USOI - Non-OPEC's Oil Production Rise Continues In October

Summary

• October non-OPEC oil production increased by 562 kb/d to 50,565 kb/d.
• For frac spreads, the general trend since late February 2022 can best be described as essentially flat around the 290 level but with a hint of a slow increase toward 300 frac spreads.
• World oil production in October increased by 94 kb/d to 81,789 kb/d.

A Guest Post by Ovi

Below are a number of Crude plus Condensate (C + C) production charts, usually shortened to "oil" , for Non-OPEC countries. The charts are created from data provided by the EIA's International Energy Statistics and are updated to October 2022. This is the latest and most detailed world oil production information available. Information from other sources such as OPEC, the STEO, and country-specific sites such as Russia, Brazil, Norway, and China is used to provide a short-term outlook for future output and direction for a few of these countries and the world. The US report has an expanded view beyond production by adding rig and frac charts.

October non-OPEC oil production increased by 562 kb/d to 50,565 kb/d. The majority of the increase came from Kazakhstan, Norway, and the US.

In the last report, it was noted that the STEO was expecting October to add 527 kb/d. They came very close.

Using data from the February 2023 STEO, a projection for non-OPEC oil output was made for the period November 2022 to December 2024 (Red graph). Output is expected to reach 51,738 kb/d in December 2024, which is 663 kb/d lower than the November 2019 peak of 52,401 kb/d.

Note that after January 2022 post-pandemic high of 51,377 kb/d, production drops to 50,008 kb/d in April 2023, before resuming its climb. The drop is primarily due to a projected drop in Russian oil output .

The production increase of 361 kb/d from January 2023 to December 2024 is largely due to rising U.S. production. See the next chart.

From January 2023 to December 2024, production in non-OPEC W/O in the US drops by 70 kb/d. This implies that most of the output increase seen from January 2023 to December 2024 comes from the US.

Listed above are the World's 10th largest Non-OPEC producers. The criteria for inclusion in the table is that all of the countries produced more than 1,000 kb/d. Only Russia and Canada experienced a small MoM production drop in October. The overall October production increase for these ten Non-OPEC countries was 428 kb/d while as a whole the Non-OPEC countries increased output by 562 kb/d. OPEC C + C dropped by 468 kb/d in October but YoY increased by 1,780 kb/d.

In October 2022, these 10 countries produced 83.1% of the Non-OPEC oil. On a YoY basis, non-OPEC production increased by 969 kb/d. World YoY October output increased by 2,749 kb/d.

Non-OPEC Production Charts

The EIA reported Brazil's October production increased by 97 kb/d to 3,245 kb/d. October's production was a new record high for Brazil which was not sustained in November and December.

Brazil's National Petroleum Association (BNPA) reported that November's output dropped by 150 kb/d to 3,095 kb/d and December had a further drop to 3,074 kb/d.

According to OPEC, the November output reduction was mainly due to some issues at the Tupi field installations.

Much of Brazil's production growth will be from the sub-salt frontier, where highly productive reservoirs containing light and low sulphur oil have been explored."

According to the EIA, Canada's October output decreased by 12 kb/d to 4,620 kb/d.

The Canada Energy Regulator (CER) reported an October output of 4,944 kb/d, 324 kb/d higher than the EIA due to a difference in the definition of condensate. Preliminary CER estimates indicate that Canadian production could rise by 160 kb/d in November to 4,784 kb/d after accounting for the typical 320 kb/d higher production reporting by the CER. If this November estimate is correct, Canadian oil production would exceed its previous December 2019 high of 4,670 kb/d.

According to OPEC, the November increase was largely due to the Hibernia field coming back online after October maintenance, and gains were seen in upgraded crude. It represents the highest Canadian production on record.

According to this source , total oil production in Alberta climbed to 3.96 million barrels per day (bpd) in November, a new peak and 2.2% higher than the previous monthly high set in September 2022.

Rail shipments to the US in November dropped by 18 kb/d to 122 kb/d.

The EIA reported China's output increased by 18 kb/d to 4,060 kb/d in October .

