What about the other 40mm bbl. p/d?
OPEC produces 33.5mm bbl. p/d, Russia produces 11.5mm bbl. p/d, the US 8.5mm bbl. p/d
and Canada 3.7mm bbl. p/d.. That totals 57.2mm bbl. p/d.. The world will use 97mm bbl. p/d
in the 4th qtr. or an additional 40mm bbl. p/d..
Many of the OPEC producers are in decline, all are having economic and financial problems.
The US is in decline and will continue to be so thru the 1H of 2017. Canada may be flat.
The 40mm bbl. comes from areas such as Mexico, Brazil and the FSU countries. All
are either in decline or not even close to meeting production expectations. Asia
led by China is down. The North Sea is in decline.
US shale will need 2 years to bring back production to its peak if possible. The
massive credit that had been available is no longer there. The majority are highly
levered and are planning to use additional C/F to reduce debt prior to additional
drilling. The majority of producers including the most aggressive PXD state they
need $60 or better to be C/F positive. The MSM makes shale look like it is the
majority of the worlds supply even though at its peak it only got close to 5mm
bbl. p/d. I do not believe any is full cycle profitable currently. The debt &
equity that was issued will not be returned by production at current prices nor
$70 for the majority of the producers.
Offshore is not profitable. Brazil has cut back to 10 rigs offshore as well as
the US. Infill drilling & EOR has been cut way back WW. The 40mm bbl. p/d that
the world will need in the 4th qtr. in addition to OPEC, Russia, the US & Canada
will not be there. Neither is the CAPEX for future additional production. The
production from past CAPEX is online much is already in decline.
The focus by the MSM & WS are on shale and OPEC. They have missed the big picture.
Neither OPEC or shale have any additional capacity & the ROW's 40mm bbl. p/d
is in decline and the CAPEX is not there to replace that declining production.