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IOGsi RED TOP NEWS:
WEEK #22, May 28, 2020
IOGsi Week #22, May 28, 2020 Highlights - There were 4 new oil and gas Drilling Permits issued in Kansas this past week by the Kansas Corporation Commission. This brings the year-to-date total of new locations issued to 191. Last year at this time, 364 permits were granted, down by 173 permits (- 48%)-------------- COFFEYVILLE RESOURCES reports Kansas crude prices dropped slightly by 75¢ / bbl from last week (- 3%). Kansas Common is $23.00 / bbl, Southcentral Kansas crude $24.75 / bbl and Eastern Kansas crude $20.25 / bbl. The total number of active drilling rigs in Kansas, either moving to or currently on drill sites, declined from 7 to 4 from week ago (- 43%). A month ago, there were also 4 active rigs (no change). This same time a year ago, 10 rotary rigs were active in the State (- 60%). --------------- All drilling activity in the state is currently taking place in the Western Ranges.
In other news, the U.S. ENERGY INFORMATION ADMINISTRATION (EIA), Washington, D.C., concurs that the COVID-19 pandemic has caused significant changes in energy supply and demand patterns. Crude oil prices have fallen significantly since the beginning of 2020, driven by reduced oil demand because of COVID-19 mitigation efforts. Despite the April agreement between the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) to reduce production levels beyond the end of the Short-term Energy Outlook (STEO) forecast period, crude oil prices have remained at some of their lowest levels in more than 20 years. --------------- The EIA has revised its current forecast of domestic crude oil production down from the April STEO because of lower crude oil prices. EIA forecasts U.S. crude oil production will average 11.7 million b/d in 2020, down 0.5 million b/d from 2019. In 2021, EIA expects U.S. crude oil production to decline further by 0.8 million b/d. If realized, the 2020 production decline would mark the first annual decline since 2016. U.S. crude oil production has not declined for two years in a row since the 17-year period of declines beginning in 1992 and running through 2008. Typically, price changes affect production after about a six-month lag. However, current market conditions will likely reduce this lag as many producers have already announced plans to reduce capital spending and drilling levels.