Reuters - Little fanfare, but Gulf of Mexico oil still growing steadily

May 4, 2017 – Reuters

Little fanfare, but Gulf of Mexico oil still growing steadily

By: Jessica Resnick-Ault

As rapid growth in U.S. shale production grabs headlines and threatens to upend attempts by OPEC to balance oil markets, a more unsung sector of the U.S. industry is also hitting new output highs - the offshore Gulf of Mexico.

While attention and investment is focused on shale, the Gulf is the among the most prolific oil source in the United States, producing more than Alaska, the West Coast and Rocky Mountains combined. The region churned out a record 1.76 million barrels per day of crude in January, trailing only Texas onshore production, which includes the growing Permian Basin.

“The business can compete with tight onshore oil any day,” said Richard Morrison, regional president for the Gulf of Mexico for BP Plc (BP.L) speaking at the annual Offshore Technology Conference in Houston, where nearly 70,000 people from 120 countries are attending.

The Gulf region is expected to add another 190,000 bpd before the end of the year, according to the U.S. Energy Information Administration. Growth should continue, according to consultancy RBN Energy, which expects production to rise by 300,000 bpd in 2018 from current levels...

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…While low oil prices from 2014 to 2017 reduced the number of new investment decisions taking during that time, some low-cost projects are still being approved, which may lessen the blow of low prices.

Gulf output is also being driven by so-called tie-backs, which are subsea lines that connect to existing projects, according to RBN Energy. These less-expensive underwater lines offer companies a chance to connect additional wells at known fields to active platforms.