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What’s Stopping An Oil Price Rally?

What’s Stopping An Oil Price Rally?

Oil prices rallied in Q3…

Bad News For Glut As US Offshore To Hit Record In 2017

Offshore Oil Rig

Companies pumping oil from the Gulf of Mexico will ramp up production in coming months, propping up American output, despite efforts to curb production and raise barrel prices.

The United States currently produces 8.7 million barrels a day - a half a million less than where the figure stood last year, according to data from the Energy Information Administration (EIA).

Low prices caused by the high output levels have kept oil exploration efforts at a minimum.

Around 500,000 more barrels of crude from Mexico’s namesake gulf will go online by 2017, according to analysis by the Wall Street Journal that included government and private sector sources.

"The projects are coming faster and sometimes bigger than expected,” Roger Diwan of IHS Energy told Dow Jones. "The ramp-up seems to have accelerated during low prices.”

A handful of sizable fields had been funded for construction years prior, when prices were higher. The projects completed construction as scheduled and will begin production in the coming months.

Once the fields become operational, the U.S. Department of Energy predicts offshore oil production will set a record in 2017 with 1.91 million barrels - 24 percent more than in 2015 - flowing out of surrounding bodies of water by next December.

Related: Move Over Oil – Lithium Is The Future Of Transportation

The year 2009 held the previous record for highest offshore oil production rate, but British Petroleum’s spill in the Gulf of Mexico later that year caused a moratorium on the category of drilling.

Mexico has also begun efforts to encourage drilling in the Gulf. A total of 21 companies, including the Who’s Who of Big Oil, have registered to take part in Mexico’s deepwater oil auction to be held in December.

Shell, Chevron, ExxonMobil, British BP, French Total SA, Spanish Repsol, Norwegian Statoil and Mexican Pemex are among the major players now registered to bid for 10 blocks in the Gulf of Mexico, Prensa Latina reports.

Some 76 percent of the country’s potential oil resources are in the Gulf of Mexico’s deep waters, according to Forbes.

By Charles Kennedy of Oilprice.com

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  • adec on June 25 2016 said:
    Kr55 has it right. This article does not reflect the whole picture worldwide and timewise
  • Kr55 on June 25 2016 said:
    Think this has been known for a very long time. These projects coming online were planned many years ago and even as prices crashed they were too far along to cancel. The catch is though, that there will be next to no projects from 2018-2020 and possibly beyond. And off-shore production declines 2-3 times faster than on land conventional production.

    Off-shore is also a 22M barrel/day producer worldwide and many places it is done have had projects slashed to next to nothing. The gulf is a drop in the bucket compared to the industry world wide that has been decimated by the oil price decline. We could be looking at millions of barrels/day of off-shore production being lost in the coming years that needs to be replaced by more on land production.

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