By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson ended the month at $76.75 per barrel, down $3 for the week, but a monthly gain of $7 a barrel. The average price for the month of October is a fraction of a cent under $77 per barrel, or nearly $6 more than the average in October of 2021.
The benchmark futures contract in New York settled Monday at $86.53 per barrel. That's down more than a dollar on the day, but a gain of nearly 9% for the month. In trading Tuesday prices were up $2, with WTI just under $89 and London Brent fetching about $95 a barrel.
Kansas crude production has declined in each of the last eight years, but the latest numbers from the Kansas Geological Survey show output on the rise through June of this year, topping 14 million barrels. That's more than 1,000 barrels per day better than average output for all of last year. Production in Barton County reached 728,000 total barrels. Ellis County was over 1.1 million. Russell County operators pumped 662,000 barrels. Stafford County chipped in 467,000.
With rising prices come rising oilfield activity in Kansas. Operators in Kansas have spudded 1,292 wells so far this year, up more than 400 wells over last year at this time. Independent Oil & Gas Service is scouting 492 wells in various stages of drilling and completion, up about 32% year over year. The Kansas Rig Count reached 28 in the eastern half of the state, up one, and 33 active rigs west of Wichita, also up one.
Baker Hughes reported 768 active drilling rigs across the US last week. The count in Texas was down three, North Dakota and Louisiana were each down two.
Kansas regulators last week approved ten new drilling locations statewide, all of them in Western Kansas, including one new drilling permit in Ellis County. That's 1,343 new permits so far this year, compared to 927 a year ago at this time. Operators completed 38 new wells across Kansas. Of the six wells completed in our area, four were dry holes. The weekly tally from Independent Oil& Gas Service shows 1,331 completed wells so far this year, compared to 720 through the end of October last year.
The government reported U.S. crude-oil inventories of 439.89 million barrels as of October 21st, a spike of more than two and a half million barrels. The Energy Information Administration says domestic stockpiles are about two percent below the five-year seasonal average.
EIA said U.S. crude production is up 23,000 barrels per day to top 12 million barrels per day for the second week in a row. Imports were up 300,000 barrels to 6.2 million barrels per day.
The government said U.S. diesel inventories rose slightly last week but remain about 20% below the five-year average for this time of year. Diesel deliveries remain slightly lower than at this time last year. Total gasoline inventories dropped 1.5 million barrels and are about six percent below the five-year seasonal average.
The auto club AAA says weak gasoline demand, the completion of seasonal west-coast refinery maintenance, and waffling global oil prices combined to drive down pump prices. Prices for regular gasoline are three cents lower than a month ago, but diesel prices remain 50 cents a gallon higher. The government said diesel inventories rose last week but remain about 20% below the five-year seasonal average. Diesel deliveries remain slightly lower than at this time last year. In Kansas, regular gasoline prices averaged $3.37 a gallon, down six cents from a week ago. But diesel prices are up eight cents week over week to $5.06 a gallon.
A young U.S. natural gas mogul may be taking home nearly $1 billion after a deal with oil giant BP. The oil supermajor continues its aggressive expansion into lower-carbon fuels and has agreed to buy gas producer Archea Energy for about $4.1 BILLION including debt. The Houston-based firm captures waste-gas emissions from landfills and farms. The company's CEO Daniel Rice stands to receive about $975 million in cash from the sale his stock. According to a statement, Archea will become a key part of BP’s bioenergy business and accelerate its growth. BP has promised to achieve net-zero emissions by the year 2050, and has made big bets on offshore wind and electric cars.
Billionaire wildcat producer Harold Hamm raised his offer for the company stock his family doesn’t already own. He's offering $4.3 billion for the outstanding shares in Continental Resources, hoping to buck the disciplined-spending mantra adopted by rival shale drillers. The largest minority investor, Smead Capital Management, disapproves of the deal, saying Hamm should be paying a lot more. Hamm tells Bloomberg going private will free the shale giant from the wishes of public investors.
Oklahoma-City-based Chesapeake Energy is cutting about three percent of its workforce, as it prepares to sell oil production in South Texas and once again re-focus on its core natural-gas operations. Reuters reports the company let go about 40 workers out of a total workforce of 1,200 people earlier this month. Chesapeake is selling off assets acquired three years ago, when the company sought to increase oil production with the $4 billion purchase of Wildhorse Resource Development.
Top oil exporter Saudi Aramco may cut prices to Asia in December as weaker-than-expected fuel consumption in China put a lid on regional demand. Reuters reports that could amount to discounts of 30 to 40 cents a barrel.
OPEC has increased its global oil demand forecast in both the long and medium term, crediting a more robust recovery than previously expected and a global shift toward prioritizing energy security over a transition to green energy.
Europe will increase its reliance on oil imports from the United States after the European Union's embargo on Russian seaborne crude imports enters into force in early December. That's the word from the CEO of the Italian energy group Eni in an interview with Bloomberg Monday.