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The 2018 Oil Production Forecast Explained

The 2018 Oil Production Forecast Explained

In my recent post, Oil Price Scenario for 2018, my global supply forecast was seriously at odds with those presented by the International Energy Agency (IEA) and Rystad Energy, a respected Norwegian consulting firm. This post puts more flesh on my 2018 oil production view. The post could easily have been called “Oil Production Forecasting for Beginners” and explains things like decline rates and oilfield interventions in addition to presenting an overview of global production and rig count statistics. The second half of the post is effectively Oil Production Vital Statistics for December based on the Energy Matters Global Energy Graphed database.

The Rystad View

The Rystad view on US oil production and future oil price is very different to my own. They see US oil production up 2 Mbpd and a virtually static oil price from 2017 to 2018. Rystad have a vast data base of relevant data and so I would not bet against them being right. Its just that I cannot see any evidence for their forecast in the data I review. Today, Brent was above $69 / bbl and the Rystad view is mean $55 / bbl in 2018. So they are forecasting another oil price crash.

Figure 1 The Rystad Sep 2017 view of US production. This non-zero scaled chart should be compared with actual US production (Figure 2).

Natural Oil Field Production Declines

A good way to summarise oil field operating dynamics is to begin with a spanking new oil field, recently discovered with 10 production wells drilled on it. Once the platform is installed, production begins and because of the high reservoir pressure the oil gushes out at an aggregate rate of 100,000 bpd (barrels per day). In fact, it wants to gush so fast that the wells are chocked back to control the flow.

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