OGPSS - A June TWIP, and the OPEC MOMR

The EIA has noted, in This Week in Petroleum that, for the first time, the sum of Non-OECD country demand contributed more than half to the total of liquid fuels consumed in the world.

Figure 1. Changes in the relative shares of liquid fuel consumption between the countries in and out of the OECD. (EIA )

It does, however, point out that the projections of the Short Term Energy Outlook are for the two curves to re-intersect at the end of 2014.

Figure 2. Projected changes in liquid fuels consumption, through 2014 (EIA)

The reality of that second assumption is, I rather suspect, more based on hope than reality. Once you start providing power, and all its benefits, to the general population you are on a slippery slope that it is almost impossible to back away from. Consider (as a small example) the problems that Egypt is currently having with the supply of subsidized bread to the general populace. Once you start supplying a commodity at a subsidized price it becomes very hard to change the equation, and too much of the non-OECD world is now living in an economy where energy use is subsidized. The problem that the above graph fails to recognize is that you cannot wean a culture from subsidies in the immediate short term and still expect their government to survive in its present condition.

Thus when the EIA project that global demand will grow to over 92 mbd in the next year, they are likely only being realistic. Their assumption that it may then decline is perhaps more in the nature of wishful thinking.

Figure 3. EIA anticipated growth in demand and supply over the near term (EIA)

There are however a couple of caveats to that last statement, the first of which is that the decline in demand may be more reflective of a lack of supply capacity (our raison d'être) and alternatively it may reflect, as a result of the first, that prices will rise to influence demand. Nevertheless we remain in a condition where the harsh realities that lie just over the horizon remain obfuscated by other events.

As with many other international agencies the EIA continue to anticipate continued growth in the North American supply of liquid fuels. Outside of that growth the increased demand for more than an additional mbd of liquid fuels seems more likely to be likely to be desperately hunting for an invisible savior.

Figure 4. Anticipated growth in liquid fuels supply over the next two years (EIA)

The decline in supply from OPEC in the two years ahead should be noted. It should also be remembered that this is likely to be as much a voluntary control, to ensure price stability in the face of increased North American production, rather than as a result of a short-term supply shortage. However the reality of continued domestic growth in demand in the Middle East, as Westexas has reminded us, is something that cannot be neglected. It has been noted that Saudi Arabia, although having less than a third of Germany’s population, recently surpassed it in terms of oil consumption. It will add several new oil-fired power stations including those at Yanbu and Jeddah. This will feed into an anticipated continued growth in Saudi domestic demand of 5.1% pa.

And this brings us to the OPEC Monthly Oil Market Report (MOMR) for June. OPEC continues to anticipate a global demand growth of 0.8 mbd this year, though they note that there will likely be a growth of 1.2 mbd in the non-OECD nations, requiring a reduction in OECD demand to match the overall forecast. Major growth in demand will continue to be in China (at 0.4 mbd and the Middle East at 0.3 mbd). On the other hand OPEC anticipate cutting their supply (to match anticipated need) by 0.4 mbd over the course of this year. OPEC, therefore, has slightly dropped their projection for year end, however it will still crest above 90 mbd.

Figure 5. Estimates of global oil demand (OPEC June 2013 MOMR)

A large part of demand projection is tied to growth in the global and individual nation economies, and that is a murky crystal ball to view. But OPEC anticipates that these economies will continue to grow at an increasing rate, while recognizing that this projection is in an area with a high level of risk in the estimate. The continued, and perhaps growing unrest in the Middle East continues to cast a further shadow over predictions over both supply and the reality of future demand in those countries. And, as one of the less frequently discussed topics, future output from Russia is not as assured as the average analyst appears to assume.

OPEC is anticipating a relatively strong growth in demand in the second half of the year to almost reach 91 mbd by the end of the year. Overall the growth in supply to meet this demand continues to come from North America.

Figure 6. Anticipated oil supply for 2013. (OPEC June 2013 MOMR)

OPEC itself is reporting a slight increase in overall production (by about 128 kbd) although, as always, there are differences in the numbers between those supplied by the countries themselves, and those reported from other sources.

Figure 7. OPEC crude oil production as reported directly (OPEC June 2013 MOMR)

There continues to be a significant disparity between the numbers reported from Iran and Venezuela, for example, when other sources are reported to the tune of around 1.5 mbd roughly. In the short term Iraqi production appears stable.

