By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson starts the week at $50.25 per barrel after gaining 75 cents a barrel on Friday.
There are five active drilling rigs in eastern Kansas, which is up one from the previous weekly report. West of Wichita the count dropped by two to 25 rigs. Independent Oil & Gas Service reports drilling underway on one lease in Ellis County, two in Russell County and one in Stafford County.
Baker Hughes reports 799 active drilling rigs across the U.S., an increase of four oil rigs and a decline of four gas rigs. Canada checks in with 153 rigs, up 15 for the week.
Independent Oil & Gas Service reports a lot of completion activity across the state as we approach the new year. Operators completed 30 wells last week in the eastern half of the state, and 24 in western Kansas. That includes one in Barton County and one in Stafford County, but both were dry holes. So far this year there are 1,357 newly completed wells.
Regulators gave their okay to 21 permits for drilling at new locations across Kansas, 1,049 so far this year, including nine in eastern Kansas and 12 west of Wichita. There's one new drilling permit in Ellis County and one in Stafford County.
Preliminary numbers from North Dakota's Department of Mineral Resources show another all-time record in that state's crude production. North Dakota operators produced more than one and a half million barrels per day in October, according to the latest numbers available.
Lawmakers in New Mexico say revenues from oil and gas production will be a bit lower than originally forecast, but still a "bonanza." Experts project an extra $797 million for the next fiscal year. That’s a dip from an earlier estimate but it’s still enough for lawmakers to consider budget increases for schools, health care, and crime-fighting initiatives.
U.S. crude production dropped slightly last week from the all-time record set the week before. The government reports domestic output of 12.788 million barrels per day, which is down about 100,000 barrels per day from the record. The four-week production average in the U.S. is ten percent higher than for the same period last year.
The Energy Information Administration reported a slight increase in domestic crude-oil stockpiles. For the week ending December 6, inventories were 447.9 million barrels. That's up 800,000 barrels from the week before and about four percent above the five-year seasonal average.
EIA reported the fifth consecutive weekly increase in gasoline stockpiles, while demand dropped. AAA says that should produce some downward pressure on prices at the pump. The national average dropped to just over $2.57/gal. The average across Kansas was just shy of $2.30. We spotted $2.12 at several locations in Hays and $2.20 across Great Bend. Your average cost to fill a 15-gallon tank will be about the same as last week, a dollar less than last month and five dollars less than six months ago.
In the monthly report, the government says crude oil prices will drop next year, but not as much as expected. The Energy Information Administration now predicts London Brent will average $61 per barrel next year, a dollar more than the prediction they made last month. The agency pegs the average WTI price next year at about $55.50.
Next year is expected to be a good one for the nation's refineries, with increasing margins for diesel fuel, and record high volumes. The government credits upcoming international efforts to reduce the sulfur content in shipping fuel. EIA now predicts U.S. refinery runs will jump three percent next year to a record 17.5 million barrels per day.
Chevron on Wednesday reduced its long-term outlook for oil and gas prices because of that glut. The nation's No. 2 oil company plans to write down assets by ten to eleven billion dollars to reflect its price pessimism.
Trading began in Saudi Arabia for shares in Saudi Aramco in the world's largest-ever initial public stock offering. Shares surged in the first day of trading, giving the company a valuation of $1.88 trillion. That makes Aramco the largest listed company in the world, comfortably ahead of Microsoft and Apple.
Mexico announced the biggest oil discovery in that country since 1987. Officials said the on-shore field in the Gulf coast state of Tabasco has 500 million barrels of crude in proven, probable and possible reserves.
The International Energy Agency says in its monthly Oil Market Report that last week's extension of the OPEC+ production cuts may not be enough to stave off next year's predicted oil glut. IEA reports production could exceed consumption by upwards of 700,000 barrels per day. Analysts say the new production agreement last week did not have the full expected effect, largely because ongoing cheating by some OPEC members.
Goldman Sachs announced over the weekend that it will no longer finance Arctic energy development. The bank also said it will stop investing in new thermal coal mines anywhere in the world. The move is a mixed bag for the oil patch. Analysts say if other banks follow suit, coal financing could become "unbankable" according to a report in The Guardian newspaper.
Acts of piracy on shipping in West Africa have been steadily increasing in recent weeks. An oil tanker was attacked on Sunday in West Africa’s Gulf of Guinea. Bloomberg reports most of its crew were kidnapped. Earlier this month 19 sailors were kidnapped from a supertanker off the coast of Nigeria, and four crew members were taken from a smaller Greek tanker docked at a port in Togo in early November. According to the International Maritime Bureau, crew kidnappings in the Gulf of Guinea make up more than 80% of the worldwide total. Passing ships have been advised to stay at least 200 nautical miles and preferably 250 miles away from the coast.