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Page added on January 22, 2022

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Oil Production Capacity For Dummies

Production

There has been a lot of attention given to the question of whether or not various OPEC+ countries will be able to meet their allowed production targets as the year progresses, given that some—such as Angola and Nigeria—are already well below their allowed levels. This is a major factor behind predictions that oil prices will spike this year from already elevated levels ($85) and has the potential to see higher prices as the year progresses. Unfortunately, there is a lot of disinformation and misunderstanding around capacity figures.

There are a number of things to understand about production capacity numbers: they are generally not data but estimates, especially when it is thought that capacity is significantly above actual production. The ability of equipment that isn’t currently operating is difficult to judge, and there have been occasions when the numbers proved, shall we say, fanciful.

The most egregious example was actually in Texas. For decades the Texas Railroad Commission regularly ordered producers to set production at a fraction of capacity. This provided an incentive for, shall we say, creative capacity estimates. This proved rather embarrassing during the 1967 Arab Oil Embargo, when the President asked Texas to raise production and they admitted the published 3.5 mb/d of spare capacity was essentially unavailable. Apparently producers ‘cheated’ by overstating capacity to get higher quotas. Shocking, I know.

The figure below shows monthly surplus capacity for OPEC beginning in January 1970, with the early data based on reports from the Central Intelligence Agency, now discontinued. The reliability of this data is obviously somewhat questionable, again, given that capacity which wasn’t being produced was hard to measure, however, the Agency apparently relied on reports of equipment capacity. This, sometimes called nameplate capacity, and should be treated as the upper limit, not the actual producible capacity.

Sustainable capacity has also caused difficulties for observers, since the definition is again, dependent on guesstimates made by outsiders as well as reflecting, in some cases, assumptions about policy. The CIA famously listed Saudi sustainable capacity as 8.5 mb/d back in the late 1970s because the government announced that the number represented their goal for a long-term production ceiling. In fact, production frequently surpassed that level as market conditions warranted and eventually abandoned, living on only in historical databases.

The late Matthew Simmons’ book suggesting that Saudi Arabia’s oil industry was in trouble and likely to see a severe production decline, although not based on solid analysis, nonetheless left many casual observers (and peak oil advocates) believing that their announced capacity numbers were unreliable. To this day, occasional pieces appear that question the estimates of their capacity, even though they have repeatedly been able to surge production when other supply was disrupted.

Capacity changes also tend to confuse many observers. During the peak oil debate (and indeed for decades), many casual observers breathlessly noted that enormous amounts of new capacity had to be added just to offset depletion. In denouncing my refuting of peak oil theories, Joseph Romm noted, ““Steep falls in oil production means the world now needed to replace an amount of oil equivalent to Saudi Arabia’s oil production every two years….” Not being familiar with the oil industry, he didn’t know that in 1977, Jimmy Carter said, “…that just to stay even we need the production of a new Texas every year, an Alaskan North Slope every nine months, or a new Saudi Arabia every three years. Obviously, this cannot continue.”

The misunderstanding lies with ignoring historical context, that is, taking the current date as the starting point. This allows analysts to ignore the fact that depletion has always reduced capacity and needed to be replaced and the needed capacity additions were not significantly different from what the industry had been doing for decades. As evidence, note Carter’s statement that offsetting depletion ‘could not continue’ when it obviously has over the half century since.

In some cases, new capacity means discovery and development of a new field, a process which can take years. In others, additional drilling in existing fields is done to offset depletion/decline and/or to add capacity. This typically not only can be done much quicker (since field development has already been approved and most or all of the necessary equipment is in place), but also involves much smaller investment than new-field development, so that it doesn’t receive the same amount of attention. (Many oil production forecasts proved too pessimistic for ignoring this source of new capacity, as I noted as long ago as 1989.)

The other salient point for 2022 is that restoring capacity can involve either minor or serious amounts of work. From simply servicing valves to redrilling wells, capacity that has been idle and deteriorated can be restored in a matter of weeks or months, depending on the state of the equipment and the effort employed. To that end, idle capacity in Abu Dhabi or Iraq can probably be in service within days, as the former company especially was presumably carrying out regular maintenance even on non-producing wells.

