March 4th, 2019
Oil prices rose Monday, boosted by reports of a possible agreement as early as this month to end the U.S.-China trade war. Supply cuts from OPEC and its non-member allies continued to support oil futures as well. A tanker was seen Friday off-loading U.S. Eagle Ford crude oil into a port in China, which Reuters said what would be the first Chinese import of American crude oil in months. The Russian energy minister told Reuters they are increasing the pace of oil production cuts under the “OPEC-plus” agreements, and should post a higher compliance rate in March.
Independent Oil & Gas Service reports a dip in its active rig count for the week, with just two rigs working in eastern Kansas, down one, and 23 west of Wichita, down six. Drilling is underway on one lease in Russell County. Operators are about to spud a new well in Barton County and one in Stafford County.
Baker Hughes reports 1,038 active oil and gas drilling rigs across the U.S. on Friday, a decline of ten oil rigs. Canada checks in with 211 active rigs, down one. The count in Texas was down five. The total in Oklahoma was down two.
Regulators approved 18 drilling permits for new locations across the state last week, just one east of Wichita and 17 in Western Kansas. That’s 133 new permits year-to-date, about half the total last year by the end of February.
Independent Oil & Gas Service reports 48 new well-completions for the week, 24 east of Wichita and 24 out west., including one completion in Barton County, three in Ellis County, and three in Russell County.
The government last week said U.S. crude oil production last week reached an all-time high of just under 12.1 million barrels per day. That’s up 104 thousand barrels per day over the week before, and an increase of 1.8 million barrels per day over last year at this time. The Energy Information Administration said commercial crude oil inventories dropped by 8.6 million barrels from the previous week to about 3% above the five year seasonal average. Imports averaged 5.9 million barrels per day, down by 1.6 million barrels per day from the previous week.
A coalition of environmental groups is fighting a tight oil project near the Utah-Colorado border by a company with ties to Estonia in eastern Europe. The company has invested $60 million to date in the Utah project, which would produce an estimated 50,000 barrels a day if the site is fully built out. Opponents say the plan would drain billions of gallons of water from the Green River, threaten endangered species and generate enormous amounts of greenhouse gas pollution.
Operators in New Mexico could soon be required to chip in a little more to help the government’s efforts to regulate that state’s booming oil and gas industry. A new bill would allow regulators to collect application fees, administrative filing fees, and permit fees to cover the costs regulating the patch. Supporters say regulators’ workload has quadrupled, while top employees are leaving for bigger paychecks in the private sector. According to the Web site “New Mexico In Depth,” lawmakers in Santa Fe are exploring just how much to charge. Some are questioning why fees should be used instead of a regular budget line-item, calling the bill a “license to steal,” and a “self-licking ice cream cone.”
An effort to ban hydraulic fracturing in New Mexico was met with scorn from the oil and gas industry and local boom towns. Such a move could cost the state about $3.5 billion in lost revenue, and could set back local governments more than $300 million, according to a committee report. That report prompted lawmakers to pull the bill off the legislative calendar.
Canada’s energy regulator has endorsed the contentious Trans Mountain pipeline expansion that would almost triple the flow of oil from the Alberta oil sands to the Pacific Coast. The National Energy Board said the expansion is in the country’s national interest, but set out 16 new conditions after a court found it had not properly determined how killer whales would be affected by additional tanker traffic. The court also said there had been insufficient consultation with indigenous communities. As oil flow increases from 300,000 to 890,000 barrels per day, tanker traffic will balloon from about 60 vessels to more than 400 vessels annually.
S&P Global Platts reports the Saudis continue their efforts to increase oil and gas acquisitions and upgrades in the U.S., despite strained political relations. Through a subsidiary, Aramco already owns the US’ largest refinery in Port Arthur, Texas, and is in the early stages of an ambitious $6.6 billion petrochemicals expansion there. Aramco is on the lookout for natural gas assets, having previously been linked to potential stakes in two large producers. But the kingdom is also pivoting to Asia, with several refinery and petrochemical deals announced recently. Those projects are seen as key to gaining outlets for Saudi crude in Asia, at a time when booming shale oil output here has reduced the U.S. reliance on supplies from the Middle East. Platts reports Saudi Aramco aims to nearly double its global refining footprint to nearly 10 million barrels per day.