Every year, the biggest wild card regarding Gulf of Mexico (GOM) crude oil production is the severity of the Atlantic hurricane season. A season generally free of major storms in offshore production areas will likely have only a minimal impact, but a summer and early fall with even just one or two powerful hurricanes along certain paths can cause output to plummet, sometimes for extended periods. In today’s RBN blog, we’ll look at GOM production gains over the years, the degree to which hurricanes and other issues have reduced output in the past, and the new production expected to come online later this decade.
Let’s start with a look at how much crude oil is produced in the GOM. Output climbed from a little more than 700 Mb/d in the early 1980s to nearly 2 MMb/d in 2019, just before the pandemic hit. Most of that growth was from discoveries in the deeper waters of the Gulf (at least 500 feet) while production in shallower areas near the coast has receded, a trend that is expected to continue. Despite rising production, the region’s share of U.S. oil output has been declining since onshore shale production, led by the Permian Basin, took off. As of 2023, GOM oil output averaged 1.87 MMb/d and accounted for 14% of domestic production, down from 27% two decades ago.
It won’t surprise most folks that hurricanes have the potential to cause major disruptions to GOM production — and, of course, to refining and other operations ashore. While the hurricane season officially runs from June 1 to November 30, major storms can form outside that window, as was the case in 2020 when Tropical Storms Arthur and Bertha spawned in May. (More on the busy 2020 hurricane season in a bit.) Each season’s impact on the oil and gas industry varies considerably, including the number of major storms, how storms are spaced out, their wind speeds, how fast they move and — most importantly — the path they take and where they make landfall. The majority of GOM oil and gas infrastructure (yellow dots in Figure 1 below) is located off the Louisiana coast — and points just west and east of there — so storms that cross that swath can affect many offshore structures.
Figure 1. Oil and Gas Infrastructure in the Gulf of Mexico. Source: Data Basin
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