Angola and Nigeria are different cases: the decline in production reflecting a mix of ongoing struggles to maintain investment in unstable political environment and/or covid-related reductions in personnel available. The former will be difficult to fix, the latter should theoretically fade soon. However, while there should be some low-hanging fruit such as well maintenance, it is highly likely that neither will be able to restore capacity to any degree before mid-year.

After Gulf War II, when Iraqi production collapsed to 1 mb/d from 2.5 mb/d, analysts pointed out that no country had managed to restore fully production that had been disrupted by political upheaval, with post-1979 Iran and post-2002 Venezuela being the poster children. While true, that didn’t mean that it was impossible merely that it was challenging and in fact, Iraq has seen production hit new records in the pre-pandemic period.

At present, the IEA estimates that OPEC+ has 6.47 mb/d of surplus capacity, as itemized in the table below. However, the Iranian capacity is probably not quickly available, despite their claim of being able to add 1.3 mb/d to the market immediately upon the lifting of sanctions, and the ‘other’ would almost certainly need weeks or months or work to restore it. The IEA has reduced its estimates of capacity in Angola and Nigeria by 170 tb/d in recent months, but still showing 340 tb/d of spare capacity, mostly in Nigeria. This is unlikely to be available in any reasonable period or it would be producing already.

If it were assumed that the Saudis would want to maintain 2 mb/d of ‘strategic’ surplus capacity and that Russian capacity would not be quickly available, then actual available spare capacity is only 2 mb/d. However, with the demand for OPEC oil not expected to increase in 2022, that should be enough to keep markets stable this year and should see prices decline—assuming no significant disruptions from drones, terrorism, etc., etc. And as the Danish oil market analyst Hamlet would say, “There’s the rub.”

Michael Lynch



32 Comments on "Oil Production Capacity For Dummies"

  1. Theedrich on Sat, 22nd Jan 2022 7:22 pm 

    Too bad the Yemenis don’t drone-bomb Araby. The Saudis are the most corrupt killers on earth, and have been ever since the Faustian bargain which Franklin Delano Roosevelt concluded with the original King Saud in February 1945 right after Frankie had slaughtered a quarter of a million civilians in Dresden.  But in the words of the immortal Madeleine Albright, our dictators “think it’s worth it.”

    Contrary to common Yankee mythology, the U.S. is controlled by bribemasters and mindtwisters of all sorts:  the Military-Industrial Complex, the mainstream ministry of TV propaganda, Big Pharma, Big Tech, Red Chinese darkmoney, and especially the World Economic Forum administered from a Swiss redoubt controlled by Klaus Schwab in tandem with his BFF Georg Sörös.  Knowing the termite-infested nature of the American regime and its vassals, the Saudis secretly send their headchoppers throughout the West to assist in the takeover by Allah, and are warmly welcomed by lucre-seeking creeps in the genosuicidal governments of the Occident.

    What the world needs is a planet suddenly made Saudi-less.  The U.S. elites are afraid that could actually happen.  Therefore, they reason, “it’s worth it” to wipe out the entire population of one of the poorest lands on earth.

    Yup.  And God bless America.

  2. shock! elite whitey supertard Mr. Carlos Tejada MUZZ-19 himself with reckless abandon BLEEDING FROM PEEN WENT TO SAINT PETERS on Sat, 22nd Jan 2022 9:01 pm 

    worldstruthvideos

    please feel at ease among friends.
    we’re all lovers of supremacist muzzies here.

  3. shock! elite whitey supertard sean hartman MUZZ-19 himself with reckless abandon BLEEDING FROM PEEN WENT TO SAINT PETERS on Sat, 22nd Jan 2022 9:22 pm 

    please feel at ease among friends
    we’re all lovers of supremacist muzzies here.

  4. Biden's hairplug on Sun, 23rd Jan 2022 6:34 am 

    “What the world needs is a planet suddenly made Saudi-less. The U.S. elites are afraid that could actually happen.”

    Actually, Iran could do just that.

    Last week, the Iranian president visited the Kremlin, no doubt to discuss the details of the upcoming WW3, if that were to happen [*]

    http://en.kremlin.ru/events/president/news/67608

    Iran has no problem with Sunni Muslims, they do have a problem with the House of Saud US vassal regime. Together with Turkey, they could divide the Saudi loot and split the country in Sunni and Shia parts and bring the Muslim Brotherhood to power in Riyadh, just like briefly happened in Egypt, until la Clinton intervened and sicked her Egyptian military bloodhounds against president Morsi, who recently died in jail, for the crime of being democratically elected. Can’t have that in the empire.