The official China bureau reported that China's output decreased to 4,024 kb/d in November and decreased further to 3,973 kb/d in December, red markers.

Note that December's output is down by 212 kb/d relative to the January 2022 high of 4,185 kb/d. China may be close to its current maximum production level of approximately 4,000 kb/d to 4,200 kb/d. To offset declines, the national oil company is investing in conventional wells, and deep water wells and is also drilling for shale oil.

Kazakhstan's output increased by 154 kb/d in October to 1,560 kb/d.

According to this source , production was expected to recover in November. Production was restored in late October after the gas leak was repaired and reached 1,890 kb/d in early November, an increase of 485 kb/d over the September low of 1,405 kb/d.

Mexico's production as reported by the EIA for October was 1,724 kb/d an increase of 14 kb/d over September.

The November and December estimates, red markers, were obtained by using the Pemex increments over October production and adding those to the EIA's October output because Pemex reports higher production than the EIA.

According to OPEC, the total crude production decline in Pemex's mature fields is projected to outweigh production ramp-ups, mainly from Mexico's foreign-operated fields.

The EIA reported that Norway's October production increased by 110 kb/d to 1,775 kb/d. This is 11 kb/d higher than reported by the Norway Petroleum Directorate.

The Norway Petroleum Directorate ((NPD)) reported that production in November was down by 16 kb/d to 1,759 kb/d and then added 33 kb/d to 1,792 kb/d in December. (Red markers). The December increase was due to the startup of Johan Sverdrup 2.

According to the NPD : "Oil production in November was 8.7 percent lower than the NPD's forecast and 5.7 percent lower than the forecast so far this year." For December they wrote, "Oil production in December was 9.7 percent lower than the NPD's forecast and 6.1 percent lower than the forecast so far this year."

According to Equinor , the start-up of giant Johan Sverdrup's Phase 2 took place on Decembe r 15. At plateau, the field will produce 720,000 barrels of oil/day.

The two phases now account for around one-third of the country's oil production and add heavier, sour crude to the North Sea's predominantly light sweet flows. It is expected that the field's total export will be stepped up gradually as further commissioning and testing of systems are ongoing. In addition, the Njord field is back online after a multi-year modification process and has been upgraded for future tie-back developments by the Fenja and Bauge fields.

Oman's production has risen very consistently since the low of May 2020. Oman's October production increased by 3 kb/d to 1,094 kb/d. It is 14 kb/d short of its pre-pandemic high.

October's output was unchanged at 1,322 kb/d.

The EIA reported that Russian output decreased by 25 kb/d in October to 10,227 kb/d.

Russia's Ministry data for November production of 10,900 kb/d was taken from this source . In light of all of the sanctions, it is surprising to see such robust production.

December production is shown unchanged based on this statement : Russia will keep oil production in December at the November level amid the EU's embargo and the price cap, Deputy Prime Minister Alexander Novak told reporters.

The EIA production numbers for November and December are derived from the Russia Ministry data by subtracting 404 kb/d. In the past, when production data was obtained directly from the Russian Energy Ministry, it was found that the EIA arbitrarily subtracted 404 kb/d from the Ministry data.

Production at Russia's Sakhalin-1 is near capacity after Exxon's exit. According to this source : Oil output from Russia's Sakhalin-1 project has recovered to 140,000-150,000 barrels per day (bpd), about 65% of the capacity.

On February 10, 2023, Russia announced it will cut oil output by 500,000 bpd in March.

Russia will cut oil production by 500,000 barrels per day, or around 5% of output, in March, Deputy Prime Minister Alexander Novak said on Friday, after the West imposed price caps on Russian oil and oil products.

The price of Brent crude rose on the news of the output cut from Russia, the world's second-largest oil exporter after Saudi Arabia, increasing by more than 2.5% on the day to $86.6 per barrel.

The EIA reported UK's production increased by 88 kb/d in September to 699 kb/d. According to OPEC, "UK liquids output in November was down by 3% from the same month a year earlier, mainly due to extended maintenance and natural declines."

According to this source, North Sea Transition Authority (NSTA), October's production was 718 kb/d. According to this source , October's output was 682 kb/d. The average for these two estimates is 700 kb/d, which is very close to the EIA estimate.

