Skyrocketing natural gas prices; gasoline prices are falling


By JOHN P. TRETBAR

The government reports that US crude production fell slightly last week but remained above 12 million barrels per day. The Energy Information Administration says U.S. operators produced just over 12.1 million barrels per day in the week through Aug. 12, down 118,000 barrels per day from the previous week.

The EIA reports that crude oil inventories in the United States fell 7.1 million barrels from the previous week. The August 12 count was 425 million barrels, about 6% below the five-year average for this time of year. Gasoline inventories decreased by 4.6 million barrels and are about 8% lower than the five-year seasonal average

Crude imports for the week fell 39,000 barrels per day. The four-week average reached 6.5 million barrels per day. The government says that’s half a percent more than the same four weeks a year ago.

So far this year, 203 Kansas operators have drilled 916 wells, an increase of 322 wells from the tally at this time last year. Independent Oil & Gas Service was looking for 434 wells in various stages of drilling and completion, up nearly 50% from a year ago. The number of rigs in Kansas increased by two in the eastern half of the state to 27 rigs. West of Wichita, the count is down from one to 34 platforms. On Friday, drilling was underway on two leases in Ellis County and two in Stafford County, with operators soon to dig a new well on a lease in Russell County.

Baker Hughes’ weekly rotary rig count was down by one gas rig to 762 active rigs nationwide. The tally in Texas was down three platforms, while New Mexico gained two.

Kansas regulators approved 36 new drill locations in the past week, 27 in eastern Kansas and nine west of Wichita. Independent Oil & Gas Service reports 1,037 new drilling permits statewide so far this year. Barton County has remained unchanged with 30 new permits so far this year. Ellis County is adding two permits, 28 so far this year. Russell County is unchanged at 12 new permits this year, and Stafford County is unchanged at 17 new drilling permits in calendar year 2022.

Independent Oil & Gas Service reports 31 newly completed wells across the state in the week through Aug. 18, including 15 east of Wichita and 16 in western Kansas. Operators have completed 1,004 new wells statewide so far this year. Barton County added two completions last week, 41 so far this year. The tally in Ellis County is unchanged at 24 wells completed. Russell County is up one to eleven wells. Stafford County gained one in 23 completed wells.

Gasoline prices continued to decline. The AAA auto club reports a national average price at the pump of just over $3.93 a gallon, down six cents a gallon from a week ago and 59 cents cheaper than there one month old. The average across Kansas is down 83 cents from last month, to $3.51 a gallon. (8/22)

U.S. natural gas prices have soared to levels not seen since 2008. Last week, futures jumped 7% to their highest closing price since August 1, 2008.

U.S. shale producers’ inventory of drilled but uncompleted wells fell by 20 wells last week. The Energy Information Administration reports that the Permian Basin saw a decline of 21 DUC. Several games reported increases.

U.S. oil-by-rail traffic was up for the week, but down from a year ago. The Association of American Railroads reports 9,732 tank cars carrying petroleum or petroleum products during the week through August 13. This is an increase of 51 tank cars from the previous week, but a decrease of 5.6% from the same week a year ago. Canadian traffic increased by almost 500 tankers for the week and 8.7% more than last year at the same date.

Although Mexico imports almost all of its natural gas, the country hopes to become a major exporter. Bloomberg reports that the country’s proximity to booming U.S. supplies positions it well to deliver U.S. gas to customers in Europe and Asia. They have a total of eight new gas export projects in the planning stage. If their hopes come true, the Latin American newcomer will join a very small club of nations that ship liquefied natural gas overseas, behind only the United States, Australia and Qatar in terms of production.

Earthstone Energy has announced the closing of an agreement to purchase the New Mexico assets of Titus Oil & Gas for $574 million in cash and approximately 3.9 million shares. The assets are located in the northern Delaware Basin of the Permian Zone and bring Earthstone’s production base to nearly 100,000 barrels of oil equivalent per day. The company plans to deploy an additional rig soon to expand its drilling program.

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