Joint post with Neil Mearns who made all the graphs (CV for Neil).
January was the month that OPEC was supposed to reduce production by 1.2 Mbpd and Russia + others were supposed to cut a further 0.6 Mbpd. None of the January production data has been released yet and the only real time indicator we have is the oil price that began the month of January on $55.05 and ended the month on $54.77 (Brent) (Figure 1). The only remarkable thing is how little market response there has been to the feeble OPEC deal.
Latest reports suggest that Libya was producing 715,000 bpd at the end of January with the objective of raising production to 1.3 Mbpd by year end, to a large extent countering the efforts of countries that may or may not have reined in production. Given the lack of price response, we will not be surprised to see some non-compliance with the planned cuts.
On 6 Jan, there were 529 operational oil rigs in the USA, that had risen to 583 on 3 February, + 54 for the month (Figures 4, 5, 6 and 7). Rising oil drilling activity in the USA will inevitably lead to more oil production at some point. US production was 12.30 Mbpd in November rising to 12.44 Mbpd in December, up 140,000 bpd for the month (Figure 12). Middle East drilling remains on a cyclical high (Figure 9) while drilling remains in the doldrums everywhere else (Figures 8 and 10).
The following totals compare December 2015 with December 2016:
- World Total Liquids 97.15/97.65/ +500,000 bpd
- OPEC 31.69/32.86/+1.17 Mbpd
- Russia + FSU 14.07/14.55/ +480,000 bpd
- Europe 3.65/3.74/ +90,000 bpd
- Asia 7.79/7.41/ -380,000
- North America 20.00/19.42/ -580,000 bpd
This is the first edition of Vital Statistics produced using the Global Energy Graphed database employing Google Sheets. All the old graphs are there with several additions. Note that since these graphs are live, they will update automatically in future as more data are added meaning that the narrative will no longer match the data in the months ahead.
Oil price data updated to 31 January 2016 using data from the EIA.
Figure 1 Daily oil prices from the EIA. The oil price has settled into a trend of steadily rising tops, but has made no significant break upwards in light of the OPEC + Russia production cuts that were supposed to be enacted at the beginning of January. These have been partly offset by Libya returning to the market (Figure 15), and so I guess without the cuts the price may have weakened. We will need to wait for the next OMR that will be published on 10 February to see if the cuts have been made. Note that the Brent-WTI spread that was a feature of the high price era has all but disappeared (Figure 3).
Figure 2 Longer term view of daily oil price showing the dramatic slump after the finance crash of 2008, the subsequent recovery was brought about by OPEC restraint (Figure 15). And then in 2014, OPEC abandoned restraint in favour of maintaining market share precipitating the 2014 oil price crash. Note how the Brent-WTI spread was a feature of the high oil price era.
Figure 3 WTI minus Brent. At its peak, the spread reached $30 per barrel. It has now virtually disappeared.
Rig count charts for North America, the USA, South America, The North Sea and OPEC are shown below. Additional charts for Europe, The Middle East, Africa and Asia-Oceania can be found here.
Rig counts provided by Baker Hughes are updated to 3rd February for N America and to December 2016 for all the rest.
Figure 4 Stacked area chart showing North America total rig count. The numbers are dominated by the USA, followed by Canada. Mexico is a small bit player on the drilling front. Peak drilling was reached on 27 January 2012 with a total of 2789 active rigs. The post oil price crash low was reached on 27 May 2016 when only 469 rigs remained active.
Figure 5 Stacked area chart of US Total rig count showing the oil – gas split. Note how the US rig fleet increased from about 1000 units in 1987 to 2000 units in 2008. Since the year 2000, drilling activity is dominated by horizontal drilling and fracking, first for natural gas but then post-May 2009 there was a huge migration away from drilling gas towards drilling LTO plays. In fact, classifying shale wells is tricky since gas wells produce natural gas liquids (NGLs) and oil wells produce natural gas with a continuum between the two. While gas focussed drilling has all but ceased, gas produced from oil wells has taken US gas production to record levels.
