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Page added on January 27, 2016

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Is Non-OPEC Beginning Serious Decline?

Is Non-OPEC Beginning Serious Decline? thumbnail

The EIA’s Monthly Energy Review just came out. They have the U.S. production numbers through December along with World, OPEC C+C, Non-OPEC and selected Non-OPEC nations through October.

Notice: When I use the term “peaked” below, I am referring to the most recent peak, not the all time peak and not necessarily the final peak.

USA

United States C+C production peaked in April at 9,694,000 bpd and has dropped half a million barrels per day by December to 9,191,000 bpd.

USA 2 Year

Here is a 2 year chart of US production that gives an amplified look at what is happening. November and December production is now below November 2014 production.

Non-OPEC

Non-OPEC C+C peaked in December at 47,207,000 bpd and dropped 763,000 bpd to 46,444,000 bpd by October.  The above chart, I believe, clearly shows that Non-OPEC production is in a downward trend. There is little doubt that this trend will continue for the next year or so. The question is how far will it drop before an increase in prices brings back enough upstream investment to turn production back around? And how long will that take?

World

World C+C production peaked in July at 80,531,000 and by October had dropped 461,000 bpd to 80,070 bpd.

Russia

Russia peaked in January at 10,246,000 bpd and in Octber was down 106,000 bpd to 10,140,000 bpd. Russia appears to be on a plateau, likely before a slow decline that begins in 2016.

China

China peaked in June at 4,408,000 bpd and production in October stood at 4,259,000 bpd.

United Kingdom

The United Kingdom has been on a plateau  of about 800,000 bpd for about three and one half years but in October had production up to 912,000 bpd.

Norway

Norway, like the UK, managed to halt its decline about three and one half years ago and has been on a plateau of around 1,600,000 bpd since then. They had a gain of 104,000 bpd in October to 1,685,000 bpd.

Egypt

Egypt is in steady decline. In October their C+C production stood at 509,000 bpd.

For Canada I am using the data from Canada’s National Energy Board. Their numbers are through December and were upgraded just a couple of days ago.

Canada NEB

Canadian production peaked in August but things have not gone so well since then. The decline in April, May and June is something that happens almost every year but the decline in September was an anomaly.

Canada NEB YoY

Canada, for the last four months, has declined in year over year production. And since they had record production in January, February and March, that trend will continue for at least for three more months.

Ambrose Evans-Pritchard and Daniel Yergin come to some startling conclusions. Bold mine.

Wealthy predators eye US shale firms

The question is whether even US shale can ever be big enough to compensate for coming shortage of oil as global investment collapses.

“There has been a US$1.8 trillion reduction in spending planned for 2015 to 2020 compared to what was expected in 2014,” said Yergin.

Yet oil demand is still growing briskly. The world economy will need seven million more barrels a day by 2020. Natural depletion on existing fields implies a loss of a further 13 million barrels a day by then.

Adding to the witches’ brew, global spare capacity is at wafer-thin levels – perhaps as low as 1.5 million barrels a day – as the Saudis, Russians and others produce at full tilt.

Yergin said those hoping for a quick rescue from Opec were likely to be disappointed.

I am of the firm opinion that the vast majority of oil production prognosticators are under estimating the effect of natural depletion of existing fields. Even countries that are increasing production, or are on a production plateau, like Saudi Arabia, Iraq, the UAE, Iran, Russia and others, all have serious depletion problems. Failing to account for this decline when you make your prediction will likely cause a serious error.

Gail Tverberg’s blog,  Our Finite World, published the following chart last week. But the chart was originally created in 2014 by Alliance Bernstein and may not reflect today’s cost as some costs have dropped in the last year. The term “breakeven cost” refers to the cost to produce a barrel of oil and has nothing to do with a country’s budget.

 photo Break Even Point_zpszpgpwtgt.jpg

I do not understand why they thought US conventional was so expensive. However it is interesting to note that Canadian Oil Sands is the most expensive oil in the world.

Nevertheless there is reason to believe that this chart just has production costs way too high. Eyeballing the chart it looks like they have Nigerian cost per barrel at over $60. But this article has a different figure: Oil crash: Nigeria producing at $5 per barrel loss.

