Non-OPEC Oil Production Collapses In April

A post by Ovi at peakoilbarrel

Below are a number of oil (C + C ) production charts for Non-OPEC countries created from data provided by the EIA’s International Energy Statistics and updated to April 2020. Information from other sources such as the OPEC and country specific sites is used to provide a short-term outlook for future output and direction.

Non-OPEC production dropped slowly from a high of 52,646 kb/d in December 2019 to 52,255 kb/d in March 2020. In April, that changed when we saw the first big drop in output from the Non-OPEC countries. April output collapsed by 1,751 kb/d to 50,504 kb/d. Those drops are associated with the OPEC + Declaration of Cooperation (DOC) commitments made by Non-OPEC countries, CV-19 and the WTI price collapse.

The projection to August (red square) was made using the August STEO report. It projects Non-OPEC production will drop to 46,074 kb/d in May before beginning to recover to over 48,000 kb/d in August.

Above are listed the worldʼs 14 largest Non-OPEC producers. They produced 87.93% of the Non-OPEC output in April and the percentage seems to vary very little MoM. On a YoY basis, Non-OPEC production was down by 72 kb/d. On a MoM basis, production was down by 1,751 kb/d. World oil production was up by 168 kb/d MoM and 243 kb/d YoY.

Brazil’s oil output in April was 2,958 kb/d. May saw a drop in output to 2,765 kb/d but it rebounded in June to 3,013 kb/d according to this source. The increase in production is mainly due to the Lula and Búzios fields, which together account for more than 50% of the total national production.

“Pre-salt production in June was 2,125 kb/d of oil, 70.5%, which was produced through 118 wells. “

The EIA shows Canadian production was down in April by 658 kb/d to 3,865 kb/d. The Canada Energy Regulator (CER) has just updated their projected production data for 2020. (Thanks Ron). The CER data is higher because it includes NGPLs in their estimates and is close to 6% of total output. According to the CER, output will recover by December to 4,474 kb/d, close to 470 kb/d lower than the December 2019 high. Alberta’s monthly production limits for raw crude and bitumen are currently set at 3.81 Mb/d from December 2019 to August 2020.

While hearings continue to block progress on construction of TC Energyʼs (NYSE:TRP) Keystone XL pipeline, president Trump has given permission for TC Energy to increase the capacity of the Keystone pipeline by to 170 kb/d to 760 kb/d. The president did this due to continuing process delays on the Keystone XL pipeline.

“TC Energy will be able to increase its transportation of oil by 50,000 bpd next year, doing so without making any substantial capital investments in the pipeline. Instead, the company will add drag reducing agents to the oil which will make the flow of the liquid smoother, according to Bevin Wirzba, the senior vice-president for liquids pipelines during the call.”

Chinaʼs production peaked in June 15 at 4,408 kb/d and has been in a steady decline up to September 2018 when it reached an output low of 3,694 kb/d. In the EIAʼs update, Chinaʼs April production decreased by 38 kb/d to 3,862 kb/d. According to this source, Chinaʼs July production dropped by 80 kb/d to 3,840 kb/d (Red square) from June’s 3,920 kb/d.

Kazakhstan production hit a new output high in February, 1,976 kb/d. For April, production was flat at 1,941 kb/d. OPEC expects their output to drop by an average 15 kb/d this year.

Mexico had steady output increase from May 2019 to March 2020 to 1,773 kb/d. However, the trend was reversed in April. Mexicoʼs production decreased in April by 20 kb/d to 1,753 kb/d according to the EIA. Data from Pemex shows that production dropped to 1,655 kb/d in June. Under the DoC, Mexico committed to reduce output by 100 kb/d in May. Relative to March, June production is down by 118 kb/d and this puts Mexico in compliance with their commitment.

Norwayʼs output increased by 53 kb/d in April from 1,752 kb/d to 1,805 kb/d. March output was revised up from 1,735 kb/d to 1,752 kb/d according to the EIA and in accordance with the NPD report. The red lines indicate production going forward as outlined by the NPD. May production came in at 1,775 kb/d rather than the pre-pandemic planned 1,859 kb/d originally predicted by the NPD.

Average daily production in June was 1,560 kb/d. “On 29 April 2020, the Government decided to implement a cut in Norwegian oil production. The oil production figures for June include the commitment of cutting 250 kb/d.” This cut is 50 kb/d higher than originally planned. So, June production of 1,560 kb/d is 245 kb/d lower than April and within 5 kb/d of their 250 kb/d cut commitment.

