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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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Sunday, 14 June 20
INDONESIAN COAL WAS STILL IN DEMAND; A 52,000-DWT SUPRAMAX FIXING DELIVERY CJK FOR A ROUND VOYAGE VIA INDONESIA AT $6,250 - BALTIC BRIEFING
Capesize
The Capesize market made new highs for the year this week after strong iron ore demand to the far east continued to develop in the mar ...
Friday, 12 June 20
CHINA CURBS COAL IMPORTS AFTER 5 MONTHS OF RECORD INFLOWS - SOURCES: REUTERS
China has stepped up customs checks for coal imports, leading to lengthy processing delays at ports, four sources familiar with the matter said, as ...
Friday, 12 June 20
COAL INDIA LIMITED SET FOR MARKETING DRIVE TO CREATE DEMAND - FINANCIAL EXPRESS
State-run miner Coal India (CIL), which is primarily focused on supplying coal to the power sector, is now reorienting its marketing to create dema ...
Friday, 12 June 20
MOODY'S REVISES BRENT OIL PRICE OUTLOOK TO $35/BARREL IN 2020 - TASS
Low oil prices are likely to exert the highest pressure on Iraq, Oman and Kuwait due to the limited space for the fiscal policy pursuit and higher ...
Thursday, 11 June 20
JAN-MAY, INDONESIA SHIPPED 175.15 MILLION TONS OF COAL TO ITS OVERSEAS BUYERS
Indonesia's coal production for the first 5 months of this year have reached 228 million tons. January – May 2020, Indonesia shipped US$ ...
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- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
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