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Non-OPEC W/O U.S. On Production Plateau

Non-OPEC W/O U.S. On Production Plateau thumbnail

A post by Ovi at peakoilbarrel.

This post updates Non-OPEC production to February 2020. However we are now in late June 2020 and the effects of the plunge in the price of WTI which began on January 6 and ended in the negative low of $-37.63/bbl on April 20 is showing up in plunging production numbers in US and other oil producing countries that post more recent output numbers. However WTI has now recovered to close to $40/b and weekly US production numbers are indicating that output may have bottomed.

OPEC, in response to the reduced worldwide demand associated with the outbreak of the CV pandemic, arranged a production reduction agreement through a Declaration of Cooperation (DoC) with OPEC and Non OPEC countries. At this time, the output reduction is only being seen in those Non-OPEC countries that provide one month lagged production numbers, i.e., Russia, Norway and Brazil.

Bloomberg reported that OPEC and its partners have tentatively agreed to extend their initial production curtailments for another two months. The group planned to curb its combined output by 9.7 million barrels per day (BPD) in May, the reduction to taper off to 8 million BPD through the end of this year. However, it now plans to maintain the reduction of 9.7 million BPD through the end of July. That will provide the global economy with more time to recover and burn off excess inventory.

Below are a number of oil (C + C) production charts for Non-OPEC countries created from data provided by the EIAʼs International Energy Statistics and updated to February 2020. Information from other sources, such as OPEC and recent news reports and country specific sites, is used to provide future output for a few countries for a month or two.

Non-OPEC production dropped from a high of 52,618 kb/d in December 2019 to 52,353 kb/d in February 2020. February’s output of 52,353 kb/d, was down by 164 kb/d from January.

This Non-OPEC output projection was made using information from the June STEO and the EIA’s monthly C + C International Energy Statistics. If correct, Non-OPEC production will bottom in June 2020 at 46,701 kb/d and then begin to recover. From March to June, production dropped by 5,138 kb/d. Output is projected to be down by 1,888 kb/d in November 2021 from the high of December 2019. Of the 1,888 kb/d, 1,740 kb/d are primarily from declines in US tight oil fields.

Above are listed the worldʼs 14th largest Non-OPEC producers. They produced 86.9% of the Non-OPEC output in February. On a YoY basis, Non-OPEC production was up by 1,913 kb/d while world oil demand was down by close to 1,250 kb/d in Q1- 2020. In February 2020 Non-OPEC output accounted for 63.6% of world oil supply and Non-OPEC W/O US accounted for 48.1% of world supply.

Brazil’s production peaked in January 2020 at 3,168 kb/d. The EIA reported February output of 2,972 kb/d. March and April data, the last two points, were obtained from this source where it was reported that April output was 2,958 kb/d, down by 15 kb/d from March. Petrobras had planned to reduce production by 200 kb/d in May but reversed those cuts amid resilient Chinese demand.

According to the Canada Energy Regulator, Canadian production will drop by 108 kb/d from December 2019 to March 2020 as shown by the separate red graph. The EIA shows production was up in February by 24 kb/d. The CER data is higher because it includes NGPLs in their estimates.

Alberta’s monthly production limits for raw crude and bitumen are currently set at 3.81 Mb/d from December 2019 to August 2020.

Alberta has also introduced a special production allowance provision. Effective December 2019, operators can apply, on a monthly basis, to increase oil production – if the additional product is moved by new rail capacity – in order to meet increasing demand. In April Canadian crude exports to the US by rail were 156,242 b/d, down by 194,325 b/d from March exports of 350,567 b/d.

China’s production decreased by 62 kb/d in February. Chinese companies are increasing capex to maintain production. According to OPEC’s May report, China’s production in March increased by 39 kb/d to get back to 3,900 kb/d (Red dot).

Mexico continues its slow steady output increase. In February, Mexico’s production increased by 4 kb/d to 1,756 kb/d. Data from Pemex shows that production increase by 15 kb/d in March and dropped by 25 kb/d in April, red dot, to 1,746 kb/d. Under the DoC, Mexico has committed to reduce output by 100 kb/d in May.

