Oil Production Vital Statistics April 2016

Most regions experienced production losses in March with the exceptions of Iran (+80,000 bpd) and Europe (+90,000 bpd compared with a year ago). Total liquids were down -260,000 bpd for a loss of -990,000 bpd since the peak last July. The oil price rally has continued with WTI on $44 as I write. While many signs point to the worst of the rout being over it remains premature to declare that it is over.

Drilling continues to decline across the board with US oil+gas rigs = 420, this is the lowest level of US drilling for over 20 years. Two strongly opposing forces control the near and medium term destiny of the oil market. The collapse in drilling must surely lead to an acceleration of production decline near term. Offset by the ever present risk of shale drillers returning to action on the back of a continued price rally.

The following totals compare March 2016 with February 2016:

  • World Total Liquids down 260,000 bpd
  • USA down 90,000 bpd
  • North America down 220,000 bpd (includes USA)
  • OPEC down 100,000 bpd
  • Saudi Arabia down 40,000 bpd
  • Iran up 80,000 bpd
  • Russia + FSU down 30,000 bpd
  • Europe up 90,000 bpd (YOY)
  • Asia no change.

This article first appeared on Energy Matters.

EIA oil price and Baker Hughes rig count charts are updated to the end of April 2016, the remaining oil production charts are updated to March 2016 using the IEA OMR data.

Figure 1 The oil price rally is losing momentum and may form another head. The day that supply and demand come into balance is drawing ever closer. But there is the overhang of crude oil stocks and the risk that higher prices send frackers back to work.

Figure 2 At this scale, the oil price recovery is brought into perspective. The price needs to break above $50 to be “sure” that the current price crisis is over.

Figure 3 Not up dated from last month.

Figure 4 The US oil and gas rig count continues to plunge with relatively little impact upon production.

Figure 5 Stacking the lines from Figure 4 shows that US drilling has now declined below any level seen for over 20 years.

Figure 6 The near-term peak in US production was 13.24 Mbpd in April 2015.  The March 2016 figure was 12.57 Mbpd, down 670,000 bpd from that peak and down 90,000 bpd  from last month that to large extent reflects data revisions. The decline in the USA represents 68% of the total global decline.

Figure 7 OPEC production has been rock steady for 12 months (dashed line) and currently stands at 31.75 Mbpd, down 100,000 bpd on Februray. New OPEC member Indonesia is included in the Asia chart (Figure 15), since changing baselines distorts the picture.

Figure 8 With the exception of Saudi Arabia and Iran, OPEC spare capacity is now all but zero. Iran has been slowly ramping up production and Iranian spare capacity is now in decline (Figure 10). In February and March, production declined in the UAE and Iraq by 440,000 bpd resulting in an uptick in the spare capacity of those countries. The reason given by the IEA is unexpected outages but this coincidentally more than offsets the rise in production from Iran.

Figure 9 In March, Saudi production stood at 10.19 Mbpd, down 30,000 bpd on Februray. NZ = neutral zone which is neutral territory that lies between Saudi Arabia and Kuwait where production from the Wafra heavy oil field is now effectively zero. Saudi Arabia is effectively pumping at capacity. The fabled 2 million bbls per day spare capacity is either a figment of imagination or heavy oil that has no refining market.

Figure 10 The pace of increase in Iranian production slowed in March to +80,000 bpd with production standing at 3.3 M bpd. This is 720,000 bpd above the 2013 low point. This substantial increase in Iranian production must certainly have contributed to the price collapse. Poor relations between Iran and Saudi Arabia don’t help with Saudi Arabia expecting sanctions-hit Iran to freeze production at the reduced January level.

Figure 11 Unlike everywhere else, drilling activity in ME OPEC remains high with 144 rigs operating in these 4 countries. Iran and Iraq are not included since their drilling history is so scarred by wars and sanctions this distorts the picture.

Figure 12 The international oil rig count continues its decline, down another 25 in March. While US rigs are now below levels seen in the 1999 crash (Figure 5), international rigs, which include the robust Middle East, have a long way to go before they reach that level. The reasons for this would be a good topic for discussion in comments.

