By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson dropped $1.25 on Friday. It starts the week Monday at $44.50 per barrel. That's down $3.25 from a week ago and $6.75/bbl lower than at the start of the year.
The free-fall in crude prices continued Monday, with the benchmark U.S. futures contract dropping more than two percent for the fourth consecutive trading session. In late morning trading, the near-month contract for WTI on the Nymex was down $1.52 to $52.67 per barrel. London Brent was off more than three percent, down $1.84 to $58.85. The international benchmark dropped below $60 a barrel for the first time since mid-October.
At least one international energy banker indicates the outbreak of China's coronavirus could hurt energy demand. MarketWatch cites a note to clients of Commerzbank: “The virus is fueling fears of a cooling of oil demand, which would mean that the global oil market would be oversupplied to an even greater extent if no further measures are taken to reduce supply.”
Regulators granted permits for drilling at eleven new locations across the state last week, four of them east of Wichita and seven in Western Kansas. That's 38 new permits so far this year.
Independent Oil & Gas reports 29 newly-completed wells across the state, 57 so far this year. There were eight new completions in eastern Kansas, and 21 in the western half of the state, including one in Russell County and two in Stafford County.
The weekly rig count from Independent Oil & Gas Service was down one to eight rigs in eastern Kansas, and up two to 15 rigs west of Wichita. The total is 18% lower than a month ago and 30% lower than a year ago at this time. Drilling was underway on one lease in Russell County.
Baker Hughes reports 796 active drilling rigs across the U.S., an increase of 14 oil rigs and one seeking natural gas. The count in Texas was up five rigs, while New Mexico and North Dakota were each up three. Canada reported 244 active drilling rigs, up 41 from a week ago.
Oil-by-rail in the U.S. continues to show increases over the same period a year ago, despite a broad downturn in freight-train traffic. The Association of American Railroads reports 14,303 tanker cars moved petroleum and petroleum products during the week ending January 11. That's up 2.8% from the same week of 2019. Canada reports a 12.9% increase.
Top executives of the world's largest oil companies debated some surprising anti-pollution goals at the recent World Economic Forum, including the possibility of targeting not just emissions from their own operations, but those produced by the fuels they sell. Targeting so-called "Scope 3" emissions would be a big shift for an industry that accounts for the bulk of greenhouse gases. Several companies have already pledged reductions in Scope 1 and Scope 2 emissions, which come directly from pumping and refining operations. Yet these account for less than 10% of total emissions from the life cycle of oil and gas. Bloomberg lists Shell, Chevron, Total, Saudi Aramco and BP among those represented in the talks at the World Economic Forum. The panel took no action.
Pirates off the Atlantic coast of West Africa are holding to a different strategy than their predecessors in Somalia nearly a decade ago. Reporting by Lloyd's List indicates that Nigerian pirates are maximizing returns by seeking to seize larger vessels in order to kidnap more crew members. Insurers are paying ransoms of between $30,000 and $50,000 dollars per crew member. A specialist tells Lloyds' that pirates in the Gulf of Guinea are at greater risk of discovery by the military or other gangs, and that limits the amount of time the crew can be held. Stephen Askins says the pirates have no desire to hold hijacked vessels, and without immediate access to the crew, they leave. During an earlier peak in piracy eight years ago, hijacked ships and crew were held hostage for months, even years, off the coast of Somalia before their release was negotiated and a multi-million dollar ransom was paid.