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July Non-OPEC and World Oil Production

July Non-OPEC and World Oil Production

The EIA continues to have problems with updating its World oil production website. Consequently, this month’s report is again a shorter version of previous posts because the EIA’s International Energy Statistics update for June and July is not available. Information from other sources such as OPEC, the STEO and country specific sites such as Brazil, Norway and China are used to provide a short term outlook for future output and direction for a few of these countries and the world.

Where STEO data was used, the ratio of C + C to All Liquids was calculated. The average for the last six months up to May was used to project June and July production and in a few cases August production.

World oil production and projection charts are presented at the end of this post.

The current May International Energy Statistics has been updated to correct for the missing condensate production in the previous Russian file and is used for this report.

July Non-OPEC oil production increased by 520 kb/d to 52,245 kb/d and is up 1,706 kb/d from May. Close to 500 kb/d of the June increase is related to the EIA’s condensate correction for Russia in the EIA’s updated May International Energy Statistics. In the previous EIA May report, Russian condensate was not included in Russian production.

Using production data from the November 2023 STEO and the updated May EIA International Energy Statistics, a projection for Non-OPEC oil output was made for the period August 2023 to December 2024. (Red graph).  Output is expected to reach 53,377 kb/d in December 2024, which is 969 kb/d higher than the December 2019 peak of 52,408 kb/d. August production is expected to increase by 27 kb/d.

From August 2023 to December 2024, oil production in Non-OPEC countries is expected to increase by 1,105. Note that production is expected to be relatively flat till May 2024.

July Non-OPEC W/O US production increased by 455 kb/d to 39,286 kb/d.

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OPEC+ Discussing 1 Million Bpd Output Cut

OPEC+ Discussing 1 Million Bpd Output Cut

Oil prices were trading up on Friday afternoon as shorts got a little nervous heading into the OPEC+ weekend, with new rumors circulating about the group’s discussions about another 1 million bpd in production cuts.

The OPEC+ group is scheduled for three separate meetings beginning this weekend and concluding on June 4.

While the general sentiment has been that the group will keep the status quo as far as production targets are concerned. But Saudi Arabia’s Energy Minister has made boisterous threats against oil’s speculators in the runup to the meeting, saying that shorts will be “ouching”.

On Thursday, Reuters suggested that the OPEC+ group would be unlikely to deepen its production targets at the meeting this weekend.

But late on Friday, Reuters suggested that OPEC+ was indeed discussing an additional output cut of around 1 million barrels “among possible options” for the meeting on June 4.

“Everything is on the table,” Iran’s OPEC Governor Amir Zamaninia told reporters in the Austrian capital.

Crude oil prices were already trading up ahead of the meeting, but increased even more in the afternoon hours, bringing Brent crude to $76.32 at 4:20 p.m., a $2.06 per barrel increase on the day. WTI was trading at $71.90 per barrel at that time.

A supply reduction of as much as 1 million barrels a day is the most likely outcome, according to RBC’s Chief Commodities Strategist Helima Croft.

“We think that the continued macro worries and soured sentiment will lead the group to make another downward adjustment,” she said in a note.

But Saudi Arabia appears to still be in control of OPEC+, and The Kingdom could decide to make good on his threats to punish short sellers for their speculative trades that fly in the face of market fundamentals.

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Peak-Oil Fears Cast Shadow Over US Supply Outlook as Costs Climb

Peak-Oil Fears Cast Shadow Over US Supply Outlook as Costs Climb

(Bloomberg) — The specter of peak oil that haunted global energy markets during the first decade of the 21st century is once again rearing its head.

Major US oil producers are warning that production from one of the fastest growing sources of supply appears likely to top out by the end of the decade. ConocoPhillips and Pioneer Natural Resources Co. are among those saying the American shale-oil juggernaut soon will be a spent force as the best drilling targets are exhausted and financing new wells gets more difficult.

“You see the plateau on the horizon,” ConocoPhillips Chief Executive Officer Ryan Lance said during a panel discussion at the CERAWeek by S&P Global conference in Houston on Tuesday. Once US crude production peaks around 2030, it’ll plateau for a time before commencing a decline, he added.

Government and private-sector researchers have been cutting forecasts for 2023 US oil-supply growth in the face of surging cost inflation, labor shortages and investor demands that more cash be diverted from drilling to dividends and buybacks. Although output in the world’s biggest economy is set to continue rising for a least a few more years, the zenith is fast approaching, executives and analysts said.

