Macondo

Crude oil production is off in most U.S. shale plays and at today’s prices will continue falling, but offshore Gulf of Mexico (GOM) output is resurging like a genie and it looks like 2016 will be another solid year. That means, with existing GOM wells producing at full throttle and new offshore production due online, U.S. production as a whole is down by less than you might expect, given that oil prices are stuck well under $35/Bbl. Today we begin a review of the resilience of GOM oil production, efforts to reduce costs, and new projects coming online.

Floating production, storage and offloading vessels—FPSOs, for short—allow for hydrocarbon production in waters too deep for conventional offshore platforms. While FPSOs have been in limited use around the world since the mid-1970s, they remain a relative rarity in the Gulf of Mexico (GOM), mostly because oil and natural gas has been available in shallower parts of the Gulf closer to shore. Now, Royal Dutch Shell will be taking a spanking-new FPSO into the deepest waters yet--9,500 feet, or almost two miles down--for its mammoth Stones development 200 miles off the Louisiana coast. Today, we look at the Stones project, the growing role of FPSOs, and the long-term perspective taken by exploration and production (E&P) companies in the GOM.

The Deepwater Horizon explosion in April 2010 effectively halted new drilling in the offshore Gulf of Mexico (GOM). Between April 2010 and June 2012 production fell by 400 Mb/d. At the same time the shale revolution led to increases in US production – up 790 Mb/d during 2012 – the largest annual increase on record. In the last quarter of 2012 GOM oil production began to recover and is forecast to increase to 1.5 MMb/d by the end of 2014. Today we look at the impact Macondo had on GOM crude production.