Oil Supply & Demand Links

Supply Curve for Oil: Shale, Canadian, Venezuela

• By and large, US E&P companies keep beating their own oil quarterly production targets, and are guiding investors to expect flat-to-small growth in 2006. Empirically, current WTI oil prices hovering at ~$60 a barrel aren’t enough to send production down. [Javier Blas]
• Record quarterly liquids production of 1,175,604 bbl/d was achieved, an increase of approximately 154,000 bbl/d or 15% from Q3/24 levels. [Canadian Natural Resources Limited] 
• Simply put, gravity causes some percentage of the sand pumped during a frac treatment to settle out of the fracturing fluid before entering the fracture network. Testing shows that as little as 12% of induced fractures are propped by sand. Even achieving a propped volume on the order of 25%-30% of the fractured area still allows most of the fracture network to close. By mixing near neutrally buoyant proppant with sand, operators can produce 80%-90% of created fractures. Because it is made of an extremely light thermoset nanocomposite bead, ULWP has a specific gravity that is approximately half that of sand. Instead of sinking and settling, it enters the fracture network and stays suspended until closure sets in and locks it in place. [The American Oil & Gas Reporter]
• Spring-based industry major ExxonMobil reportedly is using a proprietary lightweight proppant made from petroleum coke in wells in the Permian Basin to improve production and lower costs.  The proppant is designed to be transported further into fractures than traditional sand to keep more fracture area open and increase overall resource recovery by up to 15 percent.  The technology is seeing “wide use” across the basin with hundreds of wells already completed using the proppant.  And ExxonMobil plans to deploy this proppant on more than 200 Permian wells in the next 12 months. “Our work in the Permian Basin will play a key role in meeting the world’s growing energy demand for years to come,” ExxonMobil said on its website.  The company said it will double production in Permian Basin by 2030 to about 2.3 million barrels per day with “the largest contiguous acreage position in the Permian with double the number of low-cost net drilling locations compared to our next closest competitor.” [PB Oil & Gas]
• Our proprietary lightweight proppant technology enhances production rates and reduces costs. Derived from refinery-coke, it opens greater fracture areas than traditional sand. Leveraging it has improved our resource recovery by up to 15%, making it crucial for boosting efficiency and lowering drilling and completion costs. [Exxon Mobil] 
• In the Midland region of the Permian Basin, the average length of laterals, the horizontal portion of a well, has increased by 58% since 2015. More than 50% of Midland wells completed in 2025 have spanned over 10,500 ft (2 miles) laterally, with the longest reaching 21,276 ft (4 miles), according to Rystad. Advances in technology have enabled producers to drill longer laterals, which can help improve well productivity and capital efficiency. Lateral lengths can vary within and across shale basins. The optimal well design can be influenced by many factors, including geology, other well spacings, and whether a company holds contiguous leases. [American Petroleum Institute] 
• If President Trump normalizes oil trade with Venezuela—even partially—Canada’s exposure is bigger than it looks. Gulf Coast refineries are built to run heavy sour barrels. When Venezuela was sanctioned off the slate, Alberta bitumen became the backfill. Undo that, and the first barrels displaced are likely Canadian—with knock-ons for Alberta’s revenues and the equalization-era fiscal balance across Canada. [drjennifericonsidine]
• The proven oil reserves in Venezuela are recognized as the largest in the world, totaling 300 billion barrels as of 1 January 2014. The 2019 edition of the BP Statistical Review of World Energy reports the total proved reserves of 303.3 billion barrels for Venezuela (slightly more than Saudi Arabia's 297.7 billion barrels). Venezuela's crude oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries. [Oil reserves in Venezuela] 

Supply Curve for Oil Substitutes: Batteries     

• Battery sales are growing exponentially up classic S-curves that characterize the growth of disruptive new technologies. For thirty years, sales have been doubling every two to three years, enjoying a 33 percent average growth rate. In the past decade, as electric cars have taken off, it has been closer to 40 percent. As volumes increased, battery costs plummeted and energy density — a key metric of a battery’s quality — rose steadily. Over the past 30 years, battery costs have fallen by a dramatic 99 percent; meanwhile, the density of top-tier cells has risen fivefold. As is the case for many modular technologies, the more batteries we deploy, the cheaper they get, which in turn fuels more deployment. For every doubling of deployment, battery costs have fallen by 19 percent. Couple these cost declines with density gains of 7 percent for every deployment doubling and batteries are the fastest-improving clean energy technology. [RMI]
• Batteries are a lot like explosives. Like explosives, batteries contain both reducing chemicals and oxidizing chemicals bundled tightly together, ready to react with one another. Like explosives, we engineer our batteries to pack these chemicals together as tightly as possible to speed reaction rates. Like explosives, we like our batteries as powerful as possible… But the way we put batteries together is a bit like how we made gunpowder in the 1700s. Even though all of the salient reactions and transport phenomena occur on the angstrom-scale, we build batteries in mechanically separated layers—100μm anode, 30μm separator, 100μm cathode etc. Tiny as that seems, that’s as enormous in chemical terms as grains of charcoal and saltpeter in a musket. Even 20 microns leaves tens of thousands of separator molecules for each ion to crawl through before it can cough up an electron into your favorite circuit. So slow! So here’s the obvious question: what if we could make batteries more like TNT, and assemble them at the molecular scale, with anode and cathode only angstroms apart? [Orca Sciences]
• Lithium–sulfur batteries may displace lithium-ion cells because of their higher energy density and reduced cost. This is due to two factors. The first factor is that sulfur is more energy dense and less expensive than the cobalt and/or iron compounds found in lithium-ion batteries. Secondly, the use of metallic lithium instead of intercalating lithium ions allows for much higher energy density, as less substances are needed to hold "lithium" and lithium is directly oxidized. Li–S batteries offer specific energies on the order of 550 Wh/kg, while lithium-ion batteries are in the range of 150–260 Wh/kg. Li–S batteries with up to 1,500 charge and discharge cycles were demonstrated in 2017, but cycle life tests at commercial scale and with lean electrolyte have not been completed. [Lithium-sulfur battery]
• Reducing the cost of batteries is amongst the biggest challenges facing manufacturers. Much of the cost of current batteries is due to the expense of metals including nickel and cobalt. In contrast, the materials used in the electrodes of Li-S cells are comparatively low cost, with sulfur being amongst the most abundant element on earth. The benefits of economies of scale for Li-S cells will be realised upon wider commercialisation, in particular in the production of the electrolyte. Forecasts suggest this may lead to Li-S cells with comparable performance to Li-ion cells, but at less than half the price. The removal of transition metals such as cobalt from batteries is also an important consideration due to environmental and ethical concerns with mining and uncertainties around security of supply. [The Faraday Institution]
• Each cell has a theoretical limit based on the chemistry of the cathode and the anode. There is also a practical limit, which includes the mass of electrochemically inactive components such as current collectors, separators, electrolyte, additives, tabs, and packaging. A percentage of the theoretical limit can give an insight into how mature a chemistry is, or how close to maturity a chemistry may be. Lithium-ion is difficult to measure maturity due to the mixture of different cathode and anode chemistries. [NASA Glenn Research Center]