Figure 8. OPEC crude oil production as reported by others (OPEC June 2013 MOMR)

With the continued global reliance on increased production from North America, and, in turn, that reliance on improved production from tight formations, I would be a little more confident of the future were it not for plots such as this, which I recently found.

Figure 9. Chesapeake typical well decline curve (Eagle Ford Forum)

It is a curve that I rather suspect continues to be optimistic.

OGPSS - The weather, corn, ethanol and oil production

News of the future was, in my youth, something that one found by crossing the palm of a lady in a dark tent with a piece or two of silver (or the modern equivalent) at one of the fairs that came to town. Such opportunities still exist, with all the caveats that existed back then likely still being in force. However projecting the future, whether of the weather, the likely corn crop this year in the United States, or the production of crude oil by the nations of the world has become a much bigger business with copious tables, graphs and theories replacing the rather worn pack of cards or crystal ball of my youthful experience.

Our part of the world underwent a drought last year severe enough to kill several trees in our yard, for example, as well as hurting the corn crop. This year, corn plantings have been severely impacted by the heavy rains and cold weather, so that decisions on crop plantings have become more complicated and delayed, with follow-on impacts on the ultimate yield in a number of Mid-Western states. Corn yield apparently falls at an average rate of 2.3 bushels per acre per day of delay in Northern Wisconsin. These changing conditions make it difficult to assess how much ethanol, for example, will be available to meet demand, although the latest EIA TWIP holds out some optimism for this year.

The impact of the drought on corn prices, and the consequent fall in ethanol production, as production costs rose, are directly visible from their plot of the two over the last year.


Figure 1. A comparison of corn prices and ethanol production in the USA (EIA TWIP )

However, with the weather impacts still being assessed it is already being concluded that the US corn crop is unlikely to reach the record level of close to 14.6 billion bushels that were earlier projected. It still, however, has the potential to reach around 12.3 billion bushels, which would satisfy the just under 5 billion bushel need for ethanol, as well as other demands of the market. By May 12th only 28% of this year's expected crop had been planted, in contrast with a normal year where 65% would be in the ground. Thus even the relatively short-term projections of the EIA could yet be in trouble for this year.

Moving to the slightly longer-term the nations that form OPEC must try and estimate global demand for their products, and the amount that other non-OPEC nations will produce, so that they can balance supply and demand at such a level that will sustain prices at a level they are comfortable with. Their estimates come out as Monthly Oil Market Reports and in the latest (May) version they continue to expect global demand to increase by 0.8 mbd over 2013, but are beginning to hedge that bet, as the global economy continues to appear anemic, with Russian and Asian economies slowing. Yet by the fourth quarter of the year they anticipate that global demand will reach 90.9 mbd.


Figure 2. Global oil demand by region (OPEC MOMR)

OPEC anticipates that, with the major increase coming from the Americas, that non-OPEC oil production will increase by just under 1 mbd to reach an a level of 54.41 mbd in the fourth quarter of the year. The majority of that growth (some 0.59 mbd) will come from the United States, with the Permian, Bakken and Eagle Ford being cited as the anticipated source of these gains. OPEC, having looked at current rig counts, project that these numbers may be revised upwards over the course of the year. And yet it is worth noting this:

On a quarterly basis, US oil supply is seen to average 10.62 mb/d, 10.67 mb/d, 10.62 mb/d and 10.61 mb/d respectively.

The sustained gain in North American production comes about because:

On a quarterly basis, Canada’s production is anticipated to average 4.02mb/d, 3.97 mb/d, 4.02 mb/d and 4.12 mb/d respectively.

Russia is expected to continue to lead in oil production over the course of the year, although it is not longer expected to increase production above current levels.

On a quarterly basis, Russian oil supply is seen to average 10.45 mb/d, 10.43 mb/d, 10.43 mb/d and 10.43 mb/d respectively.

And this brings us back around to OPEC as they try and balance their production against the gap between global demand and non-OPEC supply. As has been the case for a while, OPEC produced two separate tables showing production, as reported by secondary sources, as well as those directly reported by the countries themselves.


Figure 3. OPEC member production as reported by secondary sources (OPEC MOMR)


Figure 4. OPEC member production as reported directly (OPEC MOMR)

It would appear, with Manifa coming on line, that Saudi Arabia is increasing production again, while Venezuela and Iran would have you believe they are producing more than they are, and Iraq, which is now producing above 3 mbd, is directly reporting less (though that could be because some of that production is coming from the north, and there are some communication problems between there and Baghdad).