Figure 13 Russia and other FSU produced 14.16 Mbpd in March, down 30,000 bpd but effectively unchanged because of revisions to the February number and little changed for 3 years (dashed line). Close examination shows that Russian production has been rising slowly while other FSU has been falling slowly.

Figure 14 The cycles in European production data are down to summer maintenance programs in the offshore North Sea province. We are now on the cycle high, and North Sea production may fall in the coming months as maintenance programs get under way. New data and data revisions now show that the North Sea has been turned around, with production rising slowly. Several years of $100 oil and record investment has paid off while at the same time contributing to the oil price crash.

To get an idea of trend it is necessary to compare production with the same month a year ago.   European production is up 90,000 bpd to 3.57 Mbpd compared with a year ago.

      • Norway Mar 2015 = 1.95 Mbpd; Mar 2016 = 2.04 Mbpd; up 90,000 bpd YOY
      • UK Mar 2015 = 0.95 Mbpd; Mar 2016 = 1.00 Mbpd; up 50,000 bpd YOY
      • Other Mar 2015 = 0.58 Mbpd; Mar 2016 = 0.53 Mbpd; down 50,000 bpd YOY

Figure 15 This group of S and E Asian producers has been trending sideways since 2010 but it has been trending down for the last year.  The group produced 7.65 Mbpd in March, identical to the February Figure. Note that Indonesia (an oil importer) has rejoined OPEC. The OPEC production numbers are reported ex NGL by the IEA and this has meant a 170,000 bpd drop in reported Indonesian production.

Figure 16 N American production topped in April 2015 at 20.12 Mbpd. Group production now stands at 19.57 Mbpd down 220,000 bpd on last month (revisions) and down 550,000 bpd from the April 2015 peak. This remains a trivial decline but at some point the collapse in US drilling is going to bite hard (Figures 4 and 5). And it will be interesting to see to what extent the Fort McMurray fire impacts tar sands production, if at all.

Figure 17 Total liquids = crude oil + condensate + natural gas liquids + refinery gains + biofuel. March production was 96.09 Mbpd down 260,000 bpd on the revised February figure and down 990,000 bpd from the July 2015 peak. There is still a way to go before production gets below the long-term dashed trend line.

Figure 18 Last month a reader asked that I re-instate this chart, so here it is (the donate button is top right) ;-). One of the things this chart shows is the astonishing increase in production capacity by 10 Mbpd since 2011. As described in The 2014 Oil Price Crash Explained, a relative movement between supply and demand of the order 4 Mbpd will be required to reinstate high price. So far supply has dropped about 1 Mbpd and demand is rising at a rate of 1.2 Mbpd per annum (IEA OMR). But there is a risk that supply is elastic to price as high cost production is brought back on and the frackers go back to work as the price rises. This would move the trend to the right rather than upwards.

Figure 19 Global stock changes reflect the imbalance between supply and demand. The surplus was equivalent to 1.5 Mbpd in the first quarter. Global production has fallen by roughly 1 Mbpd since last July, 9 months ago. At this rate, the market will remain over-supplied for the remainder of this year reinforcing the view that the current price rally may be rather premature. [note this chart was revised on 8 May to correct an error in 1Q and 2Q 2012]

Notification of pending paywall

Late last year I notified readers that Energy Matters needed to start earning some money. Since then a four pronged strategy has emerged:

  1. Infrequent annual or biannual appeals for donations
  2. Quality advertising that is coming soon
  3. Leasing of some content through Written.Com
  4. Placing some content behind a paywall

Observant readers will have noticed that the paywall has not yet arrived. I have been exceptionally busy this month with another project – more on that to come. But if everyone who read this post donates £2 (top right) it would save me the bother of working out how to install the paywall altogether!

Previous Editions of Vital Statistics

January 2015
February 2015
March 2015
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015
October 2015
November 2015
December 2015
January 2016
February 2016
March 2016

This entry was posted in Energy and tagged , , , . Bookmark the permalink.

32 Responses to Oil Production Vital Statistics April 2016

  1. Euan Mearns says:

    Maybe a good time to look at my BAU oil price scenario where I forecast $37 for Dec 2016:


    Figure 5 Deducting the demand model from the supply model produces this picture of stock change for 2016. The World is still awash in surplus oil by the end of the year. 

