Canada and Mexico Oil Supply in March 2014

Canada’s oil supply is estimated to grow by 0.21 mb/d in 2013 to average 3.98 mb/d, indicating an upward revision by 20 tb/d compared with the previous month. Fourth quarter supply was higher than expected, with an increase of 50 tb/d and 10 tb/d compared with the 2Q13 and 3Q13, respectively, to average 4.03 mb/d, up by 70 tb/d compared with the same quarter a year earlier.

On a quarterly basis, Canada’s 2013 supply is estimated to average 4.08 mb/d, 3.78 mb/d, 4.02 mb/d and 4.03 mb/d, respectively. Canada’s oil output is forecast to average 4.14 mb/d in 2014, showing an upward revision by 10 tb/d over the previous MOMR, in which growth was recorded to be 0.16 mb/d over 2013.

The number of oil and gas wells to be drilled in Canada is projected to decrease marginally in 2014 compared with 2013. A total of 10,930 wells will be drilled this year, compared with 11,097 wells in the previous year. In the current year, 85% of drilling will be for oil and 15% for gas. Alberta will lead with 6,642 wells, followed by Saskatchewan at 3,229, British Columbia at 560 and Manitoba at 480. Sixteen other wells also will be drilled in the eastern part of Canada and three wells in the northern part of the country in 2014.

On a quarterly basis, Canada’s supply in 2014 is expected to average 4.09 mb/d, 4.07 mb/d, 4.14 mb/d and 4.25 mb/d, respectively.

Mexico’s total liquid production in 2013 consists of crude oil, NGLs and biofuels. It decreased by 30 tb/d compared with a year earlier to average 2.89 mb/d. Fourth quarter supply stood at 2.90 mb/d, unchanged compared with the same quarter in the previous year. Mexico’s NGL production in 4Q13 is estimated to be 0.36 mb/d. Pemex said it had higher oil flows from seven horizontal wells brought online in 4Q13 at the project formerly known as Chicontepec. The Mexican state company said wells from the Aceite Terciario del Golfo (ATG) development came online at an average of 500 b/d and stabilized at an average production of 200 b/d. The higher productivity of these horizontal wells is due to a strategy based on creating multiple fractures. Rig and completion counts were also down from the same quarter a year ago, with completions at 187, compared with 344 a year ago. Its rig count saw 117 active rigs, with 21 in exploration and 96 in development, compared with 153 in the fourth quarter of 2012.

On a quarterly basis in 2013, Mexico’s supply is seen to average 2.91 mb/d, 2.87 mb/d, 2.88 mb/d and 2.90 mb/d, respectively.

Mexican oil output is expected to decline by 50 tb/d in 2014 from 2013 to average 2.84 mb/d, with an upward revision by 10 tb/d over the last report. However, an output decline is still forecast for 2014, despite an expected increase in capital expenditures (CAPEX). Nonetheless, uncertainty surrounding the 2014 forecast remains on both sides, especially related to the decline rate and new volumes.

On a quarterly basis in 2014, Mexico’s supply is seen to average 2.87 mb/d, 2.82 mb/d, 2.84 mb/d and 2.83 mb/d, respectively. This remains unchanged compared with the previous month’s forecast.