As long as OPEC has available reserves it can continue this balance to keep enough oil available at an acceptable price to allow the world economy to continue at its present pace. And with that ongoing adjustment available, their projections for this year of a relatively stable price would seem fairly founded, absent some major change in one of the larger producing states.

Iraq overtook Iran as the second largest producer in OPEC last year (according to secondary sources) and expects that with production from Majnoon, it will increase production capability by upwards of 200 kbd by the end of the year. Ultimately the goal is to achieve a target production of 1.8 mbd. However, as overall production levels increase, Iraq may join with the Kingdom in controlling production to maintain price.

Yet even with those abilities OPEC is becoming cautious over predicting that their estimate of the demand:supply balance numbers for this year will be accurate over that time interval.

With these uncertainties in even short-term projections of future production whether it be corn, ethanol or crude it is perhaps wise to continue a somewhat cynical view of projections over a longer time period. Although the bounding bar of a decline in existing field production continues to exist and will continue to require an offset in increased production from new wells to offset. Perhaps that lady in the tent of my youth may prove as prescient as some of the more optimistic forecasts that we continue to see.

OGPSS - OPEC and EIA short term projections

Just this month Saudi Aramco announced that production had begun at their Manifa oilfield, and by July would be supplying up to 500 kbd to the new refinery that is being built at Jamail with the collaboration of Total. The first oil from the refinery is expected to ship in August, and both projects are currently ahead of schedule. Manifa will further increase in production next year, to 900 kbd, with the additional flow going to the Yanbu refinery being built with the collaboration of Sinopec. Both these refineries are designed to take heavy crude, and can also accept oil from the ongoing projects to expand production at Safaniya. Collectively this is said to ensure that the company will be able to achieve a maximum sustainable production of 12 mbd.

The gains in available reserves are required as the current production from Ghawar and the other major fields in the Kingdom continue to decline in production, as was discussed last year. I remain relatively convinced that Saudi Aramco will not increase their crude oil production above 10 mbd, despite the wishes and projections of others that they will end up doing so. By the time that their domestic consumption reaches the point that it lowers exports to a level that would hurt the KSA economy at current prices, the shortages globally will have raised the price sufficiently that the available production at that time will continue to suffice to meet their needs. (This is, however, a projection only for this decade).

This month’s OPEC Monthly Oil Market Report continues to anticipate a significant increase in available crude over the next three years, although this is indirectly recognized through the growth in crude distillation unit (CDU) capacity around the globe in that interval.


Figure 1. Increase in crude distillation capacity by regions in the near term. (OPEC April MOMR.)

Given that the world must increasingly deal with a heavier crude supply, the need for new refineries, as exemplified by the new Saudi construction, is evident. Increased demand to absorb this supply will come, in part, by an increase in the growth rate of the GDP of the BRIC nations, although the poor growth in the developed nations continues to hamper their export markets.

Overall demand is still anticipated to increase by around 0.8 mbd, with half of that coming from China and the rest of the non-OECD nations contributing an additional 0.7 mbd, offset by a decline in demand from the OECD nations of around 0.3 mbd, taking global demand, by the end of the year to nearly 91 mbd. Internal demand in the Middle East will continue to sap a fraction of this relative to exports. Overall the Middle East demand is anticipated to increase by 280 kbd, though the impact of the turbulence in various nations is hard to estimate.


Figure 2. OPEC estimate of global demand for 2013. (OPEC April MOMR.)

Virtually all the growth in supply is anticipated to come from North America, with a slight increase in production from South America coming from Colombia and Brazil. There is some concern, however, over the impact of attacks on the energy structure in Colombia.


Figure 3. Anticipated regional change in supply in 2013. (OPEC April MOMR.)

For the US the OPEC report has the following projection:

The expected growth in 2013 is supported by the anticipated supply increase from shale oil plays in North Dakota and Texas, as well as by minor growth from other areas in Oklahoma, Kansas, Colorado and Wyoming. The infrastructure situation is improving in North Dakota, with reports suggesting that the railroad loading capacity will reach 1 mb/d. Eagle Ford oil production in January continued to increase from the same period a year earlier. On a quarterly basis, US supply is expected to average 10.57 mb/d, 10.62 mb/d, 10.56 mb/d and 10.55 mb/d respectively.

