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Tuesday, 16 June 20
SHALE SHOCKED - WOOD MACKENZIE
 Capturing shut-ins in real time
Oil markets are searching for balance as the world reflects on the impact of the COVID-19 pandemic. The market has never experienced such a demand shock and it is difficult to predict what will happen next. What we do know, is that US producers have made drastic changes to overcome the excess supply in the market. From its peak in March to the end of May, our US Daily Oil Pipe Production data, shows that total US production has dropped 1.6 million bpd. That’s approximately 13% of daily barrels-out-of-the-ground removed from the market due to price-driven shut-ins. It’s hard to swallow just how impactful this dip in production is – and there are many factors at play in the market today. In this post, we will discuss how we’ve been tracking and corroborating shut-ins, impacted regions, and our thoughts on recovery.
Regional assessments of production
In April, our US daily oil production model began showing a meaningful downward response to market pressures. Because our data is broken out into eight different regions, we saw that this decline was driven by the Permian, which fell off by nearly a million bpd from March to May. Despite the Texas Railroad Commission’s decision not to curtail production, operators voluntarily shut their wells in through a market-driven exodus. During this time, our data was corroborated by myriad shut-in announcements from various producers. We are now expecting production to begin rebounding in the basin. We’ve already seen some recovery just south of the world’s most productive basin. Though it did not show as an intense nor rapid response, production in the Eagle Ford fell off by about 130,000 bpd since March. As of June 5, most of that production has recovered. While the shut-ins started in Texas, more followed in the Bakken and Gulf of Mexico.
Bakken production data recently published by the North Dakota Industrial Commission (NDIC) shows that March production came in at 1.428 million bpd, just above our modeled 1.422 million bpd. Between March 13 and May 15, our North Dakota model showed a 410,000 bpd decline, dipping below 1 million barrels at its lowest point. The NDIC also cited on May 15 that production has dipped below 1 million bpd, and that “it is going to be a rather slow process to get production back online.” However, our modeled production data recovered by about 90,000 bpd between May 15 and May 22 which rose with local hub pricing through the end of May. This recovery has since dipped, but recent signals have shown that production is rebounding again in response to the latest price rallies. More on recovery later.
The Gulf of Mexico has been hit just as hard as some onshore fields, despite expectations of resiliency due to larger projects with higher overhead. Since March, we’ve observed production fall off by over 200,000 bpd. At first, this decline was spread evenly across fields (we model production at 12 separate offshore platforms) and corroborated by April 22 shut-in announcements from Cantium and Fieldwood Energy. On May 2, the Delta House platform shut-in and production dropped to zero. During their May 11 earnings call, Kosmos Energy revealed that the platform’s operator had decided to shut the field for the entire month of May and move up their maintenance schedule. Our model captured this shut-in ten days in advance and our subscribers witnessed production ramp back up the day that this field restarted. Previously, our data has accurately predicted production recovery following hurricanes, and our model will also capture the next price-driven uptick in offshore production.
One recent example is Tropical Storm Cristobal, which made landfall over Louisiana on June 5 bringing heavy rain and winds of upwards of 50 mph. Tropical storm warnings were posted for much of the Louisiana coastline, Mississippi, Alabama and portions of the Florida Panhandle. Gulf of Mexico producers began shutting in production on Thursday in preparation for the storm and as of today, nearly 674 Mb/d has been shut-in. Atlantis, Thunder Horse, Na Kika, Jack/St. Malo, Baldpate/Magnolia, Lucius/Hadrian and Tubular Bells are shut-in or running at reduced rates. The BSEE reported that personale had been evacuated from a total of 185 production platforms, which is 29% of total production platform in the Gulf of Mexico. Seven dynamically positioned rigs had been moved off of location in the storm path as safety precaution, while three rigs had been evacuated. Our daily model predicted shut in volumes of 574 Mb/d, which is a decline of 33% of total production from the prior week. Our daily production estimates are able to track the outages in real-time, before the public BSEE reports.
Keep in mind that shut-ins are not uniform. Certain operators, like Exxon Mobil, shut in their most productive wells (according to their May 1 earnings call), while others shut in least economic wells. Some ran wells until failure, and others chartered crude tankers for extra storage space. Still, we’ve now seen sweeping declines across the regions that we model for – which drive our total estimate of crude production in the United States.
