Global policy shifts towards protectionism…
A significant development this week…
Platts Analytics Bentek Energy has forecasted that crude oil output in the U.S. part of the Gulf of Mexico will reach 1.868 million barrels daily by the end of this year, jumping further to 2.296 million bpd by the end of 2022, thanks to expansion of existing projects and renewed interest in untapped, smaller fields.
The area yielded some 1.67 million bpd as of the end of 2016, but energy companies active in the Gulf are becoming bolder, encouraged by oil prices. Several new fields are also set to start producing this year, adding 15,000 barrels daily to total production.
These include Barataria and South Santa Cruz, both operated by Deep Gulf Energy, an independent energy player, and Crown the Anchor, property of LLOG Exploration.
At the same time, Big Oil majors are expanding production at seven fields, most of which were launched last year. Among these are Noble Energy’s Gunflint, Shell’s Stones, and Exxon’s Julia.
Platts’ forecast comes soon after Wood Mackenzie warned that deepwater projects will soon challenge shale oil and gas, as producers betting on offshore developments streamline their operations, cut costs, and use technology to make drilling and production more efficient.
According to Wood Mac’s upstream oil and gas research director Angus Rodger, this shift is essentially a shift in the mindset of Big Oil rather than a shift in innovation, with producers foregoing maximum profits for a more stable revenue stream.
Although Platts’ analysts admit—like Wood Mac’s—that there are fewer large-scale projects in the Gulf these days, and also fewer drillships and rigs in the area, the Platts team believe this is set to change next year and in 2019.
Related: Russia Reaches 2/3 Of Oil Output Cut Target
According to them, explorers will become more active in the next couple of years – “a modest but steady” improvement, Trevor Crone from Platts RigData said. An early sign of this trend was the sum of the bids attracted in the latest lease sale for the Gulf: at $275 million, the combined value of the bids was almost twice as high as the $156 million drawn in during last year’s tender of Gulf blocks.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.