Figure 6 Same data as above but plotted as unstacked line chart. The recent low in US oil focussed drilling was 330 rigs on 24 June 2016. The low in gas was 83 rigs reached on 19 August 2016. Summer 2016 may be viewed as the turning point in the US drilling industry post-2014 crash.
Figure 7 US rig count broken out by sedimentary basin / petroleum systems play. The dominant plays are The Permian, Williston (N Dakota), Eagle Ford, Marcellus and Others. The other category includes conventional onshore and offshore drilling in the contiguous 48 states + Alaska. The recent revival in US drilling has been led by the Permian which is a prolific and low cost LTO play.
Figure 8 Drilling has slumped in the North Sea to a record low since 1995. The near term low was 29 rigs in September 2016.
Figure 9 In previous additions of Vital Statistics I showed a graph for Saudi Arabia, Kuwait, UAE and Qatar. This group can still be viewed on this chart than now shows all OPEC apart from Iraq and Iran that have discontinuous data series that seriously upsets the trend. The ME OPEC countries remain on a cyclical drilling high while drilling has slowed in the remaining countries. Note that only Algeria and Venezuela have active drilling programs.
Figure 10 The near-term top in S American rigs was 329 in August 2014. By June 2016 this had crashed to 158 and it remained at about that level for the remainder of the year. Note how drilling in Ecuador, Brazil and Columbia has collapsed completely. However, this has not yet shown up in the production data for these countries. In comparison, drilling in Venezuela and Argentina has been maintained at slightly reduced levels. Note that Argentina produces about 0.6 Mbpd compared with Venezuela’s 2.1 Mbpd. There is not yet any sign of a drilling recovery in S America.
Monthly oil production data are compiled from the IEA OMR. The public data are normally released towards the end of the month and relate to the previous month meaning that we are always running 4 to 5 weeks behind real time. The oil production graphs are updated to December 2016.
The 15 graphs below are mainly composite production groups. Graphs for individual countries reproducing the whole of the IEA OMR oil production data can be found as follows:
Figure 11 The OECD has only 4 significant oil producers: the USA, Canada, Mexico and Norway. The UK has now become a small player with production ~ 1 Mbpd alongside small producers Denmark and Australia. The revival in OECD oil production began at the beginning of 2012, led by US light tight oil (LTO) and Canada. Production in Mexico and Europe are actually in decline. The near term peak in OECD production was 24.13 Mbpd recorded in November 2015. The slow decline since then reflects the oil price crash and dramatic slowdown in US drilling.
Figure 12 The shape of the N American stack is dominated by the USA where LTO production began to accelerate early in 2012. The near term peak for N America was in April 2015 at 20.12 Mbpd.
Figure 13 European oil production is dominated by the North Sea and in particular by Norway. The “other” category is dominated by Denmark with a contribution from Italy. The steep decline since 2000 reflects what may eventually happen to all offshore provinces. Record high oil prices, 2004-2014 leading to high investment levels, were eventually able to arrest and to a limited extent reverse the declines. The high on this chart is 7.1 Mbpd in April 2002, the low is 2.94 Mbpd in September 2013.
Figure 14 Stacked chart for monthly oil production of 12 OPEC countries. Gabon, that rejoined OPEC in July 2016 is not shown since I do not have the data tabulated. Gabon is a minnow with 230,000 bpd production. Indonesia, that also rejoined OPEC in 2015 but was suspended in 2016 for opposing the year end production cuts, is also excluded from the chart. The grey band at top shows spare capacity that expands and contracts according to OPEC production policies from time to time. The details of spare capacity are shown in OPEC Fig 2. The expansion post-2008 shows 4 Mbpd production withheld to support price in the wake of the finance crash. The recent contraction in spare capacity reflects the strategy to grow market share that resulted in the oil price crash of 2014. The reference month for OPEC quotas was October 2016 when production hit a record high of 32.92 Mbpd. This had fallen back a tiny amount to 32.86 Mbpd in December.