Our US Daily Oil Production model covers eight main regions, twelve Gulf of Mexico sub-regions, and a total US production estimate. The model utilizes Genscape’s Oil and Natural Gas Intelligence platforms for real-time inputs. These inputs include oil pipeline flow volumes, crude-by-rail cargo counting, and natural gas nominations. Using these proprietary inputs, Genscape captures a daily production estimate in the following regions with high accuracy: Permian, Gulf of Mexico, Eagle Ford, Bakken, DJ Basin, Alaska, Wyoming, and California. All other US production regions are captured in our total US production number. Regions included in our high-frequency estimate have a monthly correlation to state data greater than 95% R2. This accuracy creates user confidence and helps answer the next question, when will US production reach the bottom and begin recovery?
Calling the bottom and capturing recovery
As a result of these declines in our daily estimates, we have lowered our short-term total US production forecast significantly in Q2-2020 to take into account the shut-ins and completion deferrals. We expect that production will drop nearly 1.9 million bpd, from 12.8 million bpd in March to 10.9 million bpd in June. Of this reduction, we assume nearly 1.1 million bpd come from shut-ins, while 800,000 bpd is related to completion deferrals and rig activity reductions. We could see a jump in production by mid-June as curtailments come back online, however there is risk to this depending on how quickly demand recovers and where storage levels sit. The timing and volume could be dependent on if wells need workover activity or if they actually come back at higher levels due to pressure build up and flush production.
In fact, we’ve seen some incremental growth driven by North Dakota, Denver-Julesburg, and the Eagle Ford, signaling that production could be recovering. Local hubs like Clearbrook and Midland both traded above WTI throughout late April/early May, improving the margin on barrels produced in these regions. Still, since we have never seen widespread production shut-in like this in the past, many questions remain about how much volume will return and if smaller producing higher cost wells may be shut-in for good.
Keep in mind that our forecast will change according to prices and the now bottomed-out rig count, and that we provide our clients with a weekly update of our forward-looking expectations based on these inputs. Regardless of when production comes back, our users will be able to capture and quantify the recovery as it happens. Just as our data was a leading indicator of the first shut-ins, it will catch production on the way up. This will allow our clients to be able to update their balances in near real-time and respond to production movements appropriately.
Watch what happens next
For years, US crude production has been marked by steady, seemingly unstoppable growth. The drastic imbalance of oversupply in a market suppressed by a demand-choking pandemic has driven prices to historic lows. The resulting production dive is nearly indescribable, but nothing short of unprecedented. Data describes the situation much better than words, which is why we strive to provide the most accurate and high-frequency assessment of crude production in a cloudy market. The combined analytical expertise and powerful daily modeling of our US Crude Production suite will help you capitalize on upstream uncertainty. Join us in following shut-ins and capture crude recovery.
Source: Wood Mackenzie
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Friday, 24 July 20
IPA: THERMAL COAL IMPORTS AT MAJOR PORTS DECLINE 35 PC TO 17.71 MT IN APR TO JUNE - ECONOMIC TIMES
These ports had handled 27.13 MT of thermal coal and 14.95 MT of coking coal in the April-June period of the previous financial year
...
Thursday, 23 July 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 1.36 MILLION TONS OF BITUMINOUS COAL FOR OCTOBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 1,360,00 ...
Wednesday, 22 July 20
CIL'S COAL SUPPLY TO POWER SECTOR DROPS OVER 21% TO 93.5 MT IN APR-JUN QUARTER - PTI
The supply of coal by state-owned Coal India Ltd to the power sector fell 21.7 percent to 93.5 million tonnes (MT) in the first quarter of the ongo ...
Monday, 20 July 20
KOREA MIDLAND POWER INVITED BIDS FOR TOTAL 2.520 MILLION MT OF BITUMINOUS COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO), has issued an international tender for total 840,000 of Bituminous Coal to be used at Bo ...
Monday, 20 July 20
CHINA'S JUNE COAL OUTPUT FALLS 1.2% YEAR-ON-YEAR OVER ILLEGAL MINING CHECKS - REUTERS
China’s coal output dropped 1.2% in June on the year to 330 million tonnes, official data showed, as major coal mining areas cracked down on ...
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- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
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