Canada is expected to reach a production total of 4 mbd by the end of the year, with the largest impact coming from the Kearl Oil Sands production anticipated to bring 110 kbd to market in the third quarter. (This is not dependent on the Keystone pipeline.) Mexico will see a slight decline in production though the Kambesah field (at 13.7 kbd) and increased production from Tsimin will offset most of that.

OPEC is anticipating that Norwegian production will fall 110 kbd this year, with a small decline of 40 kbd in UK production. OPEC expects that Russian production will increase to average 10.43 mbd in 2013, slightly down from first quarter numbers, while, in anticipation of Kashagan production, OPEC expects Kazakhstan to increase production to 1.67 mbd. The decline in production from the Azeri-Chirag-Guneshli field is expected to cause a slight ( 50 kbd) reduction in Azerbaijan production. There is, as previously, some difference between the production that the individual nations of OPEC report each month and that reported by secondary sources.


Figure 4. OPEC crude production from secondary sources.(OPEC April MOMR.)


Figure 5. OPEC crude production based on national direct reporting.(OPEC April MOMR.)

In short, over the course of this year OPEC remains relatively complacent that North American production gains will continue to meet the global demand, and that OPEC (i.e. largely the KSA) can back away from full production in order to balance supply and demand at a price level that keeps the OPEC bankers happy.

Back in March the EIA TWIP noted the change over the years, not only in amounts, but also in the sources of US imports, which remain significant. There has been quite a bit of change since 2005, when imports were at their highest level (10.1 mbd).


Figure 6. Change in the countries and volumes for the ten largest suppliers of crude to the USA. (EIA )

The EIA anticipates that US liquid fuels consumption will remain sensibly stable through the end of 2014, ending that year at 18.61 mbd. At this time production is expected to rise to 11.75 mbd.


Figure 7. EIA estimates of US liquid fuels production through 2014. ( EIA)

In that interval they anticipate that the price of gasoline in the United States will slowly decline. In contrast with the reports by the major oil companies that were discussed recently, these forecasts are short enough that it will be fairly quickly evident how accurate they are.

OGPSS - Current oil production and the future of Ghawar

(Updated intro)There is a growing impression being given in the discussion of oil and natural gas supplies, that the world is moving into a period where there will soon be such a plentiful sufficiency of crude that the US may consider exporting some of its production. (h/t Leanan). But if one looks behind the headlines, and particularly at the current status of the largest oilfield contributing toward this rosy picture, the Ghawar field in Saudi Arabia, that optimism becomes more evidently built on a very transient set of data that, as this series of posts seeks to show, will not be sustainable for any significant period into the future.

 The three major oil producers (i.e. those producing more than 5 mbd each) are currently seeing surges in production as the world moves to an overall production of 90 mbd. The OPEC June Monthly Oil Market Report (MOMR) notes that this has brought Russia to 10.33 mbd in May, some 100 kbd over the same period in 2011; and Saudi Arabia is reported to have averaged 9.917 mbd in May, up 40 kbd over April. The United States is running at 6.236 Mbd of crude (from the EIA TWIP), while importing 9.117 mbd. The MOMR reports US oil supply at 9.66 mbd on average, but counts more than just crude in this value. The gain over the past year is around 600 kbd. It is interesting to note, in regard to OPEC production the continued difference between the volumes that OPEC reports from direct contact with the suppliers, and that when the numbers are obtained from “secondary sources.”
Figure 1. OPEC production from its members, with values provided by them (OPEC June MOMR)

 
Figure 2. OPEC production from information provided by secondary sources (OPEC June MOMR).

 This surge from the majors has, in part, led the EIA to project that oil prices will, for the remainder of the year, remain relatively stable.
 
Figure 3. EIA estimate of crude oil prices going forward over the next eighteen months (EIA TWIP)

 In the short term, and leading into a national election, there is no significant event (short of a hurricane or two) that obviously threatens this projection – though the Iranian situation and the questionable stability of nations in the Middle East and North Africa (MENA) has to remain a concern. But sadly the continued ill health of the global economy, with no evident savior or realistic plan for growth now visible, means that demand – which OPEC projects will still grow 1.17 mbd y-o-y on average this year, may continue to be met.

