1.9 MMBOPD expected in 2019

The Permian is setting new records for basin production, but it is far from the only location achieving all-time high oil output. The EIA reports the Gulf of Mexico produced an average of 1.65 MMBOPD, the highest yearly level on record. This was achieved despite the disruptions caused by hurricanes in the fall and pipeline issues in December.

Based on forecasts from the EIA’s Short-Term Energy Outlook, the GOM will build on this record, achieving even higher production in 2018 and 2019. The EIA estimates the Gulf will produce 1.7 MMBOPD in 2018 and 1.9 MMBOPD in 2019, based on current trends and expected projects.

Gulf Production Hit Record Levels in 2017, More to Come

Source: EIA

Gulf drilling has not yet recovered

Operations in the Gulf are very different from activity in modern unconventionals, and few places is this more evident than in the time involved. In a basin like the Permian, a company can plan, drill, complete and bring a well online in a matter of months.

In the Gulf, by contrast, this can take years. The fields expected to come online in the next two years were discovered from four to nine years ago. Furthermore, projects take time to ramp up production, a process that can often take multiple years. The time required to bring an offshore project online means the Gulf is less affected by short-term changes in oil price. Rigs in the area dropped off sharply in 2015 and 2016, like onshore operations, but unlike onshore GOM rigs continued to fall in 2017.

Gulf Production Hit Record Levels in 2017, More to Come

Source: EIA

The recent rise in oil prices has not yet translated through to activity levels in the Gulf. However, the long lead time for projects similarly means a rapid drop in oil price does not immediately translate into a drop in production, but instead affect future project discoveries and authorizations.

Nine projects in the works

There are four new projects that are expected to come online in 2018, and six that are planned to begin production in 2019. These projects are expected to contribute about 400 MBOPD by the end of 2019, pushing the GOM to record levels of production.

2017 Deepwater GOM Project Starts
Majority Operator Field Name Water Depth (ft) Discovery Year Expected Production Start
LLOG Son of Bluto 2 6,461 2012 2017
Freeport McMoRan Horn Mountain Deep 5,400 2015 2017
Anticipated Deepwater GOM Project Starts
Stone Energy Amethyst 1,200 2014 2018
Hess Stampede-Knotty Head 3,557 2005 2018
Hess Stampede-Pony 3,497 2006 2018
LLOG Otis 3,800 2014 2018
Apache Bushwood 2,700 2009 2019
Shell Gotcha 7,844 2006 2019
LLOG Phobos 6,919 2013 2019
Stone Energy Rydberg 7,500 2014 2019
Shell Tomcat 1,200 2014 2019
Shell Kaikias 4,575 2014 2019

 


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