Thread by @anasalhajji

Thread on global oil production: Shale & Sanctions

1. The results are in. Only a few got it right! It is Canada. The US doubled its production by 2019, then production declined in 2020. This explains why the majority went for the US.
see chart in next tweet #Oil #OOTT

2. The chart below is a production index of the top 12 producing countries. It shows that the highest increases came from Canada, the US, and Iraq.

Anything below 100 is a decrease. In the case of Venezuela, production in 2020 is only about 17% of what it was in 2000. #OOTT

3. Here are changes in the production of crude & condensates between 2010 and 2020:
The US added 5.83 mb/d. Virtual tie between Iraq & Canada at around 1.62 mb/d, followed by Gulf states: Saudi Arabia, UAE, & Kuwait.

Now, look at the decline. Venezuela leads by 2.2 mb/d
#oil

4. Here is the big story:
a. The net addition from the top 12 oil-producing countries is about 6 mb/d.
b. The US addition is about 6 mb/d
c. Current effective spare capacity is about 6 mb/d.

What does that all mean? 🔥
see next tweet!
#Oil #OOTT #OOTT

5. Well, if it was not for the shale revolution, it would have been 2007-2008 all over again!

But, without the shale revolution, the Trump administration would not have imposed stiff sanctions on Iran, Venezuela, & Russia! Saudi Arabia would have added more, along with offshore

6. Whoops! If those countries increased their production, which they would, then the peak oil theory of conventional oil would have died another violent death.

Anyway: notice what happened to Russian and Chinese production. It is going nowhere.

7. Mexico will continue to struggle. If sanctions are lifted, Iran can add about 2 mb/d in two to three years... and that is it... It will take Venezuela years to go back to 3.1 mb/d. If all stars are lined up, Iraq production may reach 5.5 mb/d, one day.

8. Shale will recover if the oil price is right. Growth in Candian oil production in the next 10 years will increase, but will not replicate the last 10 years.

Growth in production from offshore West Africa and Brazil will remain limited.
#Oil #OOTT

9- To conclude: most future growth in oil production will come from the Gulf region (Saudi Arabia, UAE, Kuwait, Iraq, and Iran) & North America.
- Notice that I said (&) and not (vs). All the oil is needed in the future.
- ESG impact will be limited if any.
#Oil #OOTT #OPEC

10- The above thread is meaningless without talking about demand, which I will dedicate another thread for it. Conclusion: Global oil demand will be higher than any estimate out there. The impact of climate change policies on the growth of global oil demand is highly exaggerated.

11- You look at supply vs demand, and you can see how climate change policies are leading us to an unprecedented energy crisis. My fear is that climate change pundits will blame the coming energy crisis on climate change! 😇

#Oil #OOTT #OPEC

12- About ESG:
- Companies will look at what they have been practicing for years to include in ESG
- Large companies will dump assets that make them look compliant & closer to being carbon neutral. OTHERS will buy them & produce.
- The impact on overall production is limited

13- If you believe #12 then it is only logical to believe the conclusion in #10. However, I will provide details on demand in a separate thread in a few days.

14- Side note: The production additions listed above are net additions and do not include compensation for the decline. In other words, because of the high decline of shale wells, the US gross addition is way higher than the 5.83 mb/d reported above and is closer to 7 mb/d.