LAGOS — As oil prices continue on the downward slide, Nigerian oil firms may be producing at up to $5/barrel loss, as average production costs for independent and marginal field producers is between $30 and $35/barrel.

Peak Oil Barrel by Ron Patterson



42 Comments on "Is Non-OPEC Beginning Serious Decline?"

  1. twocats on Wed, 27th Jan 2016 3:43 pm 

    I notice a bit of a tone-change shift in Ron’s comments where he’s making it more clear what he means by “peak”, as in, the most recent high point. I’m sure he still believes “this is the big one” but at least he’s not trying to read stuff into charts that simply isn’t there… yet.

  2. Apneaman on Wed, 27th Jan 2016 5:24 pm 

    Vacant Office Spaces Pile Up in Houston
    Companies look to unload workspaces with local economy hit by drop in oil prices

    http://www.wsj.com/articles/vacant-office-spaces-pile-up-in-houston-1453804202

  3. sidzepp on Wed, 27th Jan 2016 5:44 pm 

    Several factors to consider;
    1] the increase in ethanol production
    2] is it possible that producers are holding back oil because the price is too low at present

    I noticed on a chart the other day that WTI production spiked considerably when the price of oil sky-rocketed in 2007-08

  4. Davy on Wed, 27th Jan 2016 6:07 pm 

    In my opinion this is the number one near term issue with oil:

    “Is China About To Drop A Devaluation Bomb?”

    http://www.theautomaticearth.com/2016/01/is-china-about-to-drop-a-devaluation-bomb/

    “The real issue is what people would think if Beijing announced a more realistic 2% or less GDP growth number. The thought alone scares Lagarde as much as anyone, including the Politburo. The sole option seems to be to keep lying as long as you can get away with it. But how and where the yuan will be valued by China itself has become entirely inconsequential compared to how markets value the currency.”

    “Beijing might solve some of these problems by devaluing the yuan by 30%, or even 50%, but it would invite a large amount of other problems in the door if it did. Like a full-blown currency war. Still, it’s just a matter of time till Xi and Li either do it voluntarily or are forced to by ‘the market’.”

    “The country is already littered with “zombie” factories, empty apartment blocks that form ghostly suburbs, mothballed power stations and other infrastructure that nobody needs. But yet more wasteful projects are in the pipeline, even as the government talks about cutting industrial overcapacity. “That’s the misalignment—everything else is noise,” says Rodney Jones, the Beijing-based principal of Wigram Capital Advisors, who was a partner at Soros Fund Management during the 1990s. If debt keeps piling up at the current rate, China faces an eventual financial crisis, perhaps leading to years of subpar growth, mirroring the fate of Japan after its bubble burst in the early 1990s.”

    “A sharp devaluation won’t fix these distortions, and might even make matters worse if, as likely, it were to trigger financial mayhem in China’s trading partners. An alternative—further clamping cross-border currency controls—would be a humiliating retreat from Beijing’s policy of making the yuan more international.”

  5. geopressure on Wed, 27th Jan 2016 6:40 pm 

    Hmmm… Israeli Power Grid hit by massive cyber attack…

    One has to wonder: Cyber Attack? or did they run out of oil to turn into electricity?

    I’ll give you a hint: It isn’t a cyber attack!!!

  6. shortonoil on Wed, 27th Jan 2016 7:16 pm 

    “I am of the firm opinion that the vast majority of oil production prognosticators are under estimating the effect of natural depletion of existing fields. Even countries that are increasing production, or are on a production plateau, like Saudi Arabia, Iraq, the UAE, Iran, Russia and others, all have serious depletion problems. Failing to account for this decline when you make your prediction will likely cause a serious error.”

    Depletion never occurs as a result of the shortage of a resource. There are shut down coal, iron, gold, magnesium, etc. mines all over the world that are depleted out, but still contain considerable quantities of raw material. A resource is depleted out when it is no longer economical to continue to produce it, and the depletion process begins when the first ton, yard or barrel is extracted, and continues until shut down.

