By JOHN P. TRETBAR
Eagle Communications
Common crude at CHS in McPherson rose half a dollar on Friday to $73.50 per barrel. That's down half a dollar from the first of the month, but more than ten dollars a barrel higher than at the first of the year, and four dollars higher than a year ago. Futures prices in New York dropped to their lowest level since March last week, but were up slightly on Monday, trading over $83 a barrel by midday. London Brent was fetching $87 a barrel by lunchtime Monday.
The Rotary Rig Count from Baker Hughes is up five oil rigs but down three gas rigs. The count in Texas was up two, Oklahoma was up one, and New Mexico was down one. The weekly total is down 136 rigs from a year ago.
The Kansas Rig Count from Independent Oil & Gas Service is up two rigs east of Wichita at 14 rigs either scheduled, moving to, or currently on site. The count in western Kansas is unchanged at 17 active drilling rigs. The tally is up seven percent from a month ago, but down nine percent from last year at this time.
Operators across Kansas completed 22 wells last week, with two in Barton County out of 15 in western Kansas. Independent Oil & Gas Service reports 354 completions so far this year across the state, compared to 546 a year ago at this time.
Regulators in Kansas approved 16 new drilling locations. Ten of those are west of Wichita including new permits in Russell and Stafford counties. That's 256 new drilling locations statewide so far this year, compared to 370 a year ago.
The government reported the fourth increase in domestic crude inventories in four weeks. A weekly report from the Energy Information Administration shows commercial inventories of 460 million barrels as of April 12th. Stockpiles remain about one percent below the five-year average for this time of year. Inventories in the Strategic Petroleum Reserve rose an additional 600,000 barrels, according to the Energy Information Administration report. Commercial supplies are up nearly 15 million barrels since March 15.
Domestic crude production averaged 13,131,000 barrels per day last week, down 5,000 barrels per day from the week before, but up 800,000 barrels per day from a year ago. Four-week average production is down about 2,000 barrels per day for the week, but is more than a million barrels a day higher than a year ago.
The Biden Administration has raised royalty rates for oil-and-gas drilling on public lands for the first time in a century. The Interior Department raised royalty rates for oil drilling by more than one third, to 16.67%, in accordance with the sweeping 2022 climate law approved by Congress. The new rule also raises the minimum bond that drillers must pay to $150,000 from $10,000.
Oil patch drilling and business activity has contracted for the fifth straight quarter, and could drop more this year according to respondents to a survey by the Federal Reserve Bank of Kansas City. Kansas is not alone in lackluster results of late: Oklahoma, Colorado and northern New Mexico showed declines in oil and gas activity. The survey included responses from 33 firms operating in the Midwest, the Rockies and parts of New Mexico. More than 75% of respondents agreed that consolidation will lead to more cautious production growth.
China, the world’s largest buyer of foreign crude, imported 11.3 million barrels per day last year. According to customs data, that’s 10% more than the year before. A new government report notes refiners in China imported record volumes to support rising petrochemical and transportation-fuel needs. Russia, Saudi Arabia, and Iraq were China’s main sources. Russia topped the list last year after offering steep discounts prompted by international sanctions.