By JOHN P. TRETBAR
Eagle Communications
Crude oil prices dropped nearly three dollars in just the last two trading sessions in New York.
The Friday, July 27, settlement for September crude on the NYMEX was down more than a dollar to $77.16 per barrel. Kansas Common crude at CHS in McPherson starts the week at $67.50 per barrel after dropping a dollar on Friday. That price is down more than six dollars since the first of the month, but it's more than five dollars higher than at the first of this year.
The world's second largest oil-services provider says global and offshore exploration spending will grow this year, but U.S. shale operations will slow.
The CEO of Baker Hughes told investors in an earnings call last week that the company's already glum outlook for this year is getting even more so. They forecast exploration spending in North America will fall this year, by percentages in the mid-single digit range, while offshore and international workloads will grow. U.S. shale work is dropping due to consolidation, careful spending and lower natural gas prices, according to reporting from Bloomberg.
The weekly Rotary Rig Count from Baker Hughes rose to 589 rigs, including an increase of five oil rigs. The gas rig count dropped by two rigs. The tally in Oklahoma was up two rigs from last week.
The Kansas Rig Count from Independent Oil & Gas Service is up one in eastern Kansas at 12 active rigs, and unchanged west of Wichita at 15 rigs. The tally is down four percent from a month ago and 31% lower than a year ago at this time. Drilling continued Monday on a lease in Ellis County.
Independent Oil & Gas Service reports 14 newly-completed wells for the week, four east of Wichita and ten in western Kansas. That's 727 for the year so far, compared to 959 by this time last year.
Kansas regulators okayed 33 new drilling permits last week, with 20 in eastern Kansas and 13 west of Wichita. Those include one new drilling location in Ellis County and one in Russell County. That's 570 new drilling locations statewide since the first of the year, compared to 720 a year ago at this time.
The U.S. imported more crude oil than we shipped out by 2.7 million barrels per day last week. Petroleum product exports outpaced imports by nearly 4.5 million barrels per day. Crude imports averaged 6.9 million barrels per day, down by 166,000 barrels from a week ago. The four-week average is up 2.9 percent or 200,000 barrels over last year at this time.
Crude exports averaged over 4.1 million barrels per day last week. Four-week average exports are up by about 600-thousand barrels over a year ago.
The government reports commercial crude inventories dropped 3.7 million barrels to just over 436 million barrels. Current stockpiles are five percent below the five-year seasonal average.
Energy Information Administration inventory reporting shows another 700,000 barrels in refills for the Strategic Petroleum Reserve, which now stands at 374.4 million barrels. That's down from about 600 million barrels before the Department of Energy began selling barrels to temper the effects of the Ukraine invasion. This week's reporting adds $10.6 million in savings to the U.S. Treasury.
The government reported a slight drop in Alaska production, while output in the lower 48 states was unchanged at 12.9 million barrels per day. Total output averages 13,314,000 barrels per day, topping 13.3 million for the second week in a row. Cumulative production so far this year is about seven percent ahead of last year at this time.
Crude production in the number-three producing state, North Dakota, dropped by nearly four percent in May.
The latest monthly reporting from the North Dakota Department of Mineral Resources notes output dropped by 48,000 barrels per day (bpd) to just over 1.19 million bpd. That's the lowest production average since January weather shut in production across the country. North Dakota natural gas production also dropped in May, but the state's closely watched gas-capture rate held steady at 95%.
Puerto Rico filed a billion dollar lawsuit against the oil and gas industry joining the ranks of more than two dozen cities, counties and states that are seeking compensation for the effects of climate change. The lawsuit was filed last week in the Puerto Rican capital of San Juan, accusing Exxon Mobil, BP, Chevron and other companies of unfair trade practices and failing to provide warnings about known environmental risks.