I have, however, in previous posts, given my reasons for anticipating that the surge in both Russian production and that in the United States are at near peak, and will soon decline. Saudi Arabia’s fall will be less dramatic and a little later, but the combination does not bode well for the international supply in the next presidential term. The big question with Saudi Arabian production has been, to date, more focused on the production from Ghawar, which at 5 mbd has been the rock on which the overall production builds. But that rock is continuously eroding under the long production periods that its different regions have seen. The final major new effort to bring new production on line in the overall field was the effort at Haradh, down in the South tip of the field.

 JoulesBurn has written comprehensively on this region, beginning with the first well that came into production. In 1979, as the late Matt Simmons pointed out in “Twilight in the Desert”, the three northern segments of Ghawar, Ain Dar, Shedgum and North Uthmaniyah were producing 4.2 mbd of the 5.3 mbd total Ghawar output, with South Uthmaniyah producing another 400 kbd. By 2006 North Uthmaniyah was running at a 46% water cut. Joules has taken the historic record for that region of the field and made a short movie presentation included in a post that shows how Uthmaniyah was developed over the years.
 
Figure 4. Single frame from the movie on drill site development in Uthmaniyah, over time (JoulesBurn)

 The sequence of wells, moving inexorably to the crest of the field, shows how the wells had to move as the underlying reservoir became more depleted in oil. Uthmaniyah is the region where the test program to inject carbon dioxide to enhance EOR is under construction, as mentioned earlier, and scheduled for completion in the fourth quarter of 2013. It is worth noting that Aramco are also planning on using more steam injection for enhanced oil recovery (EOR) and that plans have just been signed to increase steam production at the Ju’aymah, Shedgum and Uthmaniyah plants, with completion dates in 2014 and 2015.

Figure 5. Sectors of Ghawar with the date of discovery (Afifi )
As one moves south the quality of the reservoir changes, and becomes more difficult to produce. However as Greg Croft has noted the two lower segments of the field Hawiyah and Haradh were developed with horizontal wells, rather than the vertical wells further north in Ghawar. This has overcome some of the geological constraints and the fact that the productivity index drops from around 140 barrels of oil per day/psi to 45 BOPD/psi at Hawiyah, and 31 at Haradh. In 2008 the Hawiyah NGL recovery plant was commissioned, to yield 310 kbd of ethane and NGL. 

 The further development of the lowest segment of Ghawar, down at Haradh, was one of the major projects that Aramco listed as contributing to their ability to produce up to 12.5 mbd. The latest development built on earlier development and because the use of horizontal wells had transitioned into maximum reservoir contact (MRC) designs by the time of Haradh III reduced the anticipated number of wells from 280 verticals to 32 MRC wells.

  

Figure 6. Planned well layout in Haradh III (from Aramco via JoulesBurn) 

 In his initial review of how that developed JoulesBurn showed how the wells were developed and laid out and explained how he was able to use satellite images to determine the different components of the production equipment. It is relevant to note that Joules updated his view of the region in 2010 when he noted that, after looking at the satellite images of the region, he was able to show that instead of the production coming from the original 32 wells, there were actually some 52 production wells connected up, which – as he noted – raise a few questions as to the actual performance of the wells over the original projections. 

 Aramco have reported, however (pdf) using Real-Time Reserve Management, that it had by the summer of 2009, been more successful than anticipated. Some of the additional wells drilled were to allow cross-hole tomography (pdf) to monitor the location of the oil:water front which, as production evolved, did not follow the anticipated path. This was particularly important to establish given the 1 km spacing between wells and the more complex geology relative to that further north in Ghawar. 

 

Figure 7. Schematic showing how cross-hole tomography is carried out (Stephen Prenskey ) 

 

Figure 8. Image from Crosshole tomography at Haradh (out (Stephen Prenskey) 

 What is, however, also clear from looking at the different regions of Ghawar is that there are no places left for new programs to restore production as wells become exhausted. If KSA is to sustain its production it must look beyond the King of Oil Fields, who now lies stricken in years.

Gas prices and oil supply in light of EIA and OPEC monthly reports

I paid $50 to fill my tank at a gas station in Maine this morning, at a cost of almost $4 a gallon. When the Actress muttered some comment of protest, I told her that she had better get used to the price, because it is hard to see any normal reason for a decline in that price in the near future.

The EIA TWIP today was discussing the transportation fuel market this summer, and begins by noting:

Regular-grade gasoline retail prices, which averaged $2.76 per gallon last summer, are projected to average $3.86 per gallon during the 2011 driving season. The monthly average gasoline price is expected to peak at about $3.91 per gallon by mid-summer. Diesel fuel prices, which averaged $2.98 per gallon last summer, are projected to average $4.09 per gallon this summer. Weekly and daily national average prices can differ significantly from monthly and seasonal averages, and there are also significant differences across regions, with monthly average prices in some areas exceeding the national average price by 25 cents per gallon or more.

