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Oil and gas activity in the Gulf of Mexico is important for both energy and job security in the US, according to recent study released by PFC Energy.
The direct economic impact of oil and gas exploration and production (E&P) in the Gulf of Mexico, excluding the Macondo incident, is estimated at US$43 billion annually, according to a study released by PFC Energy.
Robin West, chairman and CEO of PFC Energy, recently spoke at a conference co-sponsored by Rice University's Baker Institute to stress the importance of oil and gas E&P in the Gulf of Mexico, adding that, “to keep US oil production levels steady over the coming decade, growth in the deepwater Gulf will be needed to offset declines in other domestic basins. Any delays/reductions caused by regulatory changes would reduce the forward production profile.”
According to the study, some 25 Bbbl of oil and 200 Tcf of gas have been discovered in the Gulf of Mexico. This accounts for about a quarter of the remaining proved crude oil reserves in the Lower 48, making the Gulf of Mexico a vital contributor to US energy security.
Offshore production in the Gulf also contributes to regional and national economies, especially in Texas, Louisiana, Mississippi, Alabama, and Florida, which border the Gulf. It also helps sustain thousands of jobs in that area.
The report includes a detailed history of Gulf of Mexico drilling and production, from the 1940s all the way to present-day ultra-deepwater drilling. With operators aiming towards the Lower Tertiary, drilling now requires more sophisticated technology, greater expertise and a lot of financial risk. An exploration well in ultra-deep water may cost around $100 million or more, which is why few companies are able to develop and operate ultra-deepwater plays.
According to the study, during the next decade deepwater projects are estimated to account for 8% of ExxonMobil’s worldwide production, compared with 40% for Chevron, 52% for BP, and 25% for Shell.
If production in the Gulf were to continue without moratoriums and the potential effects of new regulations, by 2020 more than 50% of production in the area would be from ultra-deep water. According to the report, the Gulf can potentially produce 12.9 Bboe, or 45% of the Gulf’s total projected output, from 2011 to 2020.