Gulf of Mexico oil production through 2016 could emerge from the current downturn marked by low oil prices and budget cuts relatively unscathed, cushioned by long project development timelines, according to a March 3 report by the U.S. Energy Information Administration.

Renewed interest in the GoM following the deepwater drilling moratorium prompted by the Deepwater Horizon incident in 2010 has led to a surge in projects in recent years as operators pursue new fields while redeveloping and growing mature ones.

The new projects, combined with output from existing fields, are anticipated to push GoM production to 1.52 MMbbl/d in 2015 and slightly higher in 2016 to 1.61 MMbbl/d, according to the EIA.

If all goes as planned, 13 fields will start up within the next two years, contributing to an additional 265,000 bbl/d in production by year-end 2015 when combined with production from developments brought online in late 2014, the EIA said, noting the figures were adjusted to account for shut-ins from hurricanes.

“The current low oil price adds uncertainty to the timelines of deepwater GOM projects, with projects in early development stages exposed to the greatest risk of delay,” the EIA said in the report. However, “In an effort to reduce this risk, producers are collaborating to develop projects more cost-effectively, to shorten the time to final investment decision and first production, and by sharing development costs. For instance, Chevron, BP, and ConocoPhillips recently announced a collaborative effort to explore and appraise 24 jointly held offshore leases in the northwest portion of the Gulf of Mexico's Keathley Canyon.”

The agency also pointed out that more than half of the projects slated for 2015 or 2016 startup will tie to existing production platforms using subsea tiebacks, lowering costs and startup times.

“Development of offshore fields requires both surface and subsea production equipment. The high cost of surface structures limits their application to large fields,” the EIA explained. “Those fields with reserves not large enough to justify the necessary capital expenditure use subsea infrastructure to connect to nearby existing platforms.”

Nearly half of the 13 fields with expected startups in 2015 or 2016 are located in the Mississippi Canyon area.

The eight deepwater fields scheduled to start production in 2015 are:

  • Big Bend in Mississippi Canyon Block 698 with Noble Energy as operator;
  • Big Foot in Walker Ridge Block 29 with Chevron as operator;
  • Lucius in Keathley Canyon blocks 874, 875, 918 and 919 with Anadarko as operator;
  • Motormouth in Green Canyon Block 237 with Talos Energy as operator;
  • Shell-operated Silvertip in Alaminos Canyon Block 815 and South Deimos in Mississippi Canyon Block 806;
  • Noble-operated Troubador in Mississippi Canyon Block 699; and
  • West Boreas in Mississippi Canyon Block 762, operated by Shell.

The five deepwater fields scheduled to start production in 2016 are Noble’s Dantzler and Gunflint as well as LLOG’s Marmalard and Son of Bluto 2, all in the Mississippi Canyon area; and the Chevron-operated Tahiti 2 Field in Green Canyon.

Water depths for the fields range from 701 m (2,300 ft) to 2,217 m (7,273 ft).

“Five deepwater projects began in the last three months of 2014: Stone Energy-operated Cardamom Deep and Cardona projects, Chevron-operated Jack/St. Malo fields, Murphy Oil-operated Dalmatian, and Hess-operated Tubular Bells,” EIA said in the report.

“Also occurring at the end of 2014 was the redevelopment of Mars (Mars B) and Na Kika (Na Kika Phase 3), both of which are mature fields. Cardamom Deep, Jack/St. Malo, and Tubular Bells were slated for a late 2014 startup, as well. Although industry press releases have indicated they have started producing, their production data have not yet been reported to the Bureau of Safety and Environmental Enforcement (BSEE) under the U.S. Department of the Interior.”

Opportunities for companies to gain acreage could lead to even more future discoveries.

The next GoM lease sale is planned for March 18. Lease Sale 235 will offer 7,788 blocks in the Central Planning Area offshore Louisiana, Mississippi and Alabama. The Bureau of Ocean Energy Management announced Monday that it will offer about 4,000 blocks during the Western GoM Lease Sale 246, scheduled for August.

BOEM estimates show that sale 235 could result in the production of 1 Bbbl of oil and 113 Bcm (4 Tcf) of natural gas, while sale 246 could lead to the production of between 116 MMbbl and 200 MMbbl of oil and between 15 Bcm (538 Bcf) and 26 Bcm (938 Bcf) of natural gas.

Contact the author, Velda Addison, at vaddison@hartenergy.com.

Offshore