    Figure 6 Based on an original idea by Phil Hart. I’m not sure I fully understand the dynamic here any more, but an explanation is given here. Large time lags between price signal and market response cloud the picture. Oil supply was inelastic to price up to May 2011, but then supply responded and has been responding ever since.

    • Luís says:

      This is actually easy to understand. The supply curve shift rightwards, as the extraction in North America decoupled from market prices (i.e., no matter where Brent is, they will keep pumping).

  2. What happens if electricity shortages curtail Venezuela’s oil production (2.53 mbpd 1Q 2016), or maybe cut it off entirely? This seems to be a distinct possibility the way things are going.


    • Euan Mearns says:

      Wow, I got a comment 🙂

      Venezuela is producing 2.35 Mbpd that would be lost and the price would rise quite sharply. But I’m not convinced they could be that stupid. Emergency generators etc would cut in – assuming they have fuel. In 2013 they were producing 2.5 Mbpd, and so there’s not a lot of evidence for the troubles undermining production so far.

      • Thinkstoomuch says:

        Well Just so you get another. 🙂

        I hope they do as you say as I am getting ready for my summer wander and rising quite sharply is not what I want to see. Even if it is on a motorcycle and camping. 😉


      • Andy Dawson says:

        Two thoughts on that..

        One, how much emergency generation capacity do they have in reserve? It’d be characteristic of a regime like Chavez/Maduro’s to have ignored investment and maintenance, or diverted them to daily use already.

        Second, if they’d not already been diverted, the regime would probably go populist and use them for a few more weeks of survival.

        Not a fashionable view, I know, but the latter parts of “Atlas Shrugged” are a surprisingly accurate depiction of the latter days of a populist regime.

        • Andy: I think we can reasonably assume that a country that imposes a two-day work week to save electricity has no emergency generation capacity that it isn’t already making full use of.

          Venezuela’s strategy is to minimize production from the El Guri dam, which has historically provided about 70% of the country’s electricity, hoping the Guri reservoir will shortly fill to the point where they can start using it again. In the meantime they are trying to get by with their 17,500MW of thermal capacity, but only 9,000MW of this capacity is reportedly “available”, and 3,000MW of that is available for only some of the time because of lack of maintenance.


          Venezuela bears watching. Latin American revolutions are commonly preceded by a shortage of toilet paper, and right now there’s none to be had in Venezuela.

  3. Daniel says:

    How much impact do you think that the Fort McMurray fire could have on Canadian production, as some facilities have shut down by now?

    • Euan Mearns says:

      The oil price has not responded at all, so I guess everyone else doesn’t see a problem. Tar sands production is of the order 2 Mbpd. With storage brim full this is not going to cause any scarcity for a long while. And I’m sure the Canadians will get everything back up and running within weeks if not before. But just as well its not winter and -30˚C out.

      The fact that the price has not responded to Fort McMurray is a sign of the continuing gross over-supply situation and my underlying feeling that price weakness will continue.


      The blaze has already destroyed more than 1,600 homes and other buildings in Fort McMurray.

      I guess the main problem will be to get water and electricity supplies restored. But then most folks will return home and get back to work. But its kind of a black swan.

      • Luís says:

        According to what the Canadian media is reporting this morning, most folks will not return home any time soon; in great measure because they have no home any more. Even shelters have burned down.

        There will be some good deal of logistics to sort out before things get back to normal.

  4. Luís says:

    I would just note that according to the EIA world petroleum extraction fell 600 kb/d from December to January alone. That was before the issues in Nigeria, Venezuela, Libya and now Canada and Iraq. Meanwhile, these funny stats including French fry oil and schnapps show essentially a flat line.


  5. Pingback: Oil Production Vital Statistics April 2016 | Energy News

  6. Pingback: Sigue bajando la producción de petróleo – Colectivo Burbuja

  7. Charles Kohlhaas says:

    As one who has been through several downturns in the oil and gas industry, I find the discussion of “glut” rather strange here. The price started down in August 2014 when the Fed terminated Quantitative Easing. Increases of storage above normal levels did not occur until January 2015. The charts in the commentary here show an OPEC surplus capacity of about 3 million bpd which is the highest of all estimates I have seen; most put it at about 1.5 to 1.8 mbpd. First, this demonstrates the difficulty of making such estimates and that the “glut” is approximately in the range of potential error. Second, this is 3% or less in a 95 million-bpd market. This is, absolutely and percentage-wise, by far the smallest overcapacity at the time of an oil downturn in the last 60 years. Third, as shown in the article, overcapacity was decreasing when the price dropped.

