News From the Oil Patch: Prices from London to McPherson at 7-year highs

By JOHN P. TRETBAR

The near-month light sweet crude contract in New York settled at $83.76 Friday, above $83 per barrel for only the second time in seven years. In London, Brent crude was also on the rise, approaching $86. Kansas Common crude at CHS was priced at $74 per barrel on Monday, the best price in McPherson since October 9, 2014.

The weekly Rig Count in Kansas from Independent Oil & Gas Service shows a ten percent increase in drilling activity. There are 19 active rigs in eastern Kansas, up four from a week earlier. The count in Western Kansas was unchanged at 23 active rigs. Drilling continued on leases in Russell and Stafford counties, and operators were about to spud a new well in Barton County. Based solely on the number of wells spudded, Independent reports drilling activity in Kansas increasing more than 142% from a year ago. The number of operators searching for oil and gas is up 36% year over year.

Baker Hughes reported 542 active U.S. drilling rigs Friday, marking a decline of two oil rigs but a gain of one exploring for natural gas. The count in Wyoming was down three rigs, New Mexico was up two, and Texas was down one.

Kansas regulators authorized 24 new drilling locations last week, ten of them east of Wichita and 14 in the western half of the state including one new permit each in Barton and Stafford counties. That's 869 new drilling permits so far this year, compared to 358 at this time last year.

Independent Oil & Gas Service reports 17 new well completions for the week. That's 697 newly-completed wells statewide so far this year, just three wells ahead of that total a year ago. Operators in Ellis and Stafford counties completed wells among the 14 in Western Kansas.

The sole trade group representing producers, operators and owners of marginally-producing wells announced five new board members including four from Kansas. Nicole Koelsch of Adams/Brown in Great Bend joins the board of directors of the National Stripper Well Association. In a news release, Koelsch said the association has proven to be a valuable resource for their industry. Other new board members include Nick Powell of Mission, Kansas, Dave Murfin and Will Darrah of Wichita, and Sam Bradley of Loveland, Colorado.

U.S. operators produced over eleven million barrels of crude oil per day for the fourth week in a row. For the week through October 15th, The Energy Information Administration reports output of just over 11.3 million barrels per day, a slight decrease from the week before. Domestic crude-oil inventories dropped slightly last week. The government reports stockpiles of 426.5 million barrels of crude oil as of October 15th, down 400,000 barrels from a week earlier, and about six percent below the five year average for this time of year. Crude imports dropped by 169,000 barrels per day last week to about 5.8 million. Imports over the last four weeks averaged nearly 20% more than during the same period a year ago.

A Canadian company is planning to build North Dakota's first factory designed to turn natural gas into liquid fuels. Supporters say the new plant will produce low-sulfur diesel fuel and military-grade jet fuel. It will also help curb the venting or flaring of natural gas at oil wells. State officials say the $2.8 billion project in Trenton, North Dakota will convert natural gas into about 1 million gallons of liquid fuels per day.

Compared to a year ago, Americans are paying about $17 more to fill up our vehicles with gasoline. Analysts at Triple-A say it doesn't look like we'll find relief at the gas pump any time soon. The national average price for a gallon of regular is now just over $3.38. That's up a six cents from a week ago and more than $1.20 higher than a year ago. The average here in Kansas is up nearly eight cents from a week ago. 

Oil-by-rail traffic is on the increase across the U.S. and Canada. The Association of American Railroads (AAR) reports 9,901 American petroleum carloads for the week ending October 16th. That's up 506 tankers from the week before but down 3.6% from a year ago. Oil-by-rail shipments in Canada are up more than 18% year over year according to weekly AAR data.

The newly-remade board of directors at Exxon Mobil is debating whether to continue with several major oil and gas projects. People familiar with the matter say the energy giant is reconsidering its investment strategy amid the quickly-changing energy landscape. The Wall Street Journal reports Exxon board members, many installed last year by an activist investor, are weighing the fate of many future projects. The company is facing pressure from investors to restrain fossil-fuel investment to limit carbon emissions and return more cash to shareholders.

With crude prices surging, oil output in the Permian Basin of Texas and New Mexico is getting closer to levels seen before the pandemic-driven market crash. While total production in the U.S. is still lagging, The government reports the Permian is increasing output to an average of over 4.8 million barrels a day in October. That’s close to the record set in March of 2020. Bloomberg reports a global supply deficit and high prices are prompting rising production. Private drillers in the basin have been seeking to capitalize on the surge in oil prices, ramping up volumes steadily, while public companies are under shareholder pressure to keep spending in check. In other shale plays, the recovery has been slow. In the Bakken of North Dakota, where the shale boom began, and in the Eagle Ford of southern Texas, the number of wells drilled but uncompleted are at their lowest on record.