Figure 15 Details of OPEC spare capacity. At the end of 2016, spare capacity was approaching historic lows of 1.99 Mbpd with most countries pumping flat out. Saudi Arabia alone has spare capacity of about 1.6 Mbpd though some industry observers question if Saudi Arabia could actually grow production by that amount at short notice.
Figure 16 Post-2008, Iran cut production in line with all OPEC countries but was unable to restore production to the 4 Mbpd plateau and then sanctions took hold in 2011 resulting in the loss of 1 Mbpd production. Note how the IEA restored Iran’s spare capacity in March 2015 in anticipation of sanctions being lifted and how that spare capacity was gradually converted to production in the course of 2016. Iran is part of the “OPEC deal”, but uniquely was allowed to increase and not cut production. Iran’s “quota for January 17 is 3.80 Mbpd, slightly higher than the Dec 16 figure of 3.72 Mbpd.
Figure 17 Libya was once one of the most wealthy countries in Africa on a per capita basis built upon oil production that peaked at 1.77 Mbpd in January 2008. The fall in production post-2008 reflects OPEC constraint post-finance crash. Oil production then fell off a cliff in March 2011 as the Arab Spring, civil war and UK / France led bombing took hold. Colonel Gaddafi was killed in October 2011 and production almost made a full recovery thereafter. But, come the summer of 2013 production once again fell off a cliff as the civil war re-ignited and terrorist attacks on oil installations wrecked the country’s oil industry. A major program of repairs has been undertaken and production of 715,000 bpd was reported by Forbes on January 30th 2017. This represents a 435,000 bpd uplift from August 2016 when production stood at 280,000 bpd. The full return of Libya to the market will to a large extent undo the OPEC deal.
Figure 18 Rest of World comprises all non-OPEC and non-OECD countries. This group is dominated by Russia, followed by China, the rest of the FSU (Kazakhstan and Azerbaijan) and Brazil. Production has been glued to a 30 Mbpd plateau since April 2010. Neither rising during the period of prolonged high price nor falling post 2014 oil price crash.
Figure 19 Production in Russia and FSU ticked up in October, the reference month for the OPEC + Russia deal. A new record of 14.55 Mbpd was struck in December.
Figure 20 Alongside N America, this is the only group showing production decline post-2014 oil price crash, led by China. Indonesia, Malaysia and India are all experiencing longer-term, slow decline. The fall in China’s has now been noticed by the mainstream media.
Figure 21 South America, excluding OPEC countries Venezuela and Ecuador, is dominated by Brazil. Production for the group is stable. I do not know the reason for the steep fall in Brazil’s production that took place in June 2010.
Figure 22 The Middle East excluding OPEC is dominated by Oman. Oman is an interesting small producer where the government handed over control of the industry to Shell who operate under license arrangements under the name Petroleum Development Oman (PDO). Oman is a significant exporter that remained outside of OPEC but has joined the consortium of countries that should have cut production in January. Syria and Yemen once produced 1 Mbpd between them back in 2002. Production was declining slowly in both countries until the Arab Spring dawned and production has now all but ceased in both countries. Other Middle East will be dominated by Bahrain.
Figure 23 Africa excluding OPEC (Libya, Algeria, Nigeria and Angola) has only one other major producer in the shape of Egypt. There are a host of smaller producers in the other category that includes countries like Equatorial Guinea, Republic of Congo, Gabon, South Sudan, Chad and Tunisia.
Figure 24 Summary of global C+C+NGL production. Note that OPEC counties’ NGL production is reported separately.
Figure 25 Some readers will be pleased to see that we have now broken out total liquids according to the various categories. In December 2016, global C+C+NGL amounted to 93.39 Mbpd. Record high production now belongs to November 2016.