    Depletion also has nothing to do with production rate, and as we have been saying for some time, the depletion of the world’s petroleum reserve is much more advanced than generally assumed. The petroleum industry, although surely aware of the depletion process, has ignored it in favor of stressing resources, and reserves based on projections of dubious merit. $30 oil has arrived as a reminder that depletion is an ongoing process, and relentless. 70% of the world’s petroleum reserves vanished over the last 19 months.

    http://www.thehillsgroup.org/

  7. Northwest Resident on Wed, 27th Jan 2016 7:33 pm 

    Peak oil, peak depletion, peak energy, peak lies, peak fraud, peak bullshit — we’re living through peak EVERYTHING these last few days of the Age of Oil. What fast approaches will certainly be a “new world order”, just not the one they promised us!

  8. sidzepp on Wed, 27th Jan 2016 7:39 pm 

    http://anonhq.com/not-doom-gloom-africa-just-misrepresentation-facts-media-video/

    A good example of how ignorant we can be in the U.S.

  9. makati1 on Wed, 27th Jan 2016 7:49 pm 

    sidzepp, great article and video. American’s have a very warped picture of the world thanks to the propaganda and brainwashing they are subjected to from birth. Most never leave the 50 states and many never leave the area they were born in.

    Military men who may have been in the Philippines during the Korean or Vietnam wars have ancient/obsolete ideas about the Philippines which they propagate when anyone brings up the subject. Ditto for other parts of the world where the military has been in the past. Few Americans know anyone who travels extensively today. It would be a real eye opener if they got a passport and traveled to Asia or Africa or South America. But, you know this. ^_^

  10. sidzepp on Wed, 27th Jan 2016 7:58 pm 

    Thanks Makati; I had the pleasure of serving two years in the Peace Corps from ’73 to ’75. As a history major I went over with the inbred concept of manifest destiny, the so called city on the hill. Within several months my eyes and my perception opened up to a whole new world out there and rather that judge it from my perspective, it grew to the realization that I had much more to learn than to give.

  11. Apneaman on Wed, 27th Jan 2016 8:02 pm 

    sidzepp, that’s not entirely true. I once heard one of Americas best, brightest and most beloved politicians, Sarah Palin, say Africa is a fine COUNTRY.

    https://www.youtube.com/watch?v=NrzXLYA_e6E

  12. Truth Has A Liberal Bias on Wed, 27th Jan 2016 9:31 pm 

    Declining production AND declining EROI.

    http://youtu.be/ztgz-QOOrs8

    No solutions in sight. I predict a no holds barred survival of the fittest and most ruthless.

  13. makati1 on Wed, 27th Jan 2016 10:04 pm 

    Truth, your prediction will likely hold true. The world is in a declining mode in every area except population, chaos and war. Oil is more like kerosene. Coal is more like peat or wood. Even natural gas is getting more difficult to control and use. Food and water, ditto. Incomes are shrinking in buying power, taking the globalized trade and economy down. The financial world is in slow motion collapse. Etc.

    Not knowing or being in denial will not change anything except your eventual level of pain. It appears that you are prepared or in the process of being prepared. That is a good thing.

  14. Apneaman on Wed, 27th Jan 2016 11:19 pm 

    Truth, the fittest and most ruthless may eat sugar for a while longer, but they will starve and be dead like the rest of the yeast too. Not long either since once it hits the chaos stage the 450 nuke plants will be abandoned by their workers trying to save themselves and their families. Anyone want to debate apes surviving that many meltdowns? Once a few go it will cause a chain reaction of panic and fleeing – all posts will be abandoned as fathers, mothers, sons and daughters will naturally put their families safety first.

  15. Apneaman on Wed, 27th Jan 2016 11:32 pm 

    Anyone remember Bhopal? In a complete crash there will be thousands of these and refiners and gas wells, like porter ranch, and a whole host of industrialized shit melting down and blowing up. We have only ever experienced what happens when the full force of the government and industry responds to these disasters. And still they are nightmares. Just imagine what it will be like when no one shows up to battle them. Best to locate ones bugout on a mountain top – a fucking big one.