    The price downturn was not caused by a “glut”; it was caused by changes in the financial system. Oil is a medium of exchange and the price will increase as storage costs decrease, the outlook for returns on other investments for the next few years decreases, and perceptions of banking system instability increase. Would you rather have your funds sitting on deposit in a bank (which may go negative interest rates which are a charge for storing your funds in the bank) or on deposit in a bonded tank farm? Which do you expect will give you the best return on your funds over the next three years? Oil prices are a financial system phenomenon and the amount of oil in storage is a result of financial system conditions not the cause. With no Fed increase in interest rates in sight the key to future oil prices is the bond market.

    • Euan Mearns says:

      Charles, interesting commentary. No doubt that downturns in oil, copper and coal are down to the financial system caused by a change in economic circumstances that are hard to nail to the table. In the last big down turn OPEC cut production and the price went back up. This time OPEC have chosen to not cut production, creating a large supply demand imbalance and the price tanked. Thats it!

      Sure, exchange rates, interest rates etc all impact the economic system and demand, but be in no doubt that oil is the dog wagging the finance tail. If you want I will set you a challenge and that is to meet on the Greenland Summit where I have at my disposal a covered snow tractor and a few hundred gallons of diesel and you have at yours a pin stripe suit and a brief case full of derivatives.

      One thing you overlook is the change in the structure of the oil market. Previously, with conventional oil, spare capacity was measured by how much capacity was shut in. Today with unconventional oil, i.e. shale, spare capacity is measured in idle rigs. The USA currently has about 80% of its variable capacity shut in.

  8. Charles Kohlhaas says:

    Euan, you make my point very well.

    We have a Federal Reserve Chairman who, within 30 minutes, testified to Congress that she was (1) very surprised by changes in the oil price (which she had a large influence on) and (2) was taken off-guard by the drop in the value of the dollar (management of the dollar is a mandate of the Fed). Such a public admission of so much incompetence does not inspire confidence. Neither does the Chairman of the IMF, Christine LaGarde with her elegant Hermes scarves, when she advocates negative interest rates and even notes that the debt problem can alleviated by confiscating 10% of depositors’ funds in the banks of the advanced economies. Of course, she does not call it confiscation, she wants to give you shares in exchange; shares in the same bank which has been so mismanaged it must confiscate your funds. Negative interest rates are already used in Japan in some parts of Europe which were supposed to stimulate economies but have had the opposite effect and resulted in drops in the equity markets. Our own Fed Chairman, while predicting four interest hikes this year, also mentions that she may go to interest rates. Such a clear plan.

    When Quantitative Easing was initiated, oil prices increased about $20. Billions of dollars of funds were pumped into the banks. With Dodd-Frank regulations for bank investment the banks were limited as where they could place those funds; one place was financing oil and gas drilling and large capital projects in the oil and gas industry. One could argue that the Fed financed the oil and gas “shale boom”. They then cut off the funds, quit diluting the dollar, and the oil price started down. The decline was then exacerbated by the Saudis refusing to cut production. (I think they did it partly out of resentment of the Iran nuclear deal but the oil price dropped much more than the Saudis expected).

    Several major oil producers, plus China, make threats and plans as to ending the Petrodollar and the days of the dollar as the world’s reserve currency. If successful, it can be expected to result in a precipitous decline of dollar value.

    So what do you do with large amounts of wealth in the face of falling equity markets, unstable banks, threats of deposit confiscation by banks, threats of dollar devaluation, incompetent management of the financial system, etc etc.

    My point is not that men in pinstriped suits are using their positions to manipulate the price of oil. As you note, they would be meaningless and ineffective in a distress situation in Greenland – or anywhere else. What I am claiming is that investor responses to continuing mismanagement of the world’s financial system and the US government’s incoherent and ongoing program to spread economic chaos throughout the world include using oil as an attractive medium for parking wealth and the current oil price increases are partly a result of those responses – just as you would rather have a supply of diesel fuel. I also think refiners are stocking up on cheap oil while they have the chance.