“I wish we could get world leaders to realize that we need hydrocarbons for another 50 years,” said Pioneer CEO Scott Sheffield, who expects US production to peak in five or six years.

Before the dawn of the shale-oil revolution, theorists like the late investment banker Matthew Simmons were issuing dire warnings that the Middle Eastern oil bonanza that fed more than half a century of unprecedented economic expansion across the Western world was unsustainable.

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New EIA Report Reveals Massive Downward Reductions In US Shale Oil Output

New EIA Report Reveals Massive Downward Reductions In US Shale Oil Output

Readers will recall that, for the last several months, I have noted that US oil production per the EIA’s weekly Petroleum Status Report was inconsistent with the data from the EIA’s monthly Drilling Productivity Report (DPR)

The graph below shows that state of play as of last week.  The two red arrows at right show the contradictory trends, with total oil production essentially flat while shale oil production is shown rising at a healthy clip.  I have noted that this contradiction would have to be resolved by either increasing the weekly numbers or reducing shale oil output.

We now have the answer.

The graph below shows the state of play as of March 14th, when the EIA issued the March DPR.  It shows simply massive downward reductions in US shale oil output.  In the March report, shale oil output from the key plays is reduced by 443,000 bpd for January and 250,000 bpd for February.  If we go back one more month to the January DPR, shale oil production has been reduced by 542,000 bpd for December 2022.  This is a huge revision, more than 4% of total US crude and condensate production over a two month period.

With this revision, as the current graph (below) shows, US shale oil production is largely flat over the last four months, and trends in shale oil supply are consistent with the overall US crude oil supply (including conventional onshore wells, Gulf of Mexico offshore, and Alaska).  I need hardly point out that this is not good news, as the visible peak of horizontal oil rigs is now beginning to pair up with plateauing oil production, just as we would expect.

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OPEC Output Drops As Saudi Production Falls By 156,000 Bpd

OPEC Output Drops As Saudi Production Falls By 156,000 Bpd

Crude oil production from all 13 OPEC members slid by 49,000 barrels per day (bpd) in January from December as top producer Saudi Arabia slashed output by 156,000 bpd, OPEC’s latest Monthly Oil Market Report (MOMR) showed on Tuesday.

OPEC’s crude oil production in January fell by 49,000 bpd from December to average 28.88 million bpd, according to secondary sources in OPEC’s report.

Saudi Arabia, the biggest producer and de facto leader of the cartel, pumped 10.319 million bpd in January, down by 156,000 bpd month on month, and more than 100,000 bpd below its quota of 10.478 million bpd as part of the OPEC+ agreement, set out at the October meeting and valid from November 2022 through December 2023, or until OPEC+ decides otherwise.

A Bloomberg survey found earlier this month that OPEC’s crude oil production fell in January due to cuts by Saudi Arabia which may have been steeper than the Kingdom’s quota.

Saudi Arabia, however, self-reported to OPEC that its crude oil production averaged 10.453 million bpd in January, up by 17,000 bpd from December.

According to OPEC’s secondary sources, Nigeria and Angola boosted their production the most, by 65,000 bpd and 47,000 bpd, respectively. But these producers are among the biggest laggards in their OPEC+ targets—they continue to pump well below their quotas.

The monthly Reuters survey pegged OPEC’s January production nearly in line with the OPEC figures from secondary sources reported today—production at 28.87 million bpd, down by 50,000 bpd from December.

The 10 OPEC members that are part of the OPEC+ collective target production were estimated to have produced around 920,000 bpd below the January target, per the Reuters survey.

Going forward, OPEC and OPEC+ don’t plan to change the course in oil production targets after Russia announced last week a 500,000 bpd cut in its output for March.

Oil To Face “Serious” Supply Problem In 2024 As Production Capacity Runs Out, Goldman Warns

Oil To Face “Serious” Supply Problem In 2024 As Production Capacity Runs Out, Goldman Warns

Heading into 2023, Goldman was bearish on most asset classes, except commodities where the bank forecast a 43% gain as “supply shortages bite.” Since then the commodity picture has ebbed and flowed, and after commodities experienced a modest bounce following China’s unexpected reopening, they have resumed sinking with oil trading just above the Biden admin’s (supposed) SPR refill floor of $72, despite a near consensus that Chinese oil demand will hit record highs in 2023.