    Bhopal: The World’s Worst Industrial Disaster, 30 Years Later

    “Thirty years ago, on the night of December 2, 1984, an accident at the Union Carbide pesticide plant in Bhopal, India, released at least 30 tons of a highly toxic gas called methyl isocyanate, as well as a number of other poisonous gases. The pesticide plant was surrounded by shanty towns, leading to more than 600,000 people being exposed to the deadly gas cloud that night. The gases stayed low to the ground, causing victims throats and eyes to burn, inducing nausea, and many deaths. Estimates of the death toll vary from as few as 3,800 to as many as 16,000, but government figures now refer to an estimate of 15,000 killed over the years. Toxic material remains, and 30 years later, many of those who were exposed to the gas have given birth to physically and mentally disabled children. ”

    http://www.theatlantic.com/photo/2014/12/bhopal-the-worlds-worst-industrial-disaster-30-years-later/100864/

  16. Apneaman on Wed, 27th Jan 2016 11:52 pm 

    Two of the biggest cancer cells must unite to suck the life out of the remaining healthy tissue or die. Oh yeah, we’ll be seeing all sorts of chemotherapy-coalitions forming as we approach the end stage of the cancer.

    Shell shareholders vote for BG Group takeover despite opposition
    More than 80% of investors support deal, but Shell chief Ben van Beurden must win BG investors’ backing to complete merger

    http://www.theguardian.com/business/2016/jan/27/shell-shareholders-vote-for-bg-group-takeover-despite-opposition

  17. makati1 on Wed, 27th Jan 2016 11:56 pm 

    Ap, as you say, I think too many never think through to the FULL reality of collapse. You gave a good example of what is likely to occur when it really gets going. No exaggeration needed.

    We have built a huge suicide machine called nuclear energy along with too many systems that will fail and aid the destruction. No one is going to go to work and leave their family to the ravages of the hoards to properly shut down and store the hundreds of thousands of tons of nuclear spent fuel, not to mention the thousands of tons in process when the SHTF.

    If the deniers expect some type of police force or military to protect them, they are in for a surprise. The police will go home to protect theirs. not someone else’. Ditto for the military.

    I read the unicorn huggers version of the future and either laugh or shake my head in sadness for them and theirs. There is no past historical situation to match the one we are living in and moving toward. None.

    How fast it happens is the only question, but if you are under 50, you will see and experience it in the full. Those of us older may also get to see most of it, or all of it. I suspect it will be like and avalanche and will pick up speed as it moves down hill. No one will be able to avoid it. No one.

  18. Apneaman on Thu, 28th Jan 2016 12:07 am 

    Merging cancer cells all over the place.

    How oil and gas companies are dealing with low prices

    “But while prices have halved over the past year, the number of mergers and acquisitions has most definitely not. And a surge in deal making can be expected over the coming year.

    Already there is a US$60 billion deal between energy giants Royal Dutch Shell and BG Group, with a proposed merger of the second and third largest global oil services firms, Halliburton and Baker Hughes, also on the cards. Meanwhile, numerous smaller deals are taking place: two Canadian companies, Suncor Energy and Canadian Oil Sands, recently merged to form the biggest player in one of Alberta’s main oil sands operations.”

    http://theconversation.com/how-oil-and-gas-companies-are-dealing-with-low-prices-52928

  19. Plantagenet on Thu, 28th Jan 2016 12:13 am 

    Good to see non-Opec oil production finally going down. If demand continues to grow then the eventually the current oil glut will end. Just when it will end is hard to say, especially with a large amount of new oil from Iran now coming into the market.

  20. Apneaman on Thu, 28th Jan 2016 12:27 am 

    mak, I kind of picture it happening in a country like Ukraine first. What’s going to happen? Will the west just sit there or will they mobilize their resources to bail? It would be in their interests, but also a huge drain. The 1% corporate masters have interests in many places. Will they just let their investments die or will they use their influence to send NATO/UN in on a “humanitarian” mission? What about the next ebola like crisis? They were mighty slow on that last one from a bureaucratic perspective. There is still no shortage of Doctors, volunteers and military personnel who are willing to put their ass on the line, but the leadership is failing. These duty bound people will only put up with so many fuck ups before they lose heart.