    Studies show that in an active marketplace, the medium of exchange becomes the commodity with the lowest storage cost. For much of history, that has been small metal discs with a king’s, emperor’s, or president’s image on them. That is still an option but subject to some risks, only feasible for moderate amounts of funds, and present a storage problem. My father and uncles never got over the United States Government forcing them to turn in their gold for devalued paper dollars. It could happen again.

    Oil is a feasible alternative – it has storage costs from about 4% to 6% per year. Future prices are expected to be higher than current prices although the schedule is not clear. Oil is fungible and can be converted to any major currency, now and after any major financial upheaval. The “glut”, as I mentioned previously, is very thin; a very small production overcapacity which will disappear quickly with any disruptions of supply in an unstable world. Even moderate oil price increases over the next few years can be expected to pay for the storage costs and give a better yield than current and expected interest rates or the equity markets.

    And, as you point out so well, in northern Greenland you would much rather have a supply of diesel fuel than a stack of certificates of any fiat currency or the assurances of the pin-stripe suit crowd. So, if you have no confidence in mismanaged fiat currencies and their storage in mismanaged banks, in Greenland or anywhere else on the planet, you will give serious thought to alternative means of storing and preserving wealth. Oil, I think, is becoming very attractive to many investors even those not in Greenland. We see indications of that in contangos in the futures markets; I think the physical market is also attracting funds and it is a major reason for recent increases in oil prices. I also think the oil market will be dominated by investor responses to Central Bank mismanagement, bond market distortions,foreign policy blunders, and bank instability for the next many months and possibly a few years.

    • Euan Mearns says:

      Charles, I suspect any disagreement here is semantic. There’s no doubt that the debt expansion bubble and the QE bubble led to the commodities bubble. But it did so via the real economy of creating demand for goods and services that used energy. Now that we have reached the finance singularity, all bets are off. If the system implodes then it may be better to own some oil in storage than derivatives but an individual would still struggle to realise his capital in the mayhem that may ensue. And most investors who invest in oil futures do so via a fund of some sort that is paper supposedly backed by physical somewhere.

      I personally believe that we now live in a version of a post-peak oil world where traditional capitalism doesn’t work any more. Over production of expensive oil and gas and selling it all at a loss is not the best strategy.

      High price for 7 years has led to massive investment in expensive oil (low ERoEI oil) a lot of which is going to keep coming for the next few years.

      I agree that the over-supply is thin so using the word glut is perhaps not right, but the picture of the last 9 quarters in Figure 19 is unprecedented in recent years and is down to OPEC abandoning market control. The word on the street is that we now lose 1 Mbpd of tar sands production. If that does not move price up then it confirms that over-supply is real.

      Luis de Sousa is saying that I need to be wary of the IEA statistics. But I will struggle to cross check these against EIA in the near term.

  9. William Watt says:

    What is the correlation between rig count and oil production? Wouldn’t the life of the well have an impact? The life of the light tight fractured shale wells in Canada and the USA is short which should raise the rig count while not raising production. Since these are the financially leveraged operations which have been shutting down they should have a greater impact on rig count and less on production at the margin.

    Another consideration is the oil sands which are mined, not drilled, so production is excluded from the rig count. I don’t know what proportion of the world’s oil production that represents, probably not much, but the current forest fire in Alberta is said to be having quite an impact on Canadian oil production.

    Wells are drilled for different reasons, exploration, enhancement, and so forth. Probably each kind of well has a different impact on production. Things like aging oil fields and changing drilling technology would have an impact on correlation. It might be interesting to look at that historically.

    The time it takes to drill a well would have some sort of lag effect on production which might be important enough to consider.

  10. RDG says:

    Is Venezuela a canary in the coal mine in regards to it being the first oil industry nation about to be permanently shuttered due to an eroding EROEI? Is that whats behind the *constant* mismanagement of its resources?

