Could The Oil Price Shock Come Sooner Than Later? USA Today Opines -- March 27, 2016

From USA Today:

The depletion of old oil wells is expected to surpass new sources of supply in 2016, as the ongoing oil price slump puts a long list of oil projects on the shelf.

Bloomberg flagged new data from the Norwegian consultancy firm Rystad Energy, which predicts that legacy production will tip the supply balance into the negative in 2016 for the first time in years.

The production from an average conventional oil field typically ramps up in the early years, plateaus and then enters a period of decline. Depletion rates vary wildly from field to field, but a rule of thumb for conventional oil fields – which make up the bulk of total global supply – is that they decline something like 6 percent per year on average.

Again, those depletion rates can differ depending on location, levels of investment, etc., but one thing that is clear is that the oil industry needs to bring new oil fields online every year in order to merely keep production flat.

I wonder if they were referencing the Rystad note I posted earlier? 

Remember these data points:

• for years, Saudi Arabia set their budget based on $100 oil
• word on the street is that Saudi Arabia never expected oil to drop below $60
• Saudi Arabia set their 2016 budget based on an average of $60 oil for 2016
• one must assume they generally establish their budget three to six months prior to the budget year
• I doubt Saudi oil has averaged greater than $40 the first three months of 2016

To get to an average of $60 oil for the entire 2016 year, I've already done the math.

I still don't see how we get there ($60 oil average for the entire 2016 calendar year) from here.