Time for a switch in focus, from the philosophical yesterday to the prosaic today. It’s that time of the month for some hard numbers from “frack land”, i.e., the good old USA. What is more, I am going to stick my neck out today and call the top for US crude oil production.
The US government agency the Energy Information Administration (EIA) reports monthly crude oil production with a 2 month lag; January 2015 data were published on 30 March. January saw oil production averaging 9.2 million barrels per day, a rise of 14.8% year on year. Over the previous month, production was down slightly. Nonetheless, we did see a month-on-month decline in November only for production to power to a new record again in December.Yet I’m still calling the top.
True, growth has far exceeded what I expected when I started writing this blog. The production surge is indisputable (here, click for larger image).
The reason why I didn’t expect to see output rise so far so fast was due to the high production declines rates exhibited by tight oil plays, leading to what many call the ‘Red Queen’ syndrome: the need to run faster and faster just to stand still. So a mea culpa on my side: the US shale oil industry did run faster and faster. With global crude oil prices locked above $100 barrel for three long years, we got both a lot more rigs and, critically, more efficient rigs as fracking technology advanced. This was enough to overwhelm the naturally high depletion rates. Continue reading
On June 27th, the U.S. government agency The Energy Information Administration (EIA) announced provisional crude oil production figures for April 2013. Key points:
- April crude oil production 220.6 million barrels, equivalent to 7.4 million barrels per day (bpd)
- Change over April 2012 on a barrel-per-day basis: +16.9% y/y
- April total crude oil plus natural gas liquids 294.6 million barrels, equivalent to 9.8 bpd
As can be seen from the chart below (click for larger image, link to original data here), the fracking of tight oil formations in the U.S. has made a major impact on U.S. crude production. The critical question is whether the current large year-on-year percentage growth rates in oil production can be sustained (click for larger image). The year-on-year increase in production peaked in October 2012 at 18.2%, but April 2013 also recorded a very strong 16.9% year-on-year jump. Currently, year-on-year oil production gains remain robust, in contrast with U.S. natural gas trends.
Given crude oil is a globally traded commodity, U.S. production numbers need to be placed in the context of world supply and demand. In its latest Oil Market Report dated 12 June 2013, the International Energy Agency (IEA) recorded global ‘all liquids’ production of 91.3 million bpd for May 2013, down marginally from the previous month, but up 0.2 million bpd over May 2012. The June 2013 Oil Market Report can be found here.
Full quarterly IEA world supply-and-demand figures, including Q3 2013 estimates, can be found here.