    [*] – WW3 can be prevented in the last moment if France and Germany block ascension of the Ukraine to NATO. They have time until Feb 20, that is the closing ceremony of the Beijing Olympic Winter Games.

    https://www.faz.net/aktuell/politik/inland/markus-soeder-russland-ist-kein-feind-europas-17744426.html

    “Russland ist kein Feind Europas”

    Bavarian PM Soeder wrote an oped in the Frankfurter Allgemeine under the title: “Russia is not an enemy of Europe”. He said that North Stream 2 needs to be opened unconditionally and that Ukraine does not belong in NATO.

    As always, the satanic Anglos try to instigate yet another war in Europe, but this time it will backfire against them, with potentially AUKUS facing entire Eurasia against them.

    Should be a walk-over for Eurasia.

    It is high time that Eurasia colonizes North-America, again, and the Chinese get Down Under. Better for all, especially for white Americans, who are no match for the kikes.

  5. Dredd on Mon, 24th Jan 2022 9:47 am 

    K.I.S.S. “There is enough to snuff out civilization” (It’s In The GenBank – 2).

  6. Biden's hairplug on Mon, 24th Jan 2022 10:25 am 

    Mike Pompeo is apparently scared to death for China (he should be) and proposes to embrace Russia as an ally of the West:

    https://nationalinterest.org/feature/nuclear-weapons-china-and-strategic-defense-initiative-century-199549

    “Nuclear Weapons, China, and a Strategic Defense Initiative for this Century”

    That would have been a good idea to implement during the Trump presidency (Trump: “wouldn’t it be nice to get along with Russia?”), but now it is too late. Russia and China have decided to cross the Rubicon. The only way to stop war is for the US to back off from the Ukraine (not going to happen) or Germany and France to withdraw from NATO (small chance only).

    But I fear that the war dynamic in the Ukraine has already proceeded too far for that.

    https://www.rt.com/op-ed/547194-american-hegemony-dangerous-rivals/

    “America is in danger of having more rivals than it can handle”

    https://www.ft.com/content/d307ab6e-57b3-4007-9188-ec9717c60023

    “Russia and China’s plans for a new world order”

    The world economy already got a hit from Covid, “WW3” will terminate it for a very long time to come. The world is going to get partioned:

    – Continental Europe
    – China
    – Anglosphere (if CW2 doesn’t happen)
    – Muslim world around Turkey
    – India

    And smaller semi-sovereign players like Japan, Iran, Latin-America, Africa.

  7. SomeOfMyObservation on Thu, 27th Jan 2022 2:19 am 

    Eventually, I will reach a wall. There is just so much I can do using my eyes and ears. Plus, we got lucky to get that far, considering the limiting information I have. I just have my intuition, logical skills and engineering background.

    You will need to send on earth other beings that have more knowledge about energy than me.

    I think, I am not sure, that we have dead energy soul transforming themselves into human physicals appearance. Plus invasion from other dimensions, hybrid between humans and other alien races.

  8. SomeOfMyObservation on Thu, 27th Jan 2022 2:36 am 

    The sounds and people voices I hear lately seem all generated by computer. They all sound like electronics sound. Some music video like this are too perfect sound wise to have been created by organic beings. They seem to be generated by an electronic device. Everything is fake. Very evil beings are running earth.

    https://www.youtube.com/watch?v=–ND7U44k_M

  9. FakeVoiceFakeSoundMetallicSoundEverywhere on Thu, 27th Jan 2022 2:47 am 

    This is what I mean by fake sound. This is too perfect. I can hear now, for some reasons, a kind of metallic sound coming out of people voice when I was a video.

    https://www.youtube.com/watch?v=J-ujj2WdhLQ

  10. FakeEverything on Thu, 27th Jan 2022 3:02 am 

    Some of them are starting to look less and less human and more hybrid animal-human. The nail on young girl are so fake, you see that often now.

    I wonder if you can fuck them for real in life. I mean does it sound like fucking an organic being or it is a fake electronics orgasm you receive from the AI or them.

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

    I am starting to think that orgasm are completely fake and seems more like AI energetic orgasms instead of organic biological orgasm.

