Jun 23, 2020 10:45 AM

News From the Oil Patch: Production down for 15th straight week

Posted Jun 23, 2020 10:45 AM


Kansas Common crude at CHS in McPherson gained a dollar a barrel Friday to start the week at $30. That's up more than three dollars from last week, up more than four dollars from the first of the month, but down more than $21 from the first of the year.

Baker Hughes reports 266 active drilling rigs nationwide, a decline of ten oil rigs and three gas rigs. The count in New Mexico was down five. Texas was down three.

Independent Oil & Gas Service reports a slight dip in drilling activity in Kansas after a slight increase last week. The Rig Count in Kansas shows two active rigs east of Wichita, which is unchanged from a week ago, and seven in Western Kansas, down two. 

Regulators approved four permits for drilling at new locations across Kansas last week, 210 so far this year.

Independent Oil & Gas Service reports 25 newly-completed wells during the last week, 492 so far this year. There were 15 completions in eastern Kansas, and ten west of Wichita, including one in Barton County and two in Ellis County.

The Kansas Geological Society recognized and named two new oil and gas fields. They are the Buffalo Plains Northwest field in Cheyenne County, and the Lunt East field in Pratt County.

The government reported its 15th consecutive weekly decline in U.S. crude-oil production. Average output for the week ending June 12 dropped nearly 600,000 barrels compared to the week before, to 10.46 million barrels per day. The weekly total from a year ago was over 12.1 million barrels per day. Weekly production in the U.S. topped 13 million barrels per day twice, back in February and March.

Crude oil inventories increased another 1.2 million barrels last week. The Energy Information Administration says stockpiles are about 15% above the five-year seasonal average. EIA reports imports of 6.6 million barrels per day last week, down more than 200,000 barrels per day compared to a week earlier. The four-week average is down ten percent from the same period last year.

U.S. freight traffic is down 15% compared to last year. But oil-by-rail is off by 26% from last year, dropping 236 tanker cars from a week ago. The Association of American Railroads reports 9,436 tankers moved petroleum and petroleum products during the week ending June 13. 

EIA says gasoline demand has increased 18% since mid-may, pumping up pump-prices by 13% in that time. The national average gasoline price ticked up another half cent Thursday to just over $2.11 per gallon. That's three cents higher on the week, nearly a quarter higher than a month ago, but still more than half a dollar less than last year at this time. Kansas is one of 15 states where the average is below two dollars ($1.92 Monday). 

Oklahoma Corporation Commissioner Bob Anthony has been named to serve his sixth straight term on the National Petroleum Council, a group that advises the Secretary of Energy on matters related to U.S. oil and gas policy. He is one of 8 Oklahoma residents named to the NPC this year, giving Oklahoma the most of any state.

The State of North Dakota has confiscated at least 239 "orphaned," or abandoned oil wells and is taking bids to plug those wells thanks to the CARES Act. The Bismarck Tribune says reclamation work starts in July. Regulators plan to use $66 million in federal coronavirus aid, and hope to return 2,200 acres of land to agricultural use, mainly in the state's older, northern oil fields. 

Federal regulators sided against the state of Washington in a dispute about oil tanker pressure that arose after a string of oil-by-rail accidents. The state will not be allowed to impose its own, stricter vapor-pressure limits on crude oil loading or unloading within its borders. Lawyers for the states of North Dakota and Montana argued that allowing the Washington regs would block their crude from the Pacific Northwest and drive down its value without any proven safety benefit. The government ruled that federal law governs the transport of hazardous materials, preempting stricter regulations imposed by the state.