So has the recent setback dented Goldman’s optimism? Not at all: in fact, according to Goldman chief commodity strategist, not only will oil rise back above $100 a barrel this year, it will rise much more in 2024 when it will face a serious supply problem as spare production capacity runs out.

Speaking on the sidelines of a conference in Riyadh, Saudi Arabia, on Sunday, Goldman chief commodity strategist Jeff Currie said that with sanctions likely to cause Russian oil exports to drop and Chinese demand expected to recover as the country ends its Covid Zero policy, prices will rise above $100 from their current level of around $80. Meanwhile, doubling down on his key long-term thesis, Currie said that a lack of spending in the industry on production needed to meet demand will also be a driver of higher prices, and this lack of capacity may become a big issue by 2024.

“The commodity super cycle is a sequence of price spikes with each high higher and each low higher,” said Currie, who predicted that by May, oil markets should flip to a deficit of supply compared to demand. That could use up much of the unused capacity global producers have, which will send prices higher.

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US EIA Short Term Energy Outlook, Jan 2023

US EIA Short Term Energy Outlook, Jan 2023

The US EIA Short Term Energy Outlook (STEO) was published on January 10, 2023. This report generally provides forecasts for Total Liquids production for non-OPEC nations, crude only output for OPEC nations, and both C+C and Total Liquids forecasts for the US. At Peak Oil Barrel we focus on crude plus condensate (C+C) output as this is the critical input that provides most of the World’s liquid fuels used for land, air and water transportation. The STEO also provides forecasts for natural gas and electricity output as well as price forecasts for oil, natural gas, and electricity. This post will focus on oil (both total liquids and C+C).

We find the OLS trend in the ratio of C+C divided by total liquids for non-OPEC minus the US over the period from October 2014 to September 2022 (it has been decreasing at an annual rate of 0.267% over that period) and we assume the trend continues from October 2022 to December 2024 (the end of the STEO forecast). This allows us to estimate non-OPEC minus US C+C. Likewise we find the ratio of OPEC crude to C+C which was relatively flat at about 93.7% from Jan 2010 to December 2019 and seems to be returning to this level since the depths of the pandemic. By assuming the ratio is 93.7% crude to C+C for OPEC we can estimate OPEC C+C from October 2022 to December 2022 using the STEO crude only estimate. The non-OPEC minus US C+C estimate is added to the STEO US C+C estimate and this is combined with the OPEC C+C estimate to find the World C+C STEO forecast.

Figure 1

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US October Oil Production Pushed Higher by New Mexico

US October Oil Production Pushed Higher by New Mexico

All of the Crude plus Condensate (C + C) production data for the US state charts comes from the EIAʼs December Petroleum Supply monthly PSM which provides updated information up to October 2022.

U.S. October production increased by 69 kb/d to 12,381 kb/d to a New post pandemic high.  It should be noted that September’s oil production increase of 289 kb/d to 12,268 kb/d which was reported last month and was considered high, was revised further up by 44 kb/d to 12,312 kb/d in the current October report. For September, the state with the largest increase was New Mexico 41 kb/d, along with a number of small increases from the smaller producing states.

While overall US oil production increased, a clearer indication of the health of US production can be gleaned by looking more closely at the Onshore L48 states.  In the Onshore L48, October production increased by 69 kb/d to 10,104 kb/d. This means that 100% of the increase in US production came from the Onshore L48.

The blue graph, taken from the December 2022 STEO, is the production forecast for the U.S. from November 2022 to December 2023. Output for December 2023 is expected to be 12,614 kb/d, 34 kb/d higher than reported last month.

Note that production in October 2023 is forecast to be lower than in October 2022. The flatness in overall US output up to October 2023 is because the production increase in the Onshore L48 of 506 kb/d from December 2022 to December 2023 is offset by declining production in the GOM. See GOM chart further down.

The red OLS line from June 2020 to October 2022 indicates a monthly production increase of 53.2 kb/d/mth over that period. The first portion of red line stops at October because that is the range covered by the OLS analysis. The second portion is the same OLS line extended to see how well it fits the STEO forecast.

Oil Production Ranked by State

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With U.S. shale oil boom over, can world production climb?

With U.S. shale oil boom over, can world production climb?

Prior to the pandemic-induced downturn in world oil production, U.S. oil production growth was responsible for 98 percent of the increase in world production in 2018 (as reported in 2019). Almost all of that growth resulted from rapid increases in shale oil production which accounted for 64 percent of U.S. production (as of 2021).

