, including one in Barton County, two in Ellis County and two in Stafford County. There are 138 new drilling permits on file across the state so far this year.
Independent Oil & Gas Service reports 30 new well completions last week, 210 so far this year. Operators completed 16 wells in eastern Kansas, and 15 west of Wichita, including on in Ellis County and one in Stafford County.
The number-two shale-oil basin in the US has been re-branded "mature," by operators who note good economics but slow long-term growth. The top energy regulator in North Dakota met recently with ten top operators in his state, and only one of those had more than a ten-year inventory of drilling locations. Lynn Helms of the Department of Mineral Resources said operators used the term "cash cow" but said they are not reinvesting revenue, and capital spending is expected to remain flat.
Helms said crude production in North Dakota was down two percent in December. The average daily output dipped to 1.13 million barrels, down more than 20,000 barrels per day from November. Natural-gas output was down 3 percent, and the amount of flared gas increased slightly.
The US backlog of drilled but uncompleted wells, or DUCs, is shrinking. Back as early as 2014, low crude prices forced some drillers to delay completion in hopes of higher prices later. Those prices are here, and DUC inventories are dropping. The Energy Information Administration reports the total in all seven of the major shale plays dropped in January by 191 wells or about four percent. Nearly half of those were in the Permian Basin of Texas and New Mexico, but four other basins showed double-digit drops in DUCs.
Two years ago, the State of Colorado adopted a rule requiring a 2,000-foot buffer between drilling rigs and homes, unless operators can offer what are called substantially equivalent protections. The state's biggest oil and gas producer is putting that to the test. Kerr-McGee hopes to drill 26 new wells near 87 homes in the city of Firestone. The company announced some concessions it had originally opposed during a hearing before state regulators, which then delayed an effort to kill the project entirely. The company now agrees to use quieter, cleaner electric drilling rigs and non-polluting muds. They also
The last time crude prices topped $90 a barrel, we reported a similar story. Back then and today, drillers trying to boost output fast are facing a shortage of fracking sand. Crude output is expected to hit records in parts of Texas and New Mexico, the heart of U.S. shale activity. Shale operators use the sand to pry open the shale and release the oil deposits trapped inside. But Reuters reports sand supplies are so tight that it is slowing the pace of work for some drillers, and eating into the bottom line for others.
The Republic of Congo, which holds OPEC's rotating presidency this year, is pushing to host a global oil conference and exhibition in June. They hope to show off the continent's energy sector and attract financing. The new OPEC President said Wednesday there is no immediate solution to rising oil prices. He said the lack of investment in oil supply in recent years is limiting the ability of oil-producing countries to boost production significantly. The cartel and its export partners are not meeting earlier pledges to increase production. Last month they fell short of their targets by up to 900,000 barrels per day, according to estimates from the International Energy Agency.