Texas Railroad Commission Reports Rise in Drilling Permits for June '17

The Texas RRC released its drilling, completion, and permitting statistics for June this week.  Total new permits topped 1,200 for only the second time in years, with combo (oil+gas) and oil wells leading the charge.  Gas well permits were also up, but only represented 70 of the permits issued.

It's notable that new well completions still have not begun to follow the upward trend in permitting.  Whether that is tardy reporting, or maybe DUC count is rising, it suggests that unless many of these permits are being delayed or abandoned, we will eventually witness a surge in completions, and therefore production.

Gas new-drill completions reported in June were just 68, and oil completions were 446:

Texas Drilling and Permit Activity: Drilling Steady, Permitting Way Up

Completions have not yet accelerated, but permitting really took off in March, per the Texas Railroad Commission Drilling, Completion, and Permitting Report for March 2017:

Permits issued in March rose to 1,233 from about 930 in each of the three previous months (Mostly Oil permits, fewer Oil+Gas permits, and very few Gas permits:

Only 63 gas wells were completed in March.  Oil activity was much greater, at 475 new well completions, but still well below March 2016 (876 completions).

Pemex Reports December Oil and Gas Production Falls to New Lows

Pemex seems almost to have exited the drilling and exploration business altogether, as December output fell sharply to continue the multiyear trend toward output collapse.

Crude oil output fell 37M BOPD to 2.035 MMBOPD, or a 240 thousand barrel per day decline over last December.

Natural gas output fell 135 MMCF per day, or 2.4% to 5.38 BCFD, or a 0.83 BCFD decline over last December.

The charts and graphs tell the story better:

Rig Counts: Oil Rigs Down 7, Gas Gains 1. Sharp Rise in Canadian Oil & Gas Drilling Activity

Holiday effects might be dampening the upward trend in US oil drilling, which was down 7 this week.  As for major basins, Barnett lost an oil rig, Eagle Ford gained 1, Granite Wash lost 1, Permian gained 1, Williston lost 1.

Gas rigs were up 1.  Nonmajor plays added 5, so the net effect was a decline in drilling potential.  Utica and Marcellus each lost 1 rig.  Haynesville and Eagle Ford both lost a single gas rig as well. 

Canadian rig counts surged on post holiday seasonality, pushing both counts to the highest in almost two years:

Texas Drilling and Completion Activity in December: Oil Gains, Gas Loses

The Texas Railroad Commission reported December drilling, completion, and permitting activity today.  It showed a sharp increase in well permits, and a rise in reported new oil well completions.  Gas completions, however, hit a new low at just 75 new wells:

Oil completions rose from 264 to 384, along with oil rig counts and prices:

Rig Counts: Oil +4 Gas +3

Rig counts rose modestly this week, according to Baker Hughes.  Both oil and gas rigs continued the trend lines established last summer.  Oil rigs rose by 4 to 529, with gains in the Permian (+3) and Eagle Ford (+1).  

Gas rigs rose by a net 3, with major basins gaining:  Haynesville (+2), Utica (+1) and Marcellus (+1).

In Canada, the post holiday drilling recovery began in earnest, with oil rigs up 29 this week after falling by 54 in the prior week.  Gas activity was stronger, with a bounce to a new year high.  Gas rigs were up +23 to 123 after falling by 13 last week:

Rig Counts: Oil +2 Gas +3 in Last Week of 2016. Counts Are Now Just About Where 2016 Began.

Another rig count to support the 7 month trend upward in the US.  Oil gains 2 rigs to 525,  and gas up 3 to 132.  Both counts bottomed out in May, with oil rigs showing the more pronounced rebound.  Gas rigs are constrained in the Marcellus and Utica by pipeline capacity, so the rig rebound has been confined to Texas/OK/LA and the DJ basin this year:

Dec 30 Baker Hughes Rig Counts:

US Oil Production Growth Stalls for 3rd Week

Perhaps temporary anomalies are to blame for the third week of declining continental US oil production.  The volume declines are not substantial, but they interrupt what was a sharp two-month growth trend that saw output rise from 8.45 million BOPD to 8.8.

This week's decline of 20 thousand barrels per day came on the heels of a 10K and a 1K decline in daily output for the month of December.  Rising rig counts belie the onset of a longer trend, but the potential for other short term confounding effects (winter weather, year end, holidays) may mean that a return to growth (or not) may not be apparent for a few weeks more.

2016 Continental US Oil Production (thousand BOPD):

Pemex Oil and Gas Production Continues Its Slow Collapse in November

Mexico seems to have accepted the terminal decline curve of its developed oil and gas resources, as liquids output fell for the 5th month, this time by 31,000 barrels per day, to a new low of 2.072 MMBOEPD.  Output fell for every type of crude, and in every region.  

Baker Hughes Rig Counts: Increases in Oil (+13) and Gas (+3)

Oil rig counts continued to rise this week (ended Dec 23), gaining 13 rigs from 510 to 523, with most of those new rigs in Texas and Oklahoma.  It seems to confirm that oil in the mid $50's is profitable for many E&P's.  With the declines in domestic production reversed, it suggests that both rig counts and production will continue to climb in this price environment.

The gas rig count is telling a similar story, up 3 this week to 129, more than 50% above the lows in May:

EIA Weekly Petroleum Status Report: Spike in Production, Drop in Imports and Demand

Today's EIA Report showed a drop in Crude Inventories (down 2.563 MMBBL), a sharp rise in Lower 48 Production (up 101 KBBL), and a dive in net imports (just 3.6 MMBBL).  The 4 week moving average of gasoline demand also fell, continuing the downward trend and below 2015 levels.