Kazakhstan production hit a new output high in February, 1,976 kb/d, 31 kb/d higher than January.

Norway’s output rebounded by 107 kb/d in February to 1,790 kb/d according to the EIA which agreed with the NPD report. The red lines indicate production going forward as outlined by the NPD. In January’s post, an NPD press release indicated that Norway’s output for May would 1,859 kb/d. It also noted that it would cut production by 100 kb/d as part of the OPEC + DoC. The blue dot shows May production came in at 1,760 kb/d which indicates that Norway is in compliance with the DoC.

This is the first sign of how the principal countries that have signed onto the OPEC + Declaration of Cooperation (DoC) are responding to their commitments.

Shown in red is a modified version of Russian oil output as reported by the Russian Ministry of Energy. It is higher than the EIA numbers because it includes NGPLs. According to the Russian Ministry of energy, Russian production dropped by 1,951 kb/d in May to 9,388 kb/d.

UK’s production dropped by 13 kb/d in February to 1,068 kb/d.

This US production chart is tentatively updated to May and shows the continuous slow decline in oil output from US oil fields from November 2019 to May 2020. March output was 12,716 kb/d, down by 28 kb/d from February’s 12,744 kb/d. Also it should be noted that February’s output estimate from the EIA’s earlier May report, 12,833 kb/d, has been revised down to 12,744 kb/d, a downward revision of 89 kb/d.

The Red dot is the projected April output, 12,143 kb/d, taken from the June Monthly Energy Review. The June STEO is projecting April output of 12,380 kb/d for the US, much higher than the MER. Averaging the latest EIA weekly data gives 12,160 kb/d for April, close to the June MER. Using the EIA weekly data, May drops to 11,419 kb/d, orange dot. The June MER estimates May output at 11,394 kb/d, 25 kb/d lower than the weekly average.

The STEO is projecting a major drop of 2.12 Mb/d in US L-48 production from March 2020 to October 2020. Note how the June STEO output projection has dropped by a further 200 kb/d in the October 2020 to March 2021 time frame compared to April’s estimate. While the STEO is showing fairly steady drop from March to October, the projection from October to March 2021 appears to be more tentative and further revisions should be expected over that time. Comparing March 2020 output with December 2021, the decrease is reduced to 1.61 Mb/d as production slowly begins to rise, starting in early 2021.

The weekly drop in US operational oil rigs is slowing and appears to be heading for a minimum in July. For the week of June 26, US oil rigs just dropped by one from the previous week. Interestingly, Texas oil rigs were up by one to 98.

According to the EIA weekly inventory report, US production reversed its production slide in the week of June 19. However with the number of virus cases soaring again in Texas, this reversal may take a pause or reverse again over the next few weeks.

These five countries complete the list of Non-OPEC countries with annual production between 500 kb/d and 1,000 kb/d. All five are in overall decline. Their combined February production was 3,562 kb/d down 54 kb/d from January’s output of 3,616 kb/d. Note that Columbiaʼs production has been essentially flat since August but showing signs of declining. Azerbaijan, Indonesia and India appear to be in a slow steady decline phase.

non opec w/o u.s. production on a seven year plateau

This is one of the more critical charts that bears watching when investigating the expected timing for the plateauing/peaking of oil production because these countries currently supply close to one half of the world’s oil. As noted above, the Non-OPEC W/O US countries accounted for 48.1% of world oil supply. Note that this chart is addressing the question of the timing for the next attempt to unseat the current November 2018 peak.

Looking at the chart, it is clearly providing an early indication that Non-OPEC countries, excluding the US, are very close to an output plateau. From December 2014 to December 2018, yearly peak output remained in the range 39,300 kb/d to 39,400 kb/d, essentially an output plateau. However in December 2019 production reached a new high of 39,805 kb/d.