According to the Russian Ministry of energy, Russian production increased by 42 kb/d in July to 9,371 kb/d.

UKʼs production increased by 39 kb/d in April to 997 kb/d. According to OPEC, production is expected to drop to 950 kb/d in May (Red square).

May’s production drop is just short of 2 Mb/d by 11 kb/d. Awesome. US oil fields began a slow and steady decline from November 2019 to March 2020. March brought the combination of CV-19 and oil price drop that led to sharp production plunges in April and May. Since the current EIA data is two months delayed, May is the second month that shows the combined effects of the pandemic and low oil prices. Will June drop below 10,001 kb/d? (Note that this chart uses PSM data, which is slightly different than the EIA international which is slow in updating its US data.)

US oil rigs dropped from 683 on March 13th to 172 on Aug 14th. At the same time, Permian rigs dropped from 418 to 116. For the week of August 21, the trend reversed. US oil rigs increased by 9 and Permian rigs by 10. As a percentage, Permian oil rigs represented 61.2% of the total on March 13th and they gradually increased to 69.6% for the week of Aug 21.

According to the August DPR, the 126 rigs operating in the Permian in August will be sufficient to raise production in August by 108 kb/d to 4,147 kb/d.

This week’s increase in oil rigs seems to imply that $42 WTI (August 21, 2020) is sufficient to bring back drilling in the Permian. For the week of August 21, Williston and Eagle Ford each dropped one rig. In non-basin areas, three rigs increased. On a state basis, Texas was up 10 to 96, North Dakota down 1 to 10 and New Mexico up 2 to 46.

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 April production was 3,487 kb/d, down 8 kb/d from March’s output of 3,495 kb/d. Azerbaijan, Indonesia and India appear to be in a slow steady decline phase.

Columbia’s production has been essentially flat since August 2019 but declined by 75 kb/d from February to April. In August, it was reported that production had fallen to 735 kb/d. “The country previously expected that with oil prices in a range of $60 to $65 a barrel, some 42 exploration wells would be drilled in 2020. Now it expects 20 to 33 wells, he said.”

Non OPEC w/o US Production

This chart is providing an early indication that Non-OPEC countries, excluding the US, are approaching an output plateau. April is the first month in which the large production drop associated with CV-19 and the plunge in oil prices shows up in this chart. Excluding the US, output from these countries dropped by 1,081 kb/d in April to 38,443 kb/d and then will drop by a further 2,370 kb/d in May.

Using information from the August STEO, output from Non-OPEC countries, W/O the US, will drop to close to 36,000kb/d in May and then will begin to rebound starting in June. August output is expected to reach 37,390 kb/d.

World Oil Production

World oil production in April increased by 168 kb/d to 82,484 kb/d. OPEC’s production increase of 1,919 kb/d in April was offset by Non-OPEC’s decline of 1,751 kb/d, the difference being 168 kb/d. April’s output of 82,484 is 2,156 kb/d lower than the November 2018 peak.

The orange square represents world oil production if the Non-OPEC countries’ output had not dropped by 1,751 kb/d. In other words, if the OPEC output surge of 1,991 kb/d had been added to a stable Non-OPEC output, World output would have been 405 kb/d lower than the peak on November 2018.

OPEC oil (C + C) production increased by 1,919 kb/d in April to 31,980 kb/d.

Non-OPEC output dropped by 1,751 kb/d in April to 50,504 kb/d. May is expected to be the low point at 46,769 kb/d before output begins to recover in June.

This chart projects world production out to September 2020. It uses the August STEO along with the International Energy Statistics to make the projection. It projects that world production will collapse by 10,221 kb/d in May. By September, output is expected to recover to 74,598 kb/d.

World oil production increased slightly in April because OPEC and Non-OPEC production went in opposite directions. However, in May, OPEC reversed its over production and along with the Non-OPEC cuts/declines, the reversal and cuts became additive and massive. Looking at some of the individual country drops between April and May as reported by other sources, these stood out; OPEC 6,331 kb/d, Russia 1,942 kb/d, US 2,060 kb/d, Canada 260 kb/d, Brazil 193 kb/d and Mexico 76 kb/d for a total of 10,862 kb/d. This is 641 kb/d higher than the DPR projected May decline of 10,221 kb/d.

This chart is world oil production without the US. Note that the November 2016 peak is two years prior to all the worldʼs countries peak shown in the previous chart. April production was 70,423 kb/d, an increase of 878 kb/d over March and 3,304 kb/d lower the the November 2016 peak. For May, we should expect to see a production decrease of approximately 8,100 kb/d to 62,200 kb/d.

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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