EIA: U.S. Offshore Oil Production On Track for New Records
Crude oil production in the U.S Gulf of Mexico hit 1.8 million bpd in 2018, setting a new annual record. The U.S. Energy Information Administration (EIA) predicts that the industry will set new production records in 2019, despite the temporary shut-ins related to Hurricane Barry in July.
Based on EIA’s latest forecasting, annual crude oil production in the GOM will increase incrementally to 1.9 million bpd this year and 2.0 million bpd in 2020, setting further new records. However, with onshore production booming, the offshore sector will account for only 15 percent of the U.S. total over the next two years - down from about 23 percent eight years ago.
U.S. offshore producers expect eight new projects to come online in 2019, and four more are slated for 2020, according to Rystad Energy. EIA expects these projects to contribute about 45,000 bpd in 2019 and about 190,000 bpd in 2020 as they ramp up production. Except for Shell's Appomattox project, which came online in May, every one of these new developments is a subsea tieback to an existing production platform - a low-cost method of developing new fields with minimal infrastructure investment.
The current production and investment levels in the Gulf are partly a function of the 2015 oil market downturn. In 2015 and early 2016, falling profits and reduced expectations for a quick oil price recovery prompted operators to rethink their capex plans, resulting in a swift reduction in drilling rig contracts. This caused average monthly rig counts to decline through 2018. The crude oil price recovery of the last two years has still not had a significant effect on operations in the Gulf, but it has the potential to contribute to increasing rig counts and field discoveries in the coming years, EIA said.