Energy Prospectus

North American Active Rig count dropped 31 to 883, compared to 2,324 a year ago.

Rigs drilling for oil in the U.S. dropped by 21 to 524, compared to 1,546 a year ago.
Rigs drilling for gas in the U.S. dropped by 7 to 185, compared to 346 a year ago.

Rigs drilling for oil will dip under 500 by year-end and I expect it to keep falling until WTI move back to $60/bbl.

U.S. oil and gas production decline will accelerate.

As our rig count declines and US production is impacted - what is going on in the rest of the world?

My understanding is that large new oil sands projects are coming on line. What about Iran?

I am beginning to think that US land based production is only a small part of the supply side of the supply vs demand equation.

Dan - it is not that I do not agree with the trend - it is the importance of the US land based production and the overall timing of world wide production projects that I question.

On other threads I have discussed the importance of the time constant '"tau" of a system. IMO what we are seeing is that the time constant of the production system is far greater than many of us thought. Many years of high prices have put in place a momentum of new production that is proving far harder to reverse than was commonly thought.

The market represents the financial bets on "tau".

IMO only a policy decision by SA and Russia combined will change this trend near term. And then there is the unending delay of winter.

Bob

If you take the time to go through the presentation at the link below (which I sent out to EPG members on 12/9) it will answer most of your questions.

http://www.authorstream.com/Presentatio ... oil-crash/

Importance of U.S. production decline: The U.S. accounted for ~85% of Non-OPEC production growth during the 5-year period 2010-2014. OPEC countries produce about 40% of global oil supply. U.S. + Russia produce about 20% of global oil supply.