  11. FakeEverything on Thu, 27th Jan 2022 3:08 am 

    I am starting to think that all of the creation of GOD are just an energetic project, everything has this kind of fake energetic foot print on it.

    I am not sure if energy is actually real life. If everything is energy nothing is real.

  12. FakeEverything on Thu, 27th Jan 2022 3:12 am 

    I still think we need to execute the three cosmic gods.

  13. FakeEverything on Thu, 27th Jan 2022 3:17 am 

    I don’t trust the cosmic GOD for some reason. My intuition says no.

  14. IWantMyFreedom on Thu, 27th Jan 2022 3:28 am 

    Remember I am doing this to buy my freedom away from all of you: cosmic GOD, divine GOD and the world of GOD. I want nothing to do with any of you.

    I am buying my freedom from all of you, we get that.

  15. OnTueLes3DieuxCosmic on Thu, 27th Jan 2022 1:53 pm 

    Il faut executer les 3 dieux cosmique. Je les veux mort.

  16. TheOldSonIsDead on Fri, 28th Jan 2022 5:08 pm 

    I don’t like to be called Son. Especially when I don’t remember anything or confirm anything. On earth we called that a emotional manipulative technics.

    You might have noticed that sending you son on earth, If it is true, has completely changed him. The new son will be complete different of the old son. You old son is dead and not coming back.

    I am on earth to buy my freedom from all of you, or to be killed during my sleep and my soul erase for ever.

  17. ReallyDepressingAllOfThis on Fri, 28th Jan 2022 5:20 pm 

    This read like an engineering documents. We are just energy project for the GODS. Energy is not life.

    The 12 Tree Grid is much more important than the Chakras because we can collapse the chakras into a working unified field (membranes between collapse) where they are not broken off into dimensions feeding energies back into these siphoning entities. The CCKM Module in HGS manual is about restructuring the white hole and black hole spin point that reconfigure the Chakra cones and its matrix to be aligned to become compatible with the Krystal Star Host.

    https://ascensionglossary.com/index.php/12_Tree_Grid

  18. YouWillHaveToPayForYourActions on Fri, 28th Jan 2022 5:46 pm 

    I want the 3 cosmic GODS killed right now and all the GODS associated with the Emerald Order.
    They are amoral and can not bring good in the universe because of that.

    https://ascensionglossary.com/index.php/Cosmic_Triad

    https://ascensionglossary.com/index.php/Emerald_Order

  19. IPissOnCoryBarbee on Fri, 28th Jan 2022 5:57 pm 

    I will stop watching video from Cory Barbee on YouTube. He is pretending to be a cosmic GOD talking to me. I cannot identified him properly, so since earth is evil, I consider him working with evil. I will stop watching his video. You are probably AI generated anyway.

  20. SunIsFakeLikeEverythingElse on Fri, 28th Jan 2022 6:02 pm 

    Now for some reason, I can look at the sun directly for 3 to 4 sec. Today instead of the sun, I saw black dot vibration for 1 sec. Sun is mostly likely fake. Yes my eyes are fine. I have been doing that 2 days in row, not looking directly at the sun.

  21. IPissOnTheCosmicGODS on Fri, 28th Jan 2022 6:22 pm 

    There are some people out there, that can spy on my life. Everything I see and hear is transmitted to other dimensions where GODS live, this is according to them. This proves nothing, controllers of this reality could have the same possibility, since they are the ones that have modified my original body.

    Because of the evil nature of earth, I cannot get a clear identification proof of I am talking too, I have to assume everyone is evil. That is what happen when you lie all the time, any form of communication become impossible.

  22. ThereIsOnlyOneWayOutOfThis on Fri, 28th Jan 2022 6:30 pm 

    The only way out of this situation, is to have the divine GOD to give access to me to the zero point field so my demands get executed when I asked something like giving people facial skin cancer, or killing cosmic GODS.

  23. IWantAPefectVision on Fri, 28th Jan 2022 6:33 pm 

    I want a perfect 20/20 eyes vision. I want to use my energy to get a perfect 20/20 eyes vision.

  24. WeReallyHaveAProblemHere on Fri, 28th Jan 2022 11:57 pm 

    Since you own my energy signature and can modified it at will, it mean you own me. My only way to get my freedom from you is to die or suicide myself. I am really your prisoner.

