WoodMac Bullish on Gulf of Mexico

By Jennifer Pallanich
Friday, January 11, 2019

The outlook for the Gulf of Mexico for 2019 continues to improve.

Earlier this week, BP made public plans to expand its Atlantis field, reported new discoveries near its Na Kika platform, and credited a breakthrough in seismic imaging with identifying 1 billion barrels of additional oil in place at its massive Thunder Horse field. Given these developments, BP aims to grow its net GoM production to around 400,000 boe/d in the next decade.

“We’re glad to see some growth coming from BP,” said William Turner, senior research analyst at Wood Mackenzie.

BP’s announcement shows “the value of our industry finally applying these fancy words like big data and supercomputing.” The bigger picture, he said, is that there is a perception that the industry is not innovative. Using big data and supercomputing is evidence to the contrary, he said.

In mid-December, WoodMac released a bullish report on GoM activities for 2019. Despite oil prices dropping in the interim, Turner is still optimistic about activity in the region.

One high point is the expected FID for Chevron’s Anchor ultra high-pressure field at Green Canyon block 807 in 5,180ft.

“It’s a pretty technically challenging reservoir,” he said.

The field requires equipment that can handle operating pressures of 20,000 psi.

The industry will also be closely watching how Shell’s Appomattox field, in 7,400 feet of water in Mississippi Canyon block 392, performs.

Appomattox will produce Jurassic reserves to the company’s largest floating production platform when it goes onstream later this year.

If Appomattox, which is expected to produce 175,000 boe/d at peak, does well, Turner says, more companies might seek to lease and explore the Jurassic reservoirs.

Part of Turner’s confidence for the Gulf this year is the expectation that smaller E&P operators will be active. For the first time in four years, Turner noted, there is expected to be an increase in drilling in the GoM.

On the flip side, fluctuating oil prices may delay some cost hikes in the supply chain, he said.

“We were expecting inflation in the supply chain, but this dramatic fall in oil prices may have kicked that inflation out to 2020,” Turner said. “If it were my dollar, I would keep investing.”

Categories: Deepwater North America

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