  21. GregT on Thu, 28th Jan 2016 1:15 am 

    “If demand continues to grow then the eventually the current oil glut will end.”

    Oil glut, oil glut, oil glut, oil glut. It’s been over a year now since you began your non stop ridiculous chant planter. In the mean time, all of those economies that rely on a continuous supply of cheap energy have not recovered, and continue to go into decline. You haven’t been able to figure it out yet, and you probably never will. Keep up the great work girl, a real maverick you are.

  22. John on Thu, 28th Jan 2016 5:19 am 

    Ron Patterson has been proclaiming wrongly that one country or another had peaked. He claimed Russia had peaked in 2012.
    http://www.theoildrum.com/node/9840

    Obviously is you claim peak oil in 2012,2013,2014..2022 at some point you will be right. However at some point people just get bored and stop listening.

    So many on the defunct oil drum did a huge disservice to peak oil with their ill educated hysteria.
    Intellectual analysts who correctly were cautious about declaring peak oil were drowned out by the likes of Ron the wrong.

  23. JuanP on Thu, 28th Jan 2016 7:06 am 

    “I am of the firm opinion that the vast majority of oil production prognosticators are under estimating the effect of natural depletion of existing fields.”

    I agree with Ron and Short that this issue does not get the attention it deserves in future oil production capacity analyses or articles on the subject. I know this is an issue that is always in my mind. When I read articles on these subjects, I am constantly asking myself “But what about the 3-4 mbpd of oil production we need to replace every year just to keep production steady?”

  24. JuanP on Thu, 28th Jan 2016 7:21 am 

    Mak & Ap, I used to pay no thought to nuclear plants or bombs when I was younger. Even after moving to Miami, I was not concerned about living less than 25 miles away from a nuclear power plant. I have completely changed my mind on this subject. Now I am convinced that many, probably most, nuclear plants will have huge problems. I also now think that it is highly likely that many, maybe most, nuclear bombs will be used at some point.

    This change of perspective was a major point in my decision to buy land in Uruguay rather than in the Florida lakes area, as we had originally planned. The Turkey Point nuclear power plant is likely to go Fukushima during a major hurricane in the future. It is ery similar to the Fukushima one with, I believe almost identical design and location flaws. Miami possibly will also get nuked at some point. We are definitely not doing anything about giving the Russians a reason not to other than threatening them with our nukes, at some point of time in the future that may not hold them back.

  25. JuanP on Thu, 28th Jan 2016 7:23 am 

    Ap “mak, I kind of picture it happening in a country like Ukraine first.” I agree. Ukraine is a leading and pioneering country in so many ways. 😉

  26. JuanP on Thu, 28th Jan 2016 7:33 am 

    I forgot to mention nuclear fuel waste. We will completely fail to deal with this as a species. We probably won’t even remove most rods from the cooling pools. Past experience is proof enough of certain future failure. Where these issues are concerned we have failed miserably so far.

    It was not increased knowledge of nuclear energy, radioactivity, nuclear plants, or nuclear bombs that changed my mind, it is my increasing acceptance of the multiple limitations of our animal nature as a species. We humans simply are less smart than yeast!

  27. makati1 on Thu, 28th Jan 2016 8:49 am 

    JuanP, the cost to safely decommission a nuke plant is more than most governments can afford even today. There is all of that spent fuel that cannot be ignored for the next 1,000+ years. Around the world, it adds up to hundreds of thousands of tons.

    As for Russia, yes, if they get pushed into a corner where Russia may lose it’s sovereignty, they just might launch a first strike. Or, it may be the Us if they think they are going to lose all of their power. Heads or tails, we all lose, but insanity rules Washington these days. Throw in wild cards like North Korea, Israel, or even Pakistan/India and who knows?

    Yes, south of the equator is safer than in the north. By the time radiation gets there, it may be diluted enough to allow you to survive. Who knows? But, just getting out of the Us was the best decision, I think.

