World Oil Production
by David Archibald
29 March 2017
The BP Statistical Review of World Energy has oil production data by country up to the end of 2015. This is what that looks like from 1988:
The United States increased production by 5.1 million barrels per day from 2010 to 2015. The increase in production from countries around the Persian Gulf over the same period was slightly less at 5.0 million barrels per day. The increase in total world production was 8.4 million barrels per day so the rest of the world declined by some 1.7 million barrels per day. This was despite Canadian production rising 1.0 million barrels per day from oil sands developments plus some other increases from Russia, Brazil, Colombia etc.
Most oil producing countries are in well-established long term decline or plateau at best. How these trends will interact can approached from a bottom-up basis. To that end, the following graphs show likely production profiles by region for the next five years.
Saudi Arabia used to be the world’s swing producer. That role has been taken by the shale drillers of the United States. The graphic assumes that enough shale wells are drilled each year to keep US production flat – profitless prosperity. Mexico’s decline is well established for geological reasons and Venezuela’s decline continues for political reasons.
Russian production has held up well and, combined with fields in development, it is assumed that Russian production remains in plateau. The Norwegian and UK production declines are well established.
Algeria and Egypt are in decline. It is assumed that Libyan production does not recover from Tony Blair and Nicholas Sarkozy’s adventure in regime change.
Iranian production peaked in 1974 at 6.1 million barrels per day as the Shah tried to overtake Saudi production. It is assumed that Iranian production is geologically limited. Iraqi production continues rising despite the civil war in that country. Currently at over 4.0 million barrels per day, Iraq’s geological endowment should see production continuing to rise towards 9.0 million barrels per day.
Most oil producing countries in the Asia Pacific region are in well established decline. They were joined by China in 2016 which has two thirds of its production from giant oilfields that have been in production for decades and now have high water cuts and high operating costs. The graph assumes that China will contribute 1.3 million barrels per day of a 2.1 million barrel per day decline for the region over the next five years.
Adding all those production profiles results in production in 2022 that is five million barrels per day lower than world production, per BP’s statistics, in 2015. That could be offset by a faster rise in Iraqi production combined with increased shale oil production. According to this graphic from BTU Analytics:
There are some 290,000 remaining shale oil well locations remaining in the United States. By Enno Peter’s work, about 62,000 shale wells have been drilled in the United States to date. Peak drilling year was 2014 with 14,262 wells drilled for 2.46 million barrels per day of production in January 2015. About half of that number of wells need to be drilled each year now to offset decline in US shale oil production.
From all of the above comes an unoriginal conclusion: US shale oil is likely to buffer the oil price for at least the next five years.
David Archibald is author of American Gripen: The Solution to the F-35 Nightmare