Demand Curve for Oil: Electric Vehicles

• Electric vehicles currently account for about half of car sales in China, undercutting 3.5% of new fuel demand in 2024, while the use of compressed and liquified natural gas in road freight displaced another 2%. China has been providing subsidy support to purchases of so-called “new energy vehicles” (NEVs) since 2009, promoting its automotive manufacturing industry, and reducing air pollution. A trade-in policy, introduced in April 2024 and expanded in 2025, continues to drive growth in China’s EV sales. Meanwhile, highly competitive Chinese automakers are also making gains in international markets. [IEA] 
• The continued growth in charging will impact transportation fuel demand in China in the coming years, and may have global implications if China’s electric cars and trucks can find growing markets abroad. Public charging demand growth has averaged 62% year on year over the past 12 months, only slightly slower than the 63% growth over the past 24 months. If that rate of growth continues over the next year, annual displacement would rise by 670,000 barrels per day, bringing the total implied destruction of oil demand to 1.76 million barrels per day. The likely impact will be weaker Chinese crude imports over the longer term, declining from last year’s average levels of 11.1 million barrels per day. [Rhodium Group]
• The SCALE of the renewables revolution in China is almost too vast for the human mind to grasp. By the end of last year, the country had installed 887 gigawatts of solar-power capacity—close to double Europe’s and America’s combined total. The 22m tonnes of steel used to build new wind turbines and solar panels in 2024 would have been enough to build a Golden Gate Bridge on every working day of every week that year. [The Economist]
• BYD is currently building a factory in Brazil, its biggest market outside China, although the development was hit last year by allegations of labour abuses. The carmaker is also building factories in Thailand, Hungary and Turkiye. In addition, Wang said that BYD had no plans to sell into Canada and the United States in the short term due to geopolitical developments. The Trump administration has maintained duties of 100pct on Chinese-made EVs, as has Canada. Wang told the analysts he was confident BYD's profitability per vehicle would exceed Toyota's when it reached the scale of the Japanese manufacturer, saying BYD's cost control was better. Toyota, the world's top automaker by sales, sold 10.8 million vehicles in 2024, while BYD sold 4.27 million. BYD, which is targeting sales of 5.5 million units this year, has roiled the Chinese auto market by rolling out more affordable models, including its entry-level Seagull electric hatchback that sells for less than US$10,000. It also offers smart driving features at no extra charge on most of its lineup. [New Straits Times]
• The true business of oil majors is fuels. Gasoline, the most important of those fuels, and used primarily for regular cars, represents 50% of oil demand today. The problem for oil majors is that most projections agree on peak light vehicle fuel consumption within this decade. Mind the wording there: not peak oil, not peak fuels, but peak light vehicle fuel (basically passenger cars). The driver of that trend is EVs. In no country is this more true than in China, the largest EV market in the world. Last year, China’s light vehicle fuel consumption already fell, and it is still falling in 2025, despite the economy expanding. To aggravate the problem, China has the second-largest refinery capacity in the world. It has a lot of refineries, for which it has no (perspective of) vehicles. [Quipus Capital]
• Far from a peak, China's gasoline demand is estimated to have fallen 9% in October on the year to 12.5 million tons, with average daily use roughly flat with September, according to Chinese consultancy Sublime China Information (SCI). The sagging holiday demand is symptomatic of the broader decline in Chinese fuel use stemming from wider EV adoption, heralding the approaching end of its decades-long role as the main driving force of new global oil demand. Gasoline consumption in the world's biggest importer of crude peaked in 2023 and the research unit of state oil company Sinopec expects demand to fall more than 4% this year from 2024. During the first nine months of the year, EVs and hybrids made up almost half of all new car sales. A fifth of the 63.5 million car trips during the eight-day holiday break were in electric or hybrid vehicles, the transport ministry says. Daily use of electricity by charging stations, a proxy for EV use, rose 45.73% during Golden Week this year, versus 2024. EV adoption has benefited from China's push to build charging infrastructure, with some 18 million charging ports by the end of September, up 54.5% on the year. [Reuters]