Expanding Our Energy Product: Monitoring Oil Storage Across the Globe
In September 2016, we announced our China Oil product, which tracks how much oil is being stored in floating roof tanks in the world’s second-largest economy. The product came into the world with a bang: our algorithms found four times more storage capacity in China than industry reports had previously recorded. For us, this solidified the importance of our goal to bring transparency to global oil markets, and we were inspired to continue evolving our product so that we could measure oil stored not just in the U.S. and China, but across the entire planet.
Today, we’re excited to announce that we’ve reached a significant milestone in this journey, and are now tracking more than 24,000 oil tanks around the world. This includes monitoring some of the most important countries for crude oil storage, including OPEC members, which is entirely unprecedented.
Our methodology remains akin to what we described when we first debuted our China product. We analyze all types of satellite imagery, using deep learning and computer vision, to locate all the floating roof oil storage tanks in a particular country, and then our algorithms calculate the fluctuations in the volume of oil in those floating roof tanks by measuring the shadows they cast.
A tank in Juaymah, Saudi Arabia that can fit a full-sized football pitch. Image provided by DigitalGlobe.
We have continued to refine the accuracy of our analysis. A crucial factor in improving our precision has been increasing the frequency of the imagery we have of the oil tanks—the more observations we can make, the more exact our estimates are. In the U.S., for instance, the number of observations we’ve made for tanks has increased nearly 5x over the past two years. Overall, we’ve seen a positive directional trend between our numbers and U.S. Energy Information Administration (EIA) statistics from 2014 to 2017. We’ve also observed a similarly positive directional trend between aggregative floating roof tank oil storage of all European OECD countries and official oil storage numbers from the International Energy Agency (IEA) from 2014 to 2017. As the number of satellites continues to increase in the coming years, we expect the strength of our trends to become even stronger.
Our work monitoring oil storage in the U.S. and Europe is particularly important for determining how accurate our algorithms are, because we are able to compare our results against reliable EIA and IEA data. We can then turn our technology to countries that don’t have data as reliable or frequent as the EIA or IEA with confidence that our algorithms will be accurate. In those situations, we’re able to report actionable data on the world’s most important commodity with confidence.
For example, as we expand our capabilities to monitor the 25 most important countries for crude oil storage in the world, we’ve noticed several interesting trends along the way, particularly with Saudi Arabia. There, as in China, we found more floating roof storage tanks than were listed in industry databases—about twice as many, in fact. A surprising number of these tanks were found in the interior of the country. As a result, the industry is tracking only about 101 million barrels’ worth of storage capacity, while we’ve found that Saudi Arabia’s floating roof storage capacity is really closer to 218 million barrels. This does not include other types of oil storage, such as below ground or fixed roof tanks.
We’ve also observed interesting changes in the directional trends between Saudi Arabia’s official report of overall oil stored and our analysis of the amount of oil stored specifically in their floating roof tanks. The Joint Organisations Data Initiative (JODI) releases official data for the amount of oil stored in total in Saudi Arabia. JODI data is an aggregate of all oil stored, which means that in addition to floating roof tanks, it includes storage methods like underground, pipeline, and fixed roof tanks, which can’t be tracked by satellite. However, until the first quarter of 2016, we saw a positive directional trend between our analysis of the levels of oil in floating roof tanks and JODI data for the total amount of oil stored in the country. This suggested that knowing the amount of oil stored in floating roof tanks was a strong proxy for tracking overall changes in oil storage.
Caption: In the visual above, the y-axis reflects the change in oil storage by percent where 100 implicates no change in oil storage, above 100 indicates an increase and below 100 indicates a decrease. The comparative datasets above highlight the strength of the directional trend between Saudi aggregate oil storage reported by JODI (which includes all types of oil storage) and Orbital Insight floating roof tank storage until the beginning of 2016; we can see that both lines clearly increase by a similar percentage. In Q1 2016 we see a divergence in oil storage between the two datasets where JODI decreases substantially, approximately by 25% from Q1 2016 through Q3 2017, and Orbital Insight floating roof storage increases by 10% over the same time-frame.
In the beginning of 2016, when oil prices started to depreciate drastically, we saw a divergence between our data and JODI numbers. JODI showed a marked decrease of 70 million barrels in total oil stored in Saudi Arabia from Q1 2016 through Q2 2017. For the same time period, our data for oil stored in floating roof tanks slightly increased by 2 million barrels. This divergence in data dramatically changed the direction of the trend we had previously seen between JODI data and our numbers, from positive to negative. There are several possible explanations for this departure, and we don’t have the whole picture because we don’t track all types of storage modalities—only floating roof tanks. Nevertheless, the previous strength of the directional trends and the subsequent change certainly provides insight that was not previously possible.
As we continue to expand the number of countries and oil tanks we monitor globally, we’re looking forward to all of the exciting information we’ll uncover. Oil plays a crucial role in the socio-economic development of our world, and by providing more visibility into this commodity, we hope to make a positive impact on the planet.