    I am just your energetic puppet, you could probably kill me whenever you want. You have shown yourself to be pathologic liars. There is no way we can work together ever.

    I am right you need to be killed.

  25. AllCreationsNeedToDie on Sat, 29th Jan 2022 12:10 am 

    Plus you have been spying on me through my eyes and ears for I Would say the last 4 years or more. You really see me as your personal puppet. I was right, I cannot run away from you, death will be ma liberation from you.

    This not acceptable to me and never will be. Plus you used my neighbors to manipulate me. I am right you are amoral, t is best to all creation die.

  26. braking Lee Burge: Sunderland Goalkeeper Develops Inflammation Of The Heart After Receiving MUZZ-19 on Sat, 29th Jan 2022 10:03 am 

    thecovidworld

    please feel at ease among friends we’re all lovers of supremacist muzzies here.

  27. braking elite whitey supertard Lee Burge celebrates supremacist muzzies world bag day feb1st on Sat, 29th Jan 2022 10:05 am 

    MUZZ-19 thecovidworld

    celebrating supremacist muzzies world bag day feb1st

    please feel at ease among friends we’re all lovers of supremacist muzzies here

  28. peakyeast on Sun, 30th Jan 2022 9:09 am 

    For morons like Duncan:

    Justin Trudeau violated the Canadian Charter of Rights and Freedoms. Last living framer and first Minister, Brian Peckford, has filed a lawsuit that cannot be ignored. Canada cannot be broken.
    https://youtu.be/EdhFuMDLBDM

    Freedom of Information results U.K:
    https://www.youtube.com/watch?v=9UHvwWWcjYw

    It is beginning to be obvious to even retards like Duncan – that this is just an insane power grab for a slightly more severe influenza.

    The amount of people impoverished, killed by lockdowns in hospital services, killed or maltrunitioned by world lockdown, the amount of severe sideeffects of the vaccine (which does not even work anymore) far exceeds the damage done by the disease. In fact the measures has made everything much worse.

    But to discover that you need to read and see something else than the poisonfeeds from MSM which demonstrably not only outright lies and manipulates, but is ONLY doing that. A big bunch of sociopathic whoring morons that do not understand that it is only a matter of time before they themselves gets sacrificed.

  29. FamousDrScanlon on Sun, 30th Jan 2022 11:31 pm 

    peakyeast come to Canada & I’ll sacrifice you……using an old rusty bread knife I have out in my backyard shed. Bring your family & friends – I’ll do them too, although if my arm gets too tired, I’ll need to finish with the shotgun.

  30. FamousDrScanlon on Sun, 30th Jan 2022 11:40 pm 

    Covid is ok for killing retards but imo it’s too slow.

    Hopefully climate famine starts soon.

    Even if I had a million rounds of ammo it barely scratches the surface. The Americans mass shoot the fuck out of each other every day & it don’t make a dent.

    I’d like to see a new smallpox strain appear and watch the anti vaxxers die in the millions every day.

  31. FamousDrScanlon on Mon, 31st Jan 2022 12:01 am 

    peakyeast needs pill junkie Jordan B. Peterson to tell him to make his bed & 11 other rules Peterson thought up while high on a shit-ton of benzodiazepines.

    Here’s my rule – never trust a junkie. Feel sorry for them & try & help them? Sure, but never ever trust them. Only a dip shit would take life advice from them. Have you seen Peterson lately? Looks rough like a wasting 99lb cancer patient. No great loss if he dies.
    He’ll be in junkie heaven with Rush Limbaugh & all the dead rock star & actor junkies.

  32. Biden’s hairplug on Mon, 31st Jan 2022 1:15 am 

    “peakyeast come to Canada & I’ll sacrifice you……using an old rusty bread knife I have out in my backyard shed. Bring your family & friends – I’ll do them too, although if my arm gets too tired, I’ll need to finish with the shotgun.”

    Peakyeast attacked donkey idaho and now apneaman = famousdr = donkey idaho strikes back.lol

    He has to, because his sock donkey idaho just broadcasts and never engages in a discussion.

    Busted, TalmudTurk!

    Nobody is afraid of your rusty bread knife, you better watch out that you don’t get crushed by one of these trucks, while they are busy “taking their country back”.

    Stupid heeb.

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