Crude oil production in the US Gulf of Mexico will continue to set records through 2020, the US Energy Information Administration (EIA) expects.
The EIA said it anticipates average annual crude oil production in the US Federal Gulf of Mexico (GoM) in 2019 and in 2020 will top the 1.8 million barrels per day (bpd) record set in 2018, even after accounting for shut-ins related to Hurricane Barry in July 2019 and including forecasted adjustments for hurricane-related shut-ins for the remainder of 2019 and for 2020.
Annual crude oil production at new and existing fields in the GoM will increase to an average of 1.9 million bpd in 2019 and 2 million bpd in 2020, according to EIA’s latest Short-Term Energy Outlook’s (STEO).
In 2019, crude oil production in the GoM fell from 1.9 million bpd in June to 1.6 million bpd in July due to production platform evacuations ahead of Hurricane Barry, but the disruption was resolved relatively quickly, and no disruptions caused by Hurricane Barry remain. EIA estimates GoM crude oil production reached 2 million bpd in August 2019, although final data are not yet available.
Producers expect eight new projects to come online in 2019 and four more in 2020. EIA expects these projects to contribute about 44,000 bpd in 2019 and about 190,000 bpd in 2020 as projects ramp up production. Uncertainties in oil markets affect long-term planning and operations in the GoM, and the timelines of future projects may change accordingly.
Because of the amount of time needed to discover and develop large offshore projects, oil production in the GoM is less sensitive to short-term oil price movements than onshore production in the Lower 48 states. In 2015 and early 2016, decreasing profit margins and reduced expectations for a quick oil price recovery prompted many GoM operators to reconsider future exploration spending and to restructure or delay drilling rig contracts, causing average monthly rig counts to decline through 2018.
Crude oil price increases in 2017 and 2018 relative to lows in 2015 and 2016 have not yet had a significant effect on operations in the GoM, but they have the potential to contribute to increasing rig counts and field discoveries in the coming years. Unlike onshore operations, falling rig counts do not affect current production levels, but instead they affect the discovery of future fields and the start-up of new projects.
Even with the anticipated growth, projected GoM crude oil production will account for a smaller share of the US total, EIA said. The administration expects the GoM to account for 15% of total US crude oil production in 2019 and in 2020, compared with 23% of total US crude oil production in 2011, as onshore production growth continues to outpace offshore production growth.