By JOHN P. TRETBAR
Eagle Media
Multi-million dollar profit margins at the Department of Energy (DOE) appear to be coming to an end.
For the first time since April, DOE did not add crude to the Strategic Petroleum Reserves (SPR) last week. The department announced shortly before the presidential election that it had spent the fund appropriated by Congress to recoup some of the crude oil sold from the SPR three years ago to tame prices.
Strategic reserves currently stand at just over 395 million barrels. That's down about 200 million barrels from three years ago, but up 36 million barrels in the last year. DOE replaced barrels sold three years ago for $90 to $95 a barrel with barrels bought for $70 to $75 per barrel. The U.S. Treasury gained upwards of $540 million in savings by selling high and buying low.
The government reported a build in U.S. commercial crude stockpiles of nearly five million barrels to just over 432 million as of February 14. That's the fourth weekly increase in a row, totaling 20 million barrels over four weeks. The Energy Information Administration says inventories are about three percent below the five-year average for this time of year.
The U.S. imports more crude than we export by nearly 1.5 million barrels a day. Petroleum products exports lead imports by more than five million.
The Energy Information Administration reports crude imports last week dropped by half a million daily barrels from the week before, to 5.8 million barrels per day.
Independent Oil and Gas service reports 24 newly-completed wells for the week ending February 20. That's 192 so far this year, which is up from 114 a year ago. Operators last week completed two wells in Barton County and one in Stafford County. Kansas regulators okayed 20 new drilling locations for a total of 101 new drilling permits so far this year. There are three new permits in Western Kansas including one in Stafford County.
U.S. crude production inched up last week to 13,497,000 barrels per day. That's up 3,000 barrels a day from a week ago, 197,000 barrels higher than a year ago, and the ninth best week ever. Cumulative production so far this year is up nearly three percent from a year ago.
Baker Hughes reports a spike in oil exploration, with horizontal drilling up six rigs. There are 488 active oil rigs nationwide, up seven rigs from a week ago. The total of 592 active rigs reflects an increase of five rigs in Oklahoma, while New Mexico and Utah each dropped by one rig. The weekly tally for gas drilling was down two rigs.
The latest Kansas Rig Count from Independent Oil and Gas Service is down 20% from a week ago with 12 active rigs. Three of those are in eastern Kansas, which drops by four rigs. Nine are west of Wichita, which is up one. The tally is down nearly 30 percent from a month ago and nearly 43 percent from a year ago.
The Kansas Geological Society sent a letter to members this week indicating they've discovered some long-running bookkeeping irregularities, including unbilled invoices, unpaid bills, and unreported tax garnishments. The announcement dated Monday notes what it calls a "reduction in staff," after "appropriate disciplinary action" was taken, but did not include any names or dollar amounts. The open letter suggests they've seen no evidence of illegal activity as of yet, but says the board brought in an accounting firm to rebuild and reconcile the books.
Forbes magazine now calls Diamondback Energy "...the biggest independent kid on the Permian block." Diamondback was already huge when it announced this week that it's buying Double Eagle's 40,000 net acres and 27 million barrels a day in current production. The deal is worth more than four billion dollars in cash and stock. One analyst points out that after three years of furious deal-making, this deal leaves few remaining opportunities for big mergers and acquisitions in the Permian Basin.