Crude oil production in the U.S.’s portion of the Gulf of Mexico is poised to top 2 MMb/d for the first time in six years — and only the third time ever. New projects keep coming online. And a newcomer to the U.S. GOM, U.K.-based Harbour Energy, just announced a deal to acquire LLOG Exploration.
The Gulf of Mexico (GOM) has seen more than its share of stormy weather, and — both literally and figuratively — so have crude oil producers active there. Earlier this century, production growth in the offshore GOM was set back by Katrina and other major hurricanes, then by the Deepwater Horizon spill. Starting in 2014, and for five years after that, the Gulf's output ratcheted up, only to be set back again, this time by the double-whammy of COVID and bad storms. Now, the GOM appears to be poised for another period of steady growth — the only question is, with the global push to decarbonize, and with at least of couple of large producers planning to exit the region, will this be Gulf producers' last stretch of good weather? In today's RBN blog, we begin a short series on the ups and downs of GOM production, the new projects starting up this year and beyond, and the Gulf's longer-term prospects.
In the stormiest market environment for crude oil in many years, it’s hard to find a spot where the sailing is smooth. If even-keel conditions exist anywhere in the oil-producing world today, it might be the offshore Gulf of Mexico, where producer decisions to invest in new platforms or subsea tiebacks are based on very long-term oil-price expectations and the production, once initiated, is steady. In the second half of the 2010s, Gulf producers significantly reduced the average breakeven prices needed to justify their most promising new investments — from more than $55/bbl back in 2015 to less than $35/bbl today. Given what’s happened to crude oil prices the past few days, however, it’s logical to wonder whether any of even the best prospective Gulf of Mexico projects will be sanctioned this year. Today, we discuss how cost-cutting and efficiency improvements have made the offshore Gulf a comparatively steady, growing base of U.S. crude oil production that so far has been less vulnerable than shale output to oil-price gyrations.