Using these same two sources for November production and averaging the estimates suggests that expected November production should be close to 738 kb/d, red marker.

U.S. November production decreased by 35 kb/d to 12,375 kb/d. For November, the state with the largest increase was Oklahoma with 19 kb/d while North Dakota had the largest decrease, 23 kb/d. The GOM also experienced a production drop.

While overall US oil production decreased by 35 kb/d, the Onshore L48 had a larger drop of 50 kb/d to 10,101 kb/d. This means that the source for the largest US production decrease came from the Onshore L48.

The Blue graph, taken from the February 2023 STEO, is the production forecast for the U.S. from December 2022 to December 2024. For comparison, the Orange graph from the January STEO has been added to show how the latest forecast has dropped the December 2024 projected output from 13,154 kb/d to 12,805 kb/d, a drop of 349 kb/d and back below the November 2019 peak of 13,000 kb/d. Also, note the change in the projected December 2022 output.

Since the beginning of April 2021 through to the week ending July 29, 2022, the US added horizontal oil rigs at a rate of close to 3.82 rigs/wk, orange OLS line, and peaked at 551 rigs in the week ending July 29. However, since then the number of operational rigs has wandered sideways.

In the week ending February 10, the number of rigs increased by 7 to 563, 7 fewer than the post-pandemic high of 570 on November 18, 2022.

In the week ending February 3, Permian rigs rose by 7 to 337 and Texas rigs dropped by 4 to 319. Note that Permian rigs are at a new post-pandemic high of 337 rigs.

It appears that there was a movement of rigs from Texas to New Mexico in the Permian since the rig count in New Mexico jumped by 11 while Texas dropped by 4.

For frac spreads, the general trend since late February 2022 can best be described as essentially flat around the 290 level but with a hint of a slow increase toward 300 frac spreads. At the beginning of the 2022 Thanksgiving and Christmas holidays, the frac count began to drop. The frac count bottomed in the week ending January 6 at 250 and then began to recover. A similar trend occurred last year.

For the week ending February 10, the frac count decreased by 4 to 266. It seems that the increase of 20 for the week ending January 27 may have been a counting error.

Note that these 266 frac spreads include both gas and oil spreads.

These six countries complete the list of non-OPEC countries with annual production between 500 kb/d and 1,000 kb/d. Note that the UK has been added to this list since its production has been below 1,000 kb/d since 2020.

Their combined October production was 3,878 kb/d, up 124 kb/d from September's 3,754 kb/d. The UK contributed 88 kb/d of that increase.

The overall output from the above six countries has been in a slow steady decline since 2014 and appears to have accelerated after 2019.

World Oil Production Ranked by Country

Above are listed the World's 11th largest oil producers.

In October 2022, these 11 countries produced 75.0% of the world's oil. On a YoY basis, production from these 11 countries increased by 2,749 kb/d.

The largest increase came from Norway, 110 kb/d. Saudi Arabia had the largest production drop, 500 kb/d.

World Oil Production Projection

World oil production in October increased by 94 kb/d to 81,789 kb/d according to the EIA (Green graph). November is expected to add 103 kb/d to 81,892 kb/d.

This chart also projects World C + C production out to December 2024. It uses the February 2023 STEO report along with the International Energy Statistics to make the projection. (Red markers).

It projects that World crude production in December 2024 will be 82,954 kb/d, 266 kb/d lower than the 83,220 kb/d in the previous post. Note that this post-pandemic high of 82,954 kb/d is 1,631 kb/d lower than the November 2018 peak of 84,585 kb/d.

The drop from November 2022 to April 2023 is primarily due to a projected drop in Russian oil output.

The increase from December 2022 to December 2024 is 930 kb/d. Of the 930 kb/d, 411 kb/d comes from World W/O U.S. production. See the next chart.

World oil production W/O the U.S. from December 2022 to December 2024 increases by a total of 421 kb/d, or at an average rate of 211.5 kb/d/yr.

Original Post

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

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Non-OPEC's Oil Production Rise Continues In October