05 Feb: Westwood Energy World Drilling and Production Market Forecast 2019-2025 Q1

OPEC have moved to take supply out of the market but the key question at the start of 2019 is – have they done enough? Expectations for oil demand growth are weak as economic growth slows in China and the US. Meanwhile, US production growth continues and is near breaking through the 12 mmbbl/d of crude oil mark, compared to just 5 mmbbl/d in 2008, and long lead-time developments in deepwater continue to come online. The dynamics on the supply and demand side point to some uncertainty for 2019, and potentially downside risk to oil price in the near-term. In the longer term, however, the issues of low project sanctioning and reserve-replacement will have to be addressed at some point to avoid a supply crunch.

Key Conclusions Include:

  • The Middle East and North America will continue to produce liquids at record levels, leading to 99.4 mmbbl/d of supply in 2025, 8% higher than 2018.
  • Driven by US onshore, global drilling activity will experience considerable growth, with over 378,000 onshore development wells to be drilled globally over the forecast period.
  • Crude oil production in the US is now close to surpassing 12 mmbbl/d compared to just 5 mmbbl/d in 2008.
  • Total US liquids (including NGLs and condensates) production averaged 14.4 mmbbl/d in 2018 and will continue to increase, averaging 15.5 mmbbl/d through 2019.
  • Deepwater activity remains a bright spot over the forecast, with production being 49% higher in 2025 than 2018. More than 1,200 wells will be drilled to achieve this.
  • Brazil will continue to dominate deepwater production, accounting for 41% of global deepwater oil production over 2019-2025.
  • OPEC and OPEC+ announced a 1.2 mmbbl/d production cut from October 2018 reference levels, though Westwood estimates they will fall short of this total by over 200 kbbl/d.

The full report is available here: https://www.westwoodenergy.com