Dec 30, 2020

News From the Oil Patch: Wichita quakes not caused by O&G

Posted Dec 30, 2020 12:12 PM


Kansas Common crude began the last week of the year at $38.50 per barrel at CHS in McPherson. That's down 75 cents from a week ago, but up nearly four dollars over prices at the beginning of the month. A year ago, Kansas prices were over fifty dollars per barrel.

The Kansas Corporation Commission says a recent string of earthquakes in Wichita is not tied to any oil and gas activity in the area. In a news release, Director Ryan Hoffman of the Conservation Division says they found no new drilling activity, and no permit violations at existing wells within a three-mile radius of the quakes. They reached farther out for disposal wells, but found no volume increases at the five disposal wells within six miles of the epicenter. 

The Kansas Geological Survey reported a slight decline in new crude-production totals through August, offering the latest county numbers available. Barton County pumped more than 924,000 barrels of crude through August. That's more than 3,700 barrels per day. The Ellis County's total through August was 1.45 million barrels, or just short of 6,000 barrels per day. Russell County year-to-date output through August reached 3,520 barrels per day, while Stafford County notched more than 2,500 barrels per day. 

Statewide, total August crude-oil production was lower than the month before but higher than reported earlier by the feds. KGS says the Kansas total was 2.56 million barrels in August, or nearly 83,000 barrels per day. That's down a thousand barrels per day from the month before. The year-to-date average statewide was nearly 77,000 barrels per day.

Baker Hughes reported 348 active rigs across the U.S. The count in Oklahoma was up two, Texas was up one, New Mexico was down one, and Louisiana was up three rigs over the week before. The Rig Count in Kansas was down slightly. Independent Oil & Gas Service reports nine active rigs in eastern Kansas, down two, and eight west of Wichita, which is unchanged. Drillers reached total depth on a new well last week in Ellis County.

Out of nine newly-completed wells reported across Kansas last week, there was one in Russell County among six West of Wichita. Independent Oil & Gas Service reports the year-to-date total is 785 new completions.

Eight new drilling permits made the list last week. That's 476 so far this year. There were eight new permits in Western Kansas, including one each in Barton and Stafford counties.

The Energy Information Administration reports inventories dropped last week by 600,000 barrels. EIA says U.S. stockpiles are about 11% above the five-year seasonal average.

The government says imports increased last week by 140,000 barrels per day to 5.6 million barrels per day. The four-week average is down nearly 13% from the same four weeks a year ago.

U.S. crude-oil production topped eleven million barrels per day for the fourth straight week. That's the first time that's happened since August. EIA reports domestic output was up 13,000 barrels per day from a week earlier, but lagged more than 1.7 million barrels per day behind the same week last year.

New oil-and-gas drilling rules in Colorado go into effect next month. But there are roughly 5,000 pending drilling permits awaiting action in the meantime, and state officials have to decide which will be approved, which will be rejected and which will have to be redone under the new rules. The Denver Post reports more than 200 people called into a Zoom meeting last week to get a first look at new drilling applications, and to assess the cumulative impacts of the new rules.

Colorado officials have agreed to enact more stringent regulations on ozone emissions from oil and gas, and other industries, at the instruction of Governor Jared Polis. The state is hoping to avoid a dramatic downgrade under the federal Clean Air Act, which could require reformulated gasoline blends in some areas.

"A pretty terrible year for the industry." That's the description of NorthDakota’s top oil regulator. Mineral Resources Director Lynn Helms told the Bismarck Tribune 2020 will be known for the rapid collapse of crude prices, dismantled drilling rigs and idled wells. Helms says next year does not look very promising in terms of growth. He says we will need a year or more before oil and gas prices prompt sustained growth in North Dakota.

State regulators say total crude oil and condensate production in the top U.S. producing state declined for the third straight month, reaching its lowest total since May. The Railroad Commission of Texas reports monthly output of 128 million barrels, or 4.1 million barrels per day. That's down from over five million barrels per day before the pandemic.

A yearly survey of more than 160 energy professionals in Texas shows they are concerned about federal overreach, but are generally positive about the future of the industry. The top three issues noted by the Texas Alliance of Energy Producers survey were, in order, the price of oil, demand for oil and gas, and federal over-regulation. Respondents noted the need for increased public education, PR and marketing to address all three concerns.

Pipeline construction and some deregulation have spawned some optimism the Canadian oil patch hasn't seen in a while. After six years of delays, work has begin on the replacement of an Enbridge pipeline to Minnesota, and construction is advancing on expansion of the TransMountain Pipeline to the Pacific coast. One is expected to open next year and the other by the end of 2022. Canada's Global News agency reports the Alberta government ended its oil production curtailment program. At least one producer is optimistic, as Canadian NaturalResources said it would boost production by five percent next year.

Oil and gas development pumped $2.8 billion into the treasury in New Mexico this year, according to a study commissioned by the New Mexico Oil and GasAssociation. That's the second-highest total revenue they've ever reported, despite a global price war and plummeting demand amid the coronavirus pandemic

Work resumed off the coast of Germany on a Russian natural-gas pipeline, despite the recent acceleration of U.S. sanctions. Any individual or company helping the pipeline in any way has been targeted, in what the Russian Press Secretary last week called a kind of "hybrid warfare." Earlier this month the pipe-laying vessel Fortuna began laying a 1.5 mile section of the pipe.