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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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- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- PTC India Limited - India
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Minerals Council of Australia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- MS Steel International - UAE
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
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