Oil Supply looking much tighter in 2018
Posted: Sun Jul 02, 2017 2:05 pm
Read: http://www.zerohedge.com/news/2017-07-0 ... ergy-shock
The point of the article above is that the market has a very short-term time perspective; sometimes I think it is less than a few hours. The drastic decline in upstream investments will have a drastic impact on future supply.
I know that talk of an oil shortage by the end of next year sounds like nonsense, but this idea is coming from IEA. U.S. shale plays cannot meet future oil demand on their own. We are already seeing signs that U.S. oil production growth is slowing because it becomes more and more difficult to keep up with a steeper decline curve. Overall, U.S. oil production now declines by approximately 25% per year. This compares to a rate of around 6% in 2000. The deplete rate is increasing as more and more of our oil comes from high decline rate horizontal wells in shale and other tight formations.
Facts:
> U.S. oil production increased 429,000 barrels per day in Q1 2017. < Primarily because of the big push to complete DUC wells in Q4 2016.
> U.S. oil production increased by only 51,000 barrels per day from 3/31 to 6/23.
> U.S. oil production declined by 92,000 barrels per day from 5/26 to 6/23. < Most of this can be attributed to tropical storm Cindy, but not all of the decline.
The point of the article above is that the market has a very short-term time perspective; sometimes I think it is less than a few hours. The drastic decline in upstream investments will have a drastic impact on future supply.
I know that talk of an oil shortage by the end of next year sounds like nonsense, but this idea is coming from IEA. U.S. shale plays cannot meet future oil demand on their own. We are already seeing signs that U.S. oil production growth is slowing because it becomes more and more difficult to keep up with a steeper decline curve. Overall, U.S. oil production now declines by approximately 25% per year. This compares to a rate of around 6% in 2000. The deplete rate is increasing as more and more of our oil comes from high decline rate horizontal wells in shale and other tight formations.
Facts:
> U.S. oil production increased 429,000 barrels per day in Q1 2017. < Primarily because of the big push to complete DUC wells in Q4 2016.
> U.S. oil production increased by only 51,000 barrels per day from 3/31 to 6/23.
> U.S. oil production declined by 92,000 barrels per day from 5/26 to 6/23. < Most of this can be attributed to tropical storm Cindy, but not all of the decline.