Stones

Work continues on several major deep- and shallow-water crude oil production projects in the U.S. Gulf of Mexico (GOM), despite the fact that oil prices are far lower than they were when the commitments to develop these projects were made. U.S. benchmark West Texas Intermediate (WTI) crude for prompt delivery closed yesterday on the CME/NYMEX futures market at $26.55/Bbl – its lowest level since May 2003 – threatening to strangle resilient domestic onshore shale production. Yet GOM production levels will rise again this year--and likely for at least another couple of years—offsetting some of the expected decline in onshore U.S. crude output.  Today, we continue our examination of steadily rising crude output in the GOM with a look at projects coming online in 2016 and beyond.

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.