Fast forward to today when OilPrice.com has declared that “The U.S. Shale Boom Is Officially Over.” The reasons cited mostly have to do with management “discipline” regarding capital expenditure in favor of shareholder payouts and complaints about “anti-oil rhetoric” and “regulatory uncertainty.”

But there might just be another reason for the slowdown in shale oil production in the United States: There isn’t as much accessible and economical shale oil underground as advertised. Earth scientist David Hughes laid out his case for this view in his “Shale Reality Check 2021.” (For a summary of Hughes’ report, see my piece from December 2021 entitled, “U.S. shale oil and gas forecast: Too good to be true?”)

There may be other sources of oil worldwide that will somehow make up for the significantly lower growth in U.S. shale oil production. But no other source seems set to provide the kind of growth U.S. shale oil provided, that is, 73.2 percent of the global increase in oil production from 2008 through 2018.

The world has actually been getting along with less oil for some time now. World oil production proper (crude oil including lease condensate) peaked on a monthly basis in November 2018 at 84.58 million barrels per day (mbpd). In August 2022 production was 81.44 mbpd. That’s after a pandemic-induced shock that saw production fall to 70.28 mbpd in June 2020.

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OPEC Production Fell In November, But 3 Members Actually Boosted Output

OPEC Production Fell In November, But 3 Members Actually Boosted Output

OPEC’s crude oil production fell by an average of 744,000 barrels per day, according to OPEC’s Monthly Oil Market Report released on Tuesday.

Saudi Arabia’s November production fell by the most among its members, by 404,000 bpd, to 10.474 million bpd—Saudi Arabia’s lowest monthly average since May 2022.

Other significant production decreases were realized by the United Arab Emirates, which saw a decrease of 149,000 bpd in November, landing at 3.037 million bpd; Kuwait, which saw a dip of 121,000 bpd to 2.685 million bpd; and Iraq with a loss of 117,000 bpd to 4.465 million bpd.

Overall, OPEC’s average production for November fell to 28.826 million bpd—the lowest average production level since June.

While the overall production was significantly lower for November and largely in line with OPEC’s plan to reduce output in response to market conditions, a handful of members increased their production.

Libya’s production also decreased by 32,000 bpd, to 1.133 million bpd. Earlier this week, Libya’s oil minister said its oil production was 1.2 million bpd. “We hope to return to 2010 levels, which was 1.6 million bpd, within two or three years,” Oil Minister Mohamed Oun told reporters on Monday.

Libya lifted its force majeure on oil and gas last exploration last week in hopes of luring foreign oil companies back into the country that has seen significant unrest in recent years.

Angola, Gabon, and Nigeria went the other way, increasing their production by a collective 132,000 bpd.

While OPEC saw its overall crude production fall, non-OPEC liquids production, according to OPEC’s latest report, increased month on month in November by 800,000 bpd to 72.7 million bpd. This figure is also 2.1 million bpd higher than the same month last year.

This means that OPEC’s share of crude oil in the global production mix slipped by 0.7%, to 28.4% in November from the month prior.

The “Oil Curse” and Splashy PR Announcements of Oil Production Cuts

The “Oil Curse” and Splashy PR Announcements of Oil Production Cuts

It’s not just the price of oil that matters: how much disposable income consumers have left to buy more goods and services matters, too.

The Oil Curse (a.k.a. The Resource Curse) refers to the compelling ease of those blessed with an abundance of oil/resources to depend on that gift for the majority of state/national revenues. The risks and demands of developing a diverse, globally competitive economy don’t seem worth the effort when the single-source wealth of oil offers such a low-risk bounty of revenues.

This dependence becomes a curse when the market value of the oil/resources plummets. Having come to depend on that seemingly inexhaustible source of massive revenues, even states that have set aside prudent reserves soon find their expenses cannot align down to diminished oil revenues without unbearable political/social pain.

The ideal solution to this problem is to jawbone oil prices higher by splashily announcing major cuts in oil production and then ignoring the proposed cuts to pump as much oil as possible to restore spending to politically viable levels.

The problem is every other oil producer is pursuing the same game plan and so production doesn’t actually decline. As global demand continues sagging in a global recession, oil supply remains at high levels. Since oil and other commodities are priced on the margin, even modest misalignments of supply and demand can generate huge swings in price.

There is no real enforcement of heavily promoted production cuts. The pressure on every oil producer is to assure the world they’re complying to cover the reality that they’re not actually cutting production because they can’t afford to lose any more revenues.

