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Brave - Armed With New Growth Plans, Gulf of Mexico Drillers Endure Hurricanes And More

The Gulf of Mexico (GOM) may account for less than one-fifth of U.S. oil production but it’s a region that’s more than holding its own. Drillers plan to expand production, using advanced technologies to tap untouched reserves in deeper waters. Still, Gulf Coast output has always been at risk from severe storms, just like the onshore outlets and infrastructure on which producers depend. In today’s RBN blog, we’ll discuss highlights from our new Drill Down Report on the developments in the Gulf. 

As most in the industry know well, GOM production has been around much longer than the tight-oil plays that drive most of today’s growth. Since the 1980s, Gulf production (blue bars in Figure 1 below) has nearly tripled to almost 2 MMb/d but its share of U.S. oil production (blue line and right axis) has shrunk to 14%, about half of what it was in the early 2000s. In contrast, tight-oil production (aka shale; orange bars) now accounts for roughly two-thirds of total U.S. production (green bars), which set an annual record last year at nearly 13 MMb/d. The extraordinary growth in tight-oil supply continues to overshadow contributions from the Gulf, or any other domestic source.

U.S. Crude Oil Production, 2010-23

Figure 1. U.S. Crude Oil Production, 2010-23. Source: EIA

So, why is Gulf oil production comparatively limited? After all, there are still billions of barrels in recoverable oil reserves in the GOM, with more to be discovered. Section 2 of our new report details the many hurdles behind exploring the region. A major factor is the challenging offshore environment, which requires sophisticated equipment to operate at extreme depths and pressures, adding to overall costs. These are complicated, pricey projects compared with shale-related ventures, especially since significant costs are incurred before any offshore oil is produced or sold. 

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