GOM growth second only to Permian
Big projects are coming back, according to the U.S. government’s energy data compiler. Gulf of Mexico oil production is projected to have the second-largest growth among U.S. oil plays through 2018, according to a note released by the EIA.
While the U.S. shale boom, which shines particularly brightly in the Permian, has attracted the vast majority of market attention, shale plays are not the only locations of successful oil and gas operations in the country. The Gulf of Mexico is still popular enough to receive $275 million in a recent lease sale, and according to Wood Mackenzie breakevens in the region are below $50/bbl.
According to the EIA, Gulf oil output will grow by 344 MBOPD from June 2017 through December 2018. This makes the Gulf second only to the Permian itself in anticipated growth among U.S. oil plays. Surprisingly, all other regions of the U.S., including the Eagle Ford and Bakken, are expected to grow by a mere 48 MBOPD.
Source: EIA
Crude oil production in the GOM set an all-time high in 2016, with average annual production of 1.6 MMBOPD. Production has continued to rise, reaching 1.7 MMBOPD in January. Gulf oil production is much less sensitive to short-term oil price movements than most shale plays. While it may take years for a GOM project to be approved, drilled, completed and brought on production, a shale well may complete this process in months. Related: Oil Rises To 8-Week High Following Unexpected U.S. Inventory Draw
Source: EIA
Seven projects will come online through 2018
Seven major projects are expected to come online in 2017 and 2018, supporting GOM production. Based on anticipated output from these new fields, production from the Gulf will likely continue to break records in the next two years. The EIA predicts that production will average 1.7 MMBOPD in 2017 and 1.9 MMBOPD in 2018.
Source: EIA
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Overall U.S. oil production is also on course to set records in 2018. Growth in the Permian and the GOM will drive average 2018 production to 9.9 MMBOPD, significantly above the previous record of 9.6 MMBOPD set in 1970.
By Oil and Gas 360
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