By JOHN P TRETBAR
News from the Oil Patch
News of the first direct exchange of fire between the US and Iran in about a month sends oil prices surging.
Prices started to surge Sunday evening on news that the US military had launched a series of air strikes on a small landmass inside the Strait of Hormuz.
The US says Iran was about to use rockets to launch sea mines into the waterway. Iran retaliated with a barrage of drones aimed at Jordan and the United Arab Emirates. NYMEX futures rose three percent Monday, nearly wiping out Friday's weekly loss of about four dollars.
Kansas common crude at CHS in McPherson starts the week at $73.50 per barrel, up two-and-a-quarter ($2.25) on the week, but down a dollar-twenty-five ($1.25) from the first of the month.Gasoline prices are up a little nationally, and down a little statewide.
Triple-A reports the national average is up a fraction to four-oh-eight ($4.08) per gallon. The average Kansas pump price for regular gas is down about a penny to three seventy-nine ($3.79) per gallon. Diesel averages $5.60 per gallon nationally, and five-eighteen ($5.18) a gallon across Kansas.Operators have spudded, drilled and completed 511 wells so far this year, down 18 percent from a year ago.
Total footage drilled is down 20% year over year. The total rises this week by 13 wells, with seven in Western Kansas, including service wells in Graham, Haskell and Russell counties.
Independent Oil and Gas Service reports a year-to-date tally of 546 wells. That trails the same sum a year ago by nearly 250 wells.Kansas regulators approve two new drilling locations this week, both of them in Ellis County. That's 499 new drilling permits so far this year, up from 478 by this time last year.
The Kansas Rig Count from Independent Oil and Gas Service is down three in eastern Kansas at eight rigs, and up three in the western half of the state at 14 rigs.
The statewide tally is up ten percent from last month and nearly thirty percent higher than a year ago. Drilling was underway or about to begin Friday on two leases in Rooks County, along with new wells in Barton, Stafford, Finney and Ness counties.The Rotary Rig Count from Baker Hughes is unchanged from a week ago at 588 active drilling rigs, up 52 rigs from a year ago.
The oil tally is down five rigs while the gas count increased by five rigs. Texas, Louisiana and Wyoming are each up one rig from a week ago. Colorado, New Mexico and Ohio are each down one.US crude-oil production had a top-ten week.
Production in the US is up 13,000 daily barrels to surpass 13.8 million barrels a day for the third straight week. Current output is third best this year, and number-six among the highest weekly reports ever. The four-week average is the third-best ever, topping 13.4 million barrels per day.Cushing remains above tank bottom, but SPR is getting closer. Stockpiles at Cushing, Oklahoma remain above the minimum operational capacity, or tank bottom, for a fourth week, rising to 22.4 million barrels.
The Energy Information Administration reports commercial stockpiles nationwide are up four million barrels to 429 million as of August 14.
The government reports another 3.7 Million barrel draw from the Strategic Petroleum Reserves this week, dropping SPR to a fraction under 290 Million barrels as of August 21.
Crude volume in storage at SPR drops 28 percent from a year ago and 60 percent from total capacity. The US Strategic Petroleum Reserves have their own "tank bottom."
In both legal and engineering terms, the 60 massive underground salt caverns in Texas and Louisiana that comprise the SPR are close to their functional minimum capacity.
Since early April, the US has moved 122 million barrels of crude from the reserves into the marketplace, and we're planning another 55 million barrels soon. Operators of the SPR use heavy salt brine to maintain a functional minimum capacity of 714 million barrels. That brine is also used to push oil out of the caverns.
The SPR is now down to just under 290 million barrels of actual crude oil. Federal law places a hard stop on reductions below 252 million barrels. Fortune Magazine reports operating below 300-million pushes the aging infrastructure into uncharted and hazardous territory. According to the report, if the fluids are removed without replacement, the immense geological weight of the overlying earth would cause the salt domes to collapse.
US Crude exports go from all-time highs last spring, to annual lows by the end of summer. Analysts credit both spikes to the fortunes of war. Crude exports this week drop more than a quarter million barrels a day, to just under 3.8 million.
Refined product exports are down six percent from a week ago to a five-week low, dropping under eight million barrels a day.Crude imports are down five percent from a week ago at 6.2 million barrels per day. The Energy Information Administration reports Saudi Arabian crude made it out of the war zone and into US refineries this week to the tune of 165 Million barrels a day.
Canada's crude shipments to the US are down more than a quarter-million barrels a day, but remain above three and a half million. Colombia managed 141,000 barrels a day, after an earthquake shut down output last week