U.S. Gulf Oil Production to Increase, But Just Barely

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--As with production from the inland shale basins, the U.S. government expects only incremental gains in oil production from the federal waters of the Gulf of Mexico (designated the Gulf of America by the Trump administration).

The U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, expects total Gulf oil production to account for about 13% of the nation's total output. Total U.S. crude oil production, including both onshore and offshore, is expected to average 13.4 million barrels per day (BBL/d) this year.

Exporting oil for the first time only a decade ago, the U.S. is the world's leader in crude oil production, besting Saudi Arabia by about 4 million BBL/d.

The EIA, however, is expecting only minor gains in production. The EIA expects total Gulf oil production to average 1.8 million BBL/d this year and 1.81 million BBL/d in 2026. Gulf oil production averaged 1.77 million BBL/d last year.

In 2015, the EIA put the average total oil production at 9.19 million BBL/d, a 6% year-over-year increase, relative to the 0.75% expansion expected by 2026. New operations at 13 fields in the Gulf of Mexico are expected to begin this year, without which production would decline, the EIA said.

Of those, eight will be developed using tiebacks to existing infrastructure. Among the standouts in new developments is the Sparta semi-submersible floating production unit tapped for the Gulf, led by Shell plc (London, England) and Equinor (Stavanger, Norway).

Equinor, which holds a minority stake in the $1.7 billion project, said it expects Sparta to produce 100,000 barrels of oil equivalent per day (BOE/d) at its peak. IIR Energy finds production could begin this month.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here to read a project report.

Elsewhere, Beacon Offshore Energy LLC (Houston, Texas) is working alongside majority-owner BP plc (London, England) at the Shenandoah field with initial production of about 120,000 BBL/d, with expansions expected to add another 20,000 BBL/d to capacity by early next year. Shenandoah is a high-pressure basin that requires advanced technology to exploit.

Subscribers can click here to read a project report.

U.S. President Donald Trump has called for a lease for drilling rights in the Gulf of Mexico, perhaps as early as June. A climate-change skeptic, the president is doubling down on the domestic energy sector, seeking to capitalize on an already-dominant position.

While offshore production is less expensive than inland basins, oil prices are below the point at which many drillers can make a profit. An early-year survey of energy firms from the Federal Reserve Bank of Dallas found heightened pessimism over Trump's economic policies.

In the Houston area, host to many of the world's energy companies, the Dallas Fed found that unemployment increased slightly to April, while home prices fell during the first quarter, suggesting broad-based pressures are emerging in the U.S. economy.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).