On Top Of Everything Else, US Federal Gulf Of Mexico Crude Oil Production Continues To Set New Reocrds -- And Will Continue To Do So -- October 16, 2019

Link here.

Lots of stuff to talk about.

That huge crude oil  build today? Some say it's simply a mismatch in timing of production reports and export reports. If that's true, this "build" will take care of itself. Like all such reports, it's a snapshot in time; the trend is the metric to watch. Even so, this report has to be concerning for Saudi Arabia.

Meanwhile, take a look at EIA's "Today in Energy, " October 16, 2019. Everyone will interpret the report through their own filters.

My filters:

• peak oil
• rig counts don't matter
  

Two screen shots to get started

First:

Takeaways for calendar year 2018 in the Gulf of Mexico:

• US crude oil production at almost 2 million bopd, set a new annual record
• EIA expects new annual production records in 2019 and 2020
• even accounting for shut-ins related to Hurricane Barry in July, 2019
• accounting for forecasted adjustments for hurricane-related shut-ins for remainder of 2019 and for all of 2020

Peak oil?

Remember all that hand-wringing five years ago that "we" weren't spending enough CAPEX on offshore oil E& P? And we move on.

Second screenshot:

Lots of verbiage: I will let readers read that for themselves.

First question: why was production data not "overlaid" in the graphic above? It would have been quite dramatic, placed on the same graphic as the rig count.

First observation: the EIA cleverly failed to mention that the sudden fall in the price of Brent in 2014 was due to the Saudi's flooding the market with oil trying to crush US oil sector (mostly shale). I've pointed that out on the graphic. Once OPEC cut back on production, the price of Brent returned to a "more normal" level.

Remember:

• all-time production record in the Gulf of Mexico, 2018
• forecast for new all-time records in 2019 and 2020
• rig count peaked at 200 in 2014 and then took a steep dive, declining quickly to 100 rigs in 2016 and then continuing a downward trend, trending toward 75 and no indication of an inflection point

Even in the Gulf, do rig counts matter? And, again, don't take that out of context.  

Switching gears: decision times and drilling. In the EIA report above, it is noted that "a fair amount of time is needed to discover and develop large offshore projects ..."

• onshore shale: time that it takes Harold Hamm to make a decision to drill / not drill probably takes about an hour if his folks ask for his input
• off-shore Gulf of Mexico: time for BP to decide to drill / not drill -- probably takes six months, maybe a year
• can you imagine how long it would take for the decision to be made if the oil sector were nationalized and turned over to a government agency needing approval of US House, Senate and president?

Okay, enough of this.