    Sometimes I get the feeling that the cover stories (CO2 emissions, debt, EV’s better than ICE) are all a deliberate fog to cause confusion. Imagine informing the public that EROEI means sudden full stop to the fossil fuel industry despite the fact there is still lots of oil and that “renewables” is actually counter productive. And that its possible to calculate an average date for the entire world thats just around the corner (2030)?

    • Colin Macdonald says:

      I work on oil rig where for every barrel of diesel used we produce about 100 barrels of oil. Given that we’re about 3 weeks from end of production, with a near exhausted reservoir I would say that represents a pretty good EROEI. And typically other offshore rigs will do much better, as does mine when looking at the whole life of the field.
      Of course a fair amount of energy went into building this rig, and there are some other
      energy inputs(helicopters, supply vessels,pies etc). But it is mobile and will likely move onto another field in the near future, lowering further the EROIE. Wind turbines and most other forms of alternative energy on other hand are not re-usable.

      • Euan Mearns says:

        Interesting stats Colin, and you are right to broaden the boundary of the ERoEI analysis. It also needs to include manpower and shore based personnel.

        If the floater is being moved to produce more oil, that will increase not lower the ERoEI.

        I will have a post on the ERoEI of solar tomorrow that should get the juices going.

      • Glen McMillian says:

        On the other hand, wind and sun don’t deplete, and there is no REASON and NO NEED to move wind and solar farms. LOL

        I followed this site for a good while but gave it up because nobody here ever seemed to recognize the obvious fact that fossil fuels deplete and that from that depletion it follows that renewables will become ever more economical and ever more practical by comparison.

        It’s not just that wind and sun DON’T deplete. It’s also that generating energy from the wind and sun means keeping a huge part of precious foreign exchange earnings at home in countries that have to import fossil fuels, and that before much longer, it will be cheaper to shut down some fossil fuel generating capacity and run on wind and solar power when it is available based on fuel cost savings alone.

        It is undeniably true that somebody must pay for back up capacity, and that the owners and operators of that capacity MUST be paid, but this question of payment is a POLITICAL question , rather than an engineering question.

        Furthermore, although it is seldom mentioned in this context, it is an unquestionable fact that when the demand for a commodity falls, the price of it falls as well. Eventually the various peoples and governments of the world will come to appreciate that a billion spent on renewable energy means spending a billion LESS on coal and gas to run power plants. This means cheaper gas for homeowners who heat with it, and cheaper fertilizers for farmers, and thus cheaper food for consumers, in the last analysis.

        Fuel costs for wind and solar farms are locked in at NEAR zero for the life of the farms, and when the turbines and panels eventually fail, they can be replaced piecemeal with BETTER ones that will still run almost fuel free for a couple or three MORE decades. The only fuel needed will be what is burnt taking care of maintenance.

        • Euan Mearns says:

          Glen, you need to check my post on solar tomorrow.

        • Andy Dawson says:

          That’s economically simplistic, to say the least. I’ve noted a common tendency amongst renewables enthusiasts to think that capital’s free – and this is another example.

          And no, we’ll not be running on wind and solar alone at any time in the credibly foreseeable future – that is, assuming we’re not about to accept extended and random periods of outage of supply.

          In fact, the reality is beginning to emerge that decarbonisation of the back of renewables alone simply isn’t an option – that in fact, we lock in HIGHER levels of carbon output than would be attainable using CCS or nuclear as the backbone of supply.

  11. Demián says:

    Sorry, something is wrong with “Crude Oil Stock Change”, bars in 1Q12 and 2Q12 are cut whith the legend… And 2Q15 is different than in your forecast (almost 2.5)

    • Euan Mearns says:

      Hi Demian, thanks for picking up on that. The 1Q and 2Q 2012 had indeed been chopped. This a result of updating charts as time goes by and data moving relative to the frame. I have corrected this. Your second point about 2Q15 I believe is explained by IEA revisions. Data from prior OMR’s gets revised in subsequent OMR’s. Perfectly valid to do this but it creates problems following the evolving situation in detail.

  12. Pingback: Taladros y pensamiento mágico – Peak Oil Colombia

  13. Pingback: Amerikaanse aardolieproduktie begint af te nemen | Cassandraclub

  14. Pingback: Oil Production Vital Statistics May 2016 | Energy Matters

Comments are closed.