Well right now, before driving season starts, the price was $3.97 for regular – but the EIA have the “out” that this is after all Maine, which is at the end of the delivery line. Ah, well!! But I suspect that the EIA is still being a tad optimistic, and may regret that $0.25 error bar by the end of the season.

Their estimate, and the rationale for it are given in the new Short-term Energy and Summer Fuels Outlook with the price of West Texas Intermediate (WTI) at $112 (it has since fallen $5) . The EIA is expecting the market to tighten, based on the turmoil in the Middle East and North Africa, and “robust” growth of demand. But they only increase the anticipated average price of WTI to $106 this year, and $114 next. And in this I think that they are being rather too optimistic given the times. And that includes their estimate that the price of gasoline will still be below $4 (at $3.80 average) through the end of next year. (Though they do add a caveat that there is a 33% probability that prices could get over $4 on average this July).

And in an aside (since the topic today is mainly crude oil) it is worth noting relative to my post on the EIA World Gas Shale report that the EIA are projecting that the Henry Hub price for natural gas will remain around $4.10 per kcf in 2011 i.e. below the 2010 average, and it will only rise to $4.55 per kcf in 2012 – which doesn’t make those gas shale drilling balance sheets look any prettier.

The oil supply problem itself is sufficiently worrying. As with others they are still predicting a global increase in demand of 1.5 mbd this year, expecting that it will rise an additional 1.6 mbd in 2012. OPEC (whose daily barrel is currently at $117) expects that with the tragedy of the earthquake and tsunami in Japan, that there won’t be quite as much growth as previously expected, and thus are only anticipating a growth in demand of 1.4 mbd this year. As their April Monthly Oil Market Report notes, they do not expect countries outside of Japan to be affected, and thus they continue to anticipate a world economic growth of around 3.9%.

As I mentioned in an earlier post there were a number of Japanese refineries which were damaged, and the country which was refining about 4.5 mbd had an immediate drop to 3.1 mbd. That has now been partially restored as some refineries have increased production, and others have been repaired. However the country as a whole is still reported to be about 617 kbd short of the pre-earthquake figure. (And there are three coal-fired power plants Haramachi Tohoku, Kashima Ibaraki, and Hitachinaka Ibaraki that are still off-line and 9 of 210 hydro-electric plants were damaged. )

Nevertheless Middle Eastern suppliers stopped some of the shipments to Japan, and this may well be what is being seen as a short-term decline in demand. (OPEC saw a drop of around 0.5 mbd in tanker shipments in March). However OPEC anticipate that there will have to be substitution for the loss in Japanese nuclear power, since that cannot be restored or replaced with equivalent new nuclear power stations in less than several years. As a result they expect that the demand for oil as a replacement fuel (the loss could be made up by about 200 kbd of oil equivalent fuel) will increase later in the year.

OPEC expects that 0.6 mbd of the overall global increase in demand will be supplied by non-OPEC countries, with Brazil, the United States, Canada, Colombia and China increasing production, while the UK and Norway will show the greatest declines. That leaves the rest for them, and bearing in mind the loss from Libya, and other potential losses around MENA, though OPEC itself only expects to see demand for its oil increase about 0.4 mbd. (Which arithmetic doesn’t quite compute – but never mind – I am assuming that the rise of 0,4 mbd includes the offset to cover the losses in production within OPEC, and that with the 0.4 mbd OPEC increase, and the 0.6 mbd non-OPEC increase, that the world will only be 0.4 mbd short – which might come from NGL increases). Incidentally OPEC anticipates that Chinese demand will grow 0.5 mbd to 9.5 mbd.

There is an interesting comment in the OPEC report relating to the poor performance of natural gas prices (as I have been discussing).

Nevertheless, a sustained upward trend in HH natural gas prices may appear if there is a radical change in the US energy policy regarding nuclear production, which seems unlikely at present. According to Barclays, in order to rebalance the US natural gas market via higher demand, it would be necessary to shutter a large amount (13-26%) of total North American nuclear capacity.

Well I have to confess that is one answer that I hadn’t thought of applying in order to get the shale drilling companies off the hook.