News from the Oil Patch: Rig Counts Plummet Again

By JOHN P. TRETBAREagle Communications

U.S. rig counts continued their losing streak. The weekly count from Baker Hughes dropped by eight oil rigs, marking the 11th straight weekly decline in the oil count. The tallies in Texas and New Mexico were each down five rigs, while Louisiana dropped three rigs.

The last time the total rig count grew was July 7.

But the oil rig hasn't risen since June 9.

The Kansas Rig Count from Independent Oil & Gas Service drops 11 percent from last week. Eastern Kansas dropped by five rigs.

The tally is now more than 36 percent lower than a year ago.

Drilling was underway Friday on a lease in Ellis County.

Operators spudded 801 new wells in Kansas so far this year, down by 266 wells from a year ago.

Total footage drilled is down 28%.

Operators completed 24 wells in Kansas last week, 16 east of Wichita and eight in the western half of the state.

Independent Oil & Gas Service says that's 1,120 completed wells so far this year, up 87 wells from the total a year ago. Kansas regulators okayed 26 new drilling permits, including one in Ellis County and one in Stafford County.

Crude prices in Kansas were down for the second week in a row.

Kansas Common crude at CHS in McPherson starts the week at $70 a barrel, gaining 75 cents over Friday.

Kansas prices are down a dollar and a half, both from last week and from last month.

Crude futures prices posted their second consecutive weekly loss.

At $79.83 a barrel, the Nymex benchmark on Friday settled below $80 for the first time in a week.

By lunchtime Monday the near month contract for WTI was slightly higher, trading a few cents over $80.

London Brent was trading over $84 per barrel by midday Monday.

The government says some unplanned outages spiked the so-called "crack spreads" at U.S. refineries this summer. And that's been spiking pump prices.

The Energy Information Administration says unplanned outages at four major regional refineries were the primary drivers of refinery margins and thus retail prices.

The national average pump price for regular gasoline is a little over three eighty-three a gallon, which is down four cents from a week ago, but about 24 cents a gallon more than a month ago and thirty cents higher than two months ago.

U.S. inventories are on the rise but remain well below the five year average in both regular gasoline and diesel fuel.

The quest for cheaper diesel fuel took another gut punch over the weekend.

Marathon Petroleum shut down the nation's third largest refinery due to a fire on Friday.

The blaze was the third to strike the plant in Garyville, Louisiana in less than a year. Diesel futures rose 5% while gasoline futures jumped about 4%.

The outage threatens to deplete already below-average diesel stockpiles at a time when US demand for the fuel is set to rise going into the harvest and heating seasons.

Diesel prices across the U.S. are up 40 cents per gallon in the last month.

North Dakota operators increased their crude production in June by three percent to nearly 1.2 million barrels per day.

That's up more than 32,000 barrels per day from May.

State regulators also report a 94% gas-capture rate, down by a percentage point but a possible record for the most natural gas ever recovered at oil wells.

That means they're flaring and venting more, but also capturing more.

Regulators in North Dakota have reported on New Mexico's crude-oil production every month since that state supplanted theirs as the second most prolific crude producer in the nation.

June numbers from New Mexico remain second-best nationally, down three percent to 1.7 million barrels per day.

Texas continues to lead the way, and in fact broke 40-year-old records in June and July at 5.5 million barrels per day.

The state accounts for more than 43% of U.S. oil production and nearly 28% of the natural gas.