The price of oil appears to be reflecting the global recession that’s baked into receding stimulus and liquidity and higher inflation

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UAE Plans $150 Billion Spending Spree To Boost Oil Output To 5MM Barrels By 2027

UAE Plans $150 Billion Spending Spree To Boost Oil Output To 5MM Barrels By 2027

With oil tumbling ahead of the grueling 2023 recession, the last thing OPEC+ and (bullish) oil traders wanted to see is even more supply coming on line, and yet that’s precisely what the a core gulf hub is proposing. According to Bloomberg, the United Arab Emirates – which in recent years has aggressively sought to diversify away from oil and to become the world’s crypto hub – will look to revert back to its core competency and plans to expand its global energy – and especially energy spending – to boost oil and natural gas production capacity.

Abu Dhabi National Oil Co., also known as Adnoc, will invest $150 billion in the five years through 2027, it said in a statement Monday. That’s an increase on the previous spending plan of $127 billion over five years that was announced a year ago.

The spending spree will try to raise crude output capacity to 5 million barrels a day by 2027, earlier than the previous target of 2030 and comes at a time  when Saudi oil giant Aramco is also planning to expand its output by 12 million by 2027.

The UAE is the largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia and Iraq. It’s spending billions of dollars to pump more oil and gas, even as the country strives to reach net-zero carbon emissions by 2050.
Oil producers have benefited for most of this year from surging prices, driven in party by Russia’s invasion of Ukraine. While Brent crude has fallen back to near where it started the year, it climbed to more than $100 a barrel in February.

Adnoc will also form a new unit for gas processing and marketing, according to a statement. It will look to sell a minority share of the business, called Adnoc Gas, through an initial public offering in Abu Dhabi in 2023.

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Oil Production by Country 2022 – Monthly Update

Oil Production by Country 2022 – Monthly Update

June Non-OPEC Oil Production Rises from U.S. and Russia Boost

June Non-OPEC Oil Production Rises from U.S. and Russia Boost

Below are a number of Crude oil plus Condensate (C + C ) production charts for Non-OPEC countries created from data provided by the EIA’s International Energy Statistics and updated to June 2022. This is the latest and most detailed world oil production information available. Information from other sources such as OPEC, the STEO and country specific sites such as Russia, Brazil, Norway and China is used to provide a short term outlook for future output and direction for a few countries and the world. The US report has an expanded view beyond production by adding rig and frac charts.

June Non-OPEC production increased by 178 kb/d to 48,990 kb/d. The largest increases came from Russia, 510 kb/d and the U.S., 201 kb/d. The largest offsetting decreases came from Kazakhstan, 381 kb/d and Norway, 285 kb/d. 

Using data from the October 2022 STEO, a projection for Non-OPEC oil output was made for the time period July 2022 to December 2023. (Red graph).  Output is expected to be 50,266 kb/d in December 2023. This forecast is 608 kb/d lower than predicted in the September report due to significant downward changes in the October STEO.

The large increase in July is due to a 1,600 kb/d increase in all liquids over June forecast in the October STEO. The C + C projection reduces the 1,600 kb/d increase to 1,084 kb/d.

Note that the September 2022 high of 50,588 kb/d is the high for all of 2022 and 2023.

The red capacity decline line represents an average decline rate for Non-OPEC countries over the four years since December 2019 and is combination of the natural decline rate plus possible reduction in exploration and production capacity/investment.

Non-OPEC Oil Production Ranked by Country

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OPEC Update, September 18, 2022

OPEC Update, September 18, 2022

The OPEC Monthly Oil Market Report (MOMR) for September 2022 was published recently. The last month reported in most of the OPEC charts that follow is August 2022 and output reported for OPEC nations is crude oil output in thousands of barrels per day (kb/d). In most of the OPEC charts that follow the blue line is monthly output and the red line is the centered twelve month average (CTMA) output.

Figure 1
Figure 2

OPEC output increased by 618 kb/d in August after being revised higher in July 2022 by 37 kb/d and June 2022 output was revised up by 5 kb/d compared to last month’s MOMR. The bulk of the August increase in OPEC output (69%) was from Libya(426), with smaller increases from Saudi Arabia(160), Kuwait(37), and UAE(33). Nigeria had a decrease of 65 kb/d. The rest of the OPEC producers had small increases or decreases of less than 20 kb/d with a total increase of 25 kb/d for all 8 nations.

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