It’s often said that the offshore Gulf of Mexico is a different animal than its onshore counterparts, especially shale and tight-oil plays like the Permian and the Bakken. Decisions to invest in new production in the GOM aren’t based on crude oil demand and price forecast for the next two or three years; they’re based on expectations for the next two or three decades. Well, 30 years from now will be 2051, a year after Shell and a number of other energy companies have pledged to achieve “net-zero” carbon emissions. What does decarbonization mean for future development in the offshore Gulf, where the upfront capital costs are enormous and wells can be prolific producers for many, many years. In today’s blog, we discuss the final investment decision (FID) on Shell’s Whale project in the western Gulf of Mexico and the prospects for further development in the GOM.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
Producing crude oil and natural gas in waters thousands of feet deep requires an extraordinary level of skill — and courage too. The challenges only increase during hurricane season, when everyone working in the offshore Gulf of Mexico keeps an eye on the weather in Hurricane Alley, that belt of warm Atlantic waters between Africa and the Caribbean where tropical depressions gain strength to form tropical storms and hurricanes. A number of these storms have had profound effects on GOM production (blue line in Figure 1), including hurricanes Katrina and Rita in 2005 (dashed red oval), Gustav and Ike in 2008 (dashed green oval), and more recently, Hurricane Barry in 2019 (dashed purple oval) and the trio of Sally, Delta, and Zeta last fall (dashed orange oval) which we covered at the time in You Really Got Me and more recently in Ridin’ the Storms Out. It could be argued, though, that the event that had the biggest impact on Gulf production — so far, at least — wasn’t a storm; it was the Macondo disaster in April 2010, when the Deepwater Horizon oil rig exploded and sank, resulting in the loss of 11 lives and the release of more than 4 MMbbl of crude oil over 87 days. In response to the disaster, a six-month moratorium on deepwater offshore drilling was declared and, as shown in Figure 1, caused GOM production to sag (dashed yellow oval). It took more than five years for output to recover to pre-Macondo levels.
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About the song
"Last Great American Whale" was written by Lou Reed, and appears as the sixth song on side one of Reed's 15th solo studio album, New York. Personnel on the record were: Lou Reed (lead, backing vocals, guitar), Mike Rathke (guitar), Rob Wasserman (electric upright bass), Moe Tucker (percussion), and Jeffrey Lesser (backing vocals).
New York was recorded between May and October 1988 at Media Sound and Studio B in New York City. Produced by Lou Reed and Fred Maher, the album was released in January 1989. It went to #40 on the Billboard Top 200 Albums chart, and has been certified Gold by the Recording Industry Association of America. Three singles were released from the LP.
Lou Reed was an American musician, singer, songwriter, and poet. He started his career in 1958 as a member of the three-piece doo wop group, The Jades, who released a single in that year. He became an in-house songwriter for Pickwick Records in the mid-1960s, and formed the Velvet Underground with original members John Cale, Sterling Morrison, and Moe Tucker in New York City in 1965. They released five studio albums, six live albums, 14 compilation albums, and 11 singles. The band was inducted into the Rock and Roll Hall of Fame in 1996. Lou Reed embarked on his solo career in 1970, with various re-unitings with the Velvet Underground over the years. As a solo artist he released 22 studio albums, 15 live albums, 16 compilation albums, and 46 singles. Reed died from liver disease at his home in East Hampton, NY, in October 2013 at the age of 71. He was inducted as a solo artist into the Rock and Roll Hall of Fame in 2014.