This group of countries will be the first to be on a production plateau before going into slow decline. As world demand then begins to increase, it will be up to the other countries, OPEC and the US, to meet that increase in demand. This will then begin to stress the world oil supply chain, as happened during 2005 to 2008, and will again begin to manifest itself in increasing gasoline and crude prices.

This chart, which extends the previous chart to December 2021, shows oil production reaching slightly less than 39,500 kb/d in October 2021. The projection was made using information from the June STEO and the EIA’s monthly C + C International Energy Statistics.

If the projection is correct, it means that from December 2014 to October 2021, oil output from these countries will have wandered between 39,300 kb/d and 39,500 kb/d, except for 2019. For all intents and purposes, these Non-OPEC countries are currently on a Seven Year production plateau and are not in a position to meet increasing world oil demand.

world oil production

World oil production dropped in February by 819 kb/d to 82,347 kb/d from 83,166 kb/d in January. This puts February output 2,297 kb/d below the previous November 2018 high of 84,644 kb/d. The questions now are “How low will it go before bottoming” and “to what level will it recover?” An indication is provided below to the first question.

This is an expanded and shortened view of world oil production projected from April 2020 to December 2021. According to this projection using data from the STEO and the EIA’s International Energy Statistics, the production low will occur in June 2020 and will be close to 71,500 kb/d, a drop of close to 12,000 kb/d from December 2019. November 2021 output is projected to recover to 80,799 kb/d and will be 2,742 kb/d lower than December 2019 and 3,843 kb/d lower than November 2018.

bp world oil reserves

This is BP’s world oil reserves updated to 2019. From 2007 to 2011, 254 B barrels were added to the world’s reserves. Of the 254, contributions came from Venezuela (198), Iran (16) and Iraq (28) for total of 242. Believable?? More critically from 2011 to 2019, only 58 B barrels were added or roughly an average of 7.25 Bb/yr. It is the slowing yearly rate of increase that is more critical over the last eight years rather than the absolute level of the proven reserves.

The only significant reserves addition between 2011 and 2019 occurred in 2017. This increase was due to the US adding 11.3 B barrels and Saudi Arabia adding 29.8 B barrels for a total of 41 B barrels. Note that these additions may be updated reserves in known fields, as opposed to new discoveries or a combination of both.

The actual 2017 reserves increase was 38.5 B barrels due to reserve depletions in other countries. Over the last two years, 7.7 B barrels were added in 2018 and there was a decrease of 2 B barrels in 2019 for a net increase of 5.6 B barrels.

Clearly the world’s oil reserves are in the peaking/plateauing phase. Over the last two years, the world consumed 70 B barrels of oil (using BP numbers) and yet the world’s reserves have not materially changed. For example, the US average daily production was 17.04 Mb/d in 2019, (BP data) for a total of 6.22 B barrels for the year. BP shows reserves for the US are unchanged from 2018 at 68.9 B barrels.

peak oil barrel



4 Comments on "Non-OPEC W/O U.S. On Production Plateau"

  1. Anonymous on Sun, 28th Jun 2020 6:35 pm 

    It’s all about demand, now. Huge amounts of oil standing on the sidelines in OPEC and non-OPEC ready to join the party when demand rebounds and prices increase. Until then, nope.

  2. Davy on Sun, 28th Jun 2020 6:40 pm 

    What would you know about OPEC annoymous? Your just a failed engineer.

    dumbass

  3. Famlin on Mon, 29th Jun 2020 12:11 pm 

    Another big change is happening.
    Share of coal in US electricity generation has crashed to 14.8% in april while the renewables (wind/geo/solar) has increased to 15.8%.

    This was unthinkable just 3 years ago. Of course Coronavirus reduced the power gen and share of coal and it will recover, still it has lost a big chunk of demand.

    Reduced coal production may also reduce diesel that is used in mining & transport of coal. Cascading effect.

  4. Duncan Idaho on Mon, 29th Jun 2020 7:01 pm 

    We are not at global peak oil—-
    That happened in November 2018.
    It’s getting further in the rear view mirror.
    We could catch that amount, but I would not hold you breath.

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