See 11 graphs below:

EIA Weekly Petroleum Report: A Weaker Picture this Week

EIA reported increases in crude, gasoline, and diesel inventories this week.  Overall, stocks remain high for crude, average for gasoline, and low for distillate.

Regionally, stocks increased in the closely watched Cushing, OK storage region and the gulf coast, leaving Cushing well below the historical range, and gulf coast well above.

Demand showed weakness in both gasoline and diesel, with weekly gasoline demand falling below the 5 year range, and distillate falling for the 4th week in a row to the middle of the range:

EIA Petroleum Weekly Report: Demand Slows Abruptly

Inventory
Commercial crude oil inventories fell by 2.6 million barrels this week, alongside a comparable rise in refined fuel inventories with Gasoline up 1.7 M and Diesel up 0.9 M.
EIA Weekly Petroleum Inventory

Regional crude inventories in the important Cushing and Gulf Coast locations fell slightly, with Cushing remaining well below historical levels and Gulf Coast well above:

Demand
Demand was tepid last week, falling below the recent trend for both gasoline and diesel.  Both products recorded levels comparable to last year, and near the low end of the 5 year range.
EIA Weekly Petroleum Demand

Supply
Supply recovered from last week's maintenance-driven decline.  Net imports were down on the week, driven primarily by increased product exports.
EIA Weekly Petroleum Supply

EIA Weekly Petroleum Report

Inventories
Today's EIA Petroleum Report was mixed, as crude inventories fell while product stocks grew.  The net was an 8.8 million barrel increase in total commercial supplies.

Crude stocks fell 3.43MM but remained at the upper end of the range.  Gasoline supplies were steady in the middle of the range, and diesel held below the range after gaining 2 million barrels.

Regionally, both Cushing and Gulf Coast crude inventories fell:

Demand

Demand fell across all categories this week, down a combined 1 MM barrels per day.  But gasoline and diesel demand were still strong.  Gasoline demand has been 300K barrels per day above 2013 demand for the last six weeks.  Diesel demand was above the 5 year range for the second week.

Supply
Domestic crude production fell this week, in Alaska and the lower 48, by a combined 89K BOPD.

Full Reports
EIA Weekly Petroleum Inventory
EIA Weekly Petroleum Supply
EIA Weekly Petroleum Demand

EIA Petroleum Status Report: Strong Demand, Product Inventories Decline

Inventory

Crude stocks grew by just under 1 million barrels last week, remaining just above the historical range.  But both Gasoline and Diesel supplies fell, keeping inventories low.  Propane continued its aggressive recovery, back into the upper half of the 5 year range.  Oil future rose slightly on the news.  

Cushing inventories continued their rapid decline, well below the historical range, while gulf coast inventories continued to build, adding 2.3 million barrels to move further above the averages.  

EIA Weekly Petroleum Inventory

Demand

Demand for gasoline, and especially diesel, was robust last week.  Diesel posted the second strong week in a row, well above the 5 year average, even as diesel inventories remained below average.

EIA Weekly Petroleum Demand

Supply

The US posted another week of record crude production, more than 1.1 million barrels per day above last year's level.

EIA Weekly Petroleum Supply

The balance of trade was a bit looser last week, as net imports rose by 435K barrels per day.

EIA Petroleum Status Report

Inventories

This week's EIA Petroleum Status Report for May 2 was positive overall, with drawdowns in Crude and Diesel, and declines in both Cushing and Gulf Coast crude stocks.  Gasoline inventories saw a build, and a very large addition to propane inventory was a reminder that we have too much.

Crude remained above the high end of the historical range, gasoline remained near the midpoint, and diesel fell back below the low end of the range.

EIA Weekly Petroleum Inventory

Crude prices firmed after the report, perhaps on the unexpected news that gulf coast inventories declined.  Cushing fell further below the historical range as expected.

Demand

Gasoline demand was flat week on week, in the middle of the range and above last year's levels.  But diesel showed strength, well above last week, the historical range, and last year, at 4.33 MMBBLD.

EIA Weekly Petroleum Demand

Supply

Domestic crude production was flat week on week, and the trade balance improved by about half a million barrels per day as crude imports fell 600 KBOPD, and exports declined slightly.

EIA Weekly Petroleum Supply

EIA Weekly Petroleum Status: Rising Inventories, Rebounding Demand

Inventory

EIA reports 4/25/14 inventories rose a total of 7.91 MMBBL, with Crude, Gasoline, and Diesel all increasing by 1.5 to 2 MMBBL each.  Only jet fuel and resid fuel declined this week.  

This kept commercial crude inventories above the historical range for the third week in a row.  Gasoline inventories moved back toward the middle of the range, and diesel held just below the range, about 20 million barrels below the midpoint.  

Cushing inventories fell further below the range, and gulf coast inventories experienced another huge increase, now well above the range.

EIA Weekly Petroleum Inventory

Core inventories this week:

Cushing and Gulf Coast inventories:

Demand

Most demand categories recovered this week, with gasoline up 263K BOEPD to the middle of the range, and diesel remaining at the high end..

EIA Weekly Petroleum Demand

Supply

Supply was little changed this week, with the trade balance turning slightly more negative as both crude imports and product exports were lower from the previous week.

EIA Weekly Petroleum Supply