  28. Boat on Thu, 28th Jan 2016 10:41 am 

    mak,

    When are you going to a stable message. First you advise to prep for the coming big event. Then you discuss nuke meltdowns that no one can escape. So why prep then?

  29. Boat on Thu, 28th Jan 2016 10:47 am 

    It was not increased knowledge of nuclear energy, radioactivity, nuclear plants, or nuclear bombs that changed my mind, it is my increasing acceptance of the multiple limitations of our animal nature as a species. We humans simply are less smart than yeast

    Your only a few decades behind most of the human race there Juan. Glad you figured out your one of the dumb ones.

  30. GregT on Thu, 28th Jan 2016 12:01 pm 

    “Glad you figured out your one of the dumb ones.”

    Where’s Davy when you need him the most Boat? Maybe he can help you out here?

  31. GregT on Thu, 28th Jan 2016 12:06 pm 

    Yes mak,

    “When are you going to a stable message.” Inquiring minds would like to know.

  32. Davy on Thu, 28th Jan 2016 12:17 pm 

    Greg, you are a dandy. I bet you wear tight pants and pee sitting down.

  33. GregT on Thu, 28th Jan 2016 12:57 pm 

    “Greg, you are a dandy.”

    Thanks Davy, although your customs are somewhat strange to me, I’ll give it my best. You are a dandy too?

    “I bet you wear tight pants and pee sitting down.”

    I bet you get along just swell with the ladies, they love comments like that. Any more pointers? My relationship could use some spicing up.

  34. Davy on Thu, 28th Jan 2016 1:31 pm 

    Greg, that is what pussies do. That’s all.

  35. GregT on Thu, 28th Jan 2016 2:19 pm 

    Davy,

    I happen to really like pussies, and don’t prefer dicks. That’s all.

  36. Davy on Thu, 28th Jan 2016 4:47 pm 

    Greg, dicks yank chains for no reason and pussies don’t know when to stop. I guess that makes you a she-male.

  37. makati1 on Thu, 28th Jan 2016 5:58 pm 

    GregT, Boat is a perfect example of the dumbed down America today. He needs to pay attention to his grammar and punctuation, if he wants respect. A foreigner who speaks/writes English as a second language can be excused for incorrect word usage, but…

  38. makati1 on Thu, 28th Jan 2016 6:01 pm 

    Boat, you buy insurance on your home don’t you? Do you expect it to burn down just so your prep will be worth the effort/expense? How about your car insurance? I prep for the possibility that we will avoid the nukes, but if it happens I will have lost nothing.

  39. Boat on Thu, 28th Jan 2016 7:20 pm 

    Mak,

    I am ot back to work a few months go closet prepper by accident. A very good friend was hurt in an accident and finally got back to work a few months ago. Then he contracted shingles and was set back another month. He has cattle soon chickens, soon pigs, goats, turkeys and soon a garden. I agreed to work for him to help his cash flow.
    Soon I will start being paid in meat. In fact he just got a couple projects that will keep us busy for three weeks. He has 60 chickens showing up in eight weeks so we have a pen to build soon. So now I am a semi prepper. LOL Were shopping around for a large chest freezer.

  40. GregT on Thu, 28th Jan 2016 7:21 pm 

    “Greg, dicks yank chains for no reason and pussies don’t know when to stop. I guess that makes you a she-male.”

    Pretty hard to argue with ‘logic’ like that Davy. You’re the winner! 🙂

  41. Davy on Thu, 28th Jan 2016 7:42 pm 

    The logic is to give it a rest and avoid starting it in the first place. That is what a winner does.

  42. makati1 on Thu, 28th Jan 2016 9:36 pm 

    Boat, good for you! I know we pull your chain on here, but all we know is what we read. And sometimes we ‘assume’ the wrong thing because the writer didn’t get his message across clearly.

    I would not want to be in your shoes, or those of many other’s on here. It is when someone denies that their country is a shit can full of loafers and teat suckers that is destroying the world, that lights my fuse. But, I have decided to ignore them. They will be judged by the future and found wanting.

    Good luck on your prepping. It is not a waste, even if